STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WEST FLORIDA REGIONAL MEDICAL ) CENTER, INC. d/b/a WEST FLORIDA ) REGIONAL MEDICAL CENTER, )

)

Petitioner, )

vs. ) CASE NO. 93-4886

)

AGENCY FOR HEALTH CARE ) ADMINISTRATION, and BAPTIST ) HOSPITAL, INC., )

)

Respondents. )

) SACRED HEART HOSPITAL OF )

PENSACOLA, )

)

Petitioner, )

vs. ) CASE NO. 93-4887

)

AGENCY FOR HEALTH CARE ) ADMINISTRATION, and BAPTIST ) HOSPITAL, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

A formal hearing was held in these consolidated cases on May 3-6, 9-13, 16- 19, 23-24, 1994, before Eleanor M. Hunter, the Hearing Officer designated by the Division of Administrative Hearings, in Tallahassee, Florida.

APPEARANCES

For Petitioner, William Wiley, Attorney At Law Sacred Heart: Darrell White, Attorney At Law

Charles A. Stampelos, Attorney At Law McFarlain, Wiley, Cassedy & Jones

600 First Florida Bank Building

215 South Monroe Street Tallahassee, Florida 32301

For Petitioner, Jeffrey Frehn, Attorney At Law West Florida John Radey, Attorney At Law

Regional Medical Aurell, Radey, Hinkle, Thomas & Baranek Center, Inc.: 101 North Monroe Street, Suite 1000

Post Office Drawer 11307 Tallahassee, Florida 32302

For Respondent, Michael J. Cherniga, Attorney At Law Baptist Hospital: Greenberg, Traurig, Hoffman

Post Office Drawer 1838 Tallahassee, Florida 32302

and

John A. Rudolph, Jr., Attorney At Law

W. Dexter Douglass, Attorney At Law Douglass & Powell

Post Office Box 1674 Tallahassee, Florida 32302

For Respondent, Richard Patterson, Attorney At Law Agency for Health Agency for Health Care Administration Health Care 325 John Knox Road

Administration: Tallahassee, Florida 32303

STATEMENT OF THE ISSUES

Whether certificate of need application number 7184 for the establishment of adult open heart surgery services at Baptist Hospital, Pensacola, Florida, filed in March 1993, meets statutory and rule criteria for approval.

PRELIMINARY STATEMENT

In March 1993, Baptist Hospital of Pensacola, Florida ("Baptist"), filed an application for a certificate of need to establish adult open heart surgery services. On July 7, 1993, the Agency for Health Care Administration ("AHCA") issued its intent to approve the application. The preliminary agency action was opposed, in this proceeding, by Sacred Heart Hospital of Pensacola ("Sacred Heart") and West Florida Regional Medical Center, Inc. ("West Florida"). These cases were consolidated for hearing with a challenge by Sacred Heart to an agency policy statement not promulgated by rule, which Sacred Heart described as follows:

The Agency may, in its discretion, approve a CON application to establish an adult open

heart surgery program notwithstanding findings by it that: (1) Need is not indicated pursuant

to Florida Administrative Code Rule 59C-1.033(7)(c), i.e., approval of a new program will reduce the

12 month total at an existing adult open heart surgery program in the district below 350 open heart surgery operations; (2) the applicable fixed need pool for adult open heart surgery programs in the District is zero; and, (3) the applicant failed to demonstrate "not normal" circumstances justifying the approval of its application.

The challenge, filed pursuant to Section 120.535, Florida Statutes, is Case No. 93-6207RU, for which a separate final order is issued.

Prior to final hearing, Sacred Heart filed a Motion in Limine to exclude testimony on the reasonableness of the requirement that existing programs retain a minimum volume of 350 procedures a year as calculated using the formula in Rule 59C-1.033(7)(c), Florida Administrative Code. The Motion was denied,

without prejudice to the movant to object to specific questions which have the effect challenging the rule. The rule was held valid in Humhosco, Inc., etc. v. DHRS, DOAH Case No. 91-0863 (F.O. 12/12/91).

At the final hearing, Baptist presented the testimony of J. L. Trantham, M.D., expert in cardiology; Robert Windham; Franklin James Fleischhauer, M.D.; Bromley Dyson, expert in hospital construction services; Dorothy Thompson, expert in hospital equipment purchasing; Ronald Luke, Ph.D., expert in health planning and health care economics; Janice Hoff, expert in nursing administration; Nancy A. Ridlehoover, expert in nursing administration; Michael King, expert in hospital financial management, financial planning and financial analysis; Thomas McLaren, expert in surgical nursing administration and hospital operating room administration; Cynthia Ayres; Timothy J. Chambo, expert in hospital cardiovascular services administration; and David Sjoberg, expert in health planning and hospital administration. Baptist exhibits 1 - 14 were received in evidence, except exhibit 8 which was the same as exhibit 6.

AHCA presented the testimony of James T. Howell, M.D., expert in medicine, public health, and health planning; and Elizabeth Dudek, expert in health care planning. AHCA exhibit 1 was received in evidence.

Sacred Heart presented the testimony of James T. Howell, M.D., Laura MacLafferty, Alberta Granger, Elizabeth Dudek, all from the agency; Nora J. Bailey, expert in health care planning; Rick Knapp, expert in health care financial planning and analysis; and Mark Richardson, expert in health planning. Sacred Heart's exhibits 1 - 40 were received in evidence, except exhibit 21, which was proffered. Composite Exhibit 40, the State Agency Action Reports on prior Baptist CON applications for open heart surgery services, was received as relevant solely for consideration in Case No. 93-6207RU.

West Florida presented the testimony of David B. McCraw, M.D., expert in cardiology, including interventional cardiology; Cynthia Ayres, expert in hospital cardiovascular services administration, and nursing administration; and

1. Eugene Nelson, expert in health planning. West Florida's exhibits 2 - 6 were received in evidence. During the final hearing, Baptist presented objections to specific testimony included in some of Sacred Heart's deposition exhibits. Baptist filed those objections on June 21, 1994, Sacred Heart responded on July 1, 1994, and rulings on the objections were issued by Order on July 6, 1994.

   
   

   The transcript of the final hearing was received at the Division of Administrative Hearings on July 5, 1994. Proposed findings of fact and conclusions of law were filed on September 1, 1994. Rulings on the findings of fact are in the appendix to this order.

   
   

   FINDINGS OF FACT

   
   

   1. On or about March 23, 1993, Baptist Hospital, Inc., ("Baptist"), Pensacola, Florida, filed a certificate of need ("CON") application to establish an adult open heart surgery program for a total project cost of $2.35 million. Baptist's application was subsequently numbered CON 7184, and was approved preliminarily by the Agency for Health Care Administration ("AHCA") on July 7,

      1993. Conditions for the issuance of the CON were drafted by Elizabeth Dudek of AHCA. Violations of CON conditions may result in sanctions, including fines of up to $1,000 a day. The conditions, as drafted, are as follows:

      
      

      The provision of a minimum of 3 percent of total annual adult open heart surgeries to Medicaid patients.

      The provision of a minimum of 3 percent of total annual adult open heart surgeries to charity care patients.

      A fixed rate structure by DRG for open heart surgery discharge (DRGs 104-108) will be set at a level which is 85 percent of the average

      of the most recently available charges at Sacred Heart and West Florida Regional, inflated at 7.5 percent annually.

      Baptist shall ensure a minimum annual adult open heart surgery patient volume of 350 at each Sacred Heart and HCA West Florida. (This assurance shall not be achieved though the transfer of charity care patients).

      
      

   2. Baptist is a 546-bed hospital, with 388 medical/surgical beds, 62 acute care beds being used as skilled nursing beds, 76 psychiatric and 20 substance abuse beds. Baptist is a Medicaid disproportionate share provider and a designated Level II trauma center, located in Pensacola, Escambia County, in AHCA District I. District I includes Escambia, Santa Rosa, Okaloosa, and Walton Counties. Baptist's primary service area is Escambia and Santa Rosa Counties in Florida, and Baldwin and Escambia Counties in Alabama.

      
      

   3. Sacred Heart Hospital of Pensacola ("Sacred Heart") the oldest hospital in Pensacola, is licensed for 391 beds, including 42 Level II and III neonatal intensive care beds, and is a Level II trauma center. Sacred Heart has an approved CON to add 40 acute care beds for a women's and children's hospital.

      In late 1995, construction is expected to be completed. After the women's and children's hospital is finished, Sacred Heart will undertake the construction of

      12 additional critical care beds which it projects will be operational in 1996. Sacred Heart is a Medicaid disproportionate share provider. Sacred Heart initiated an open heart surgery program in the early 1970's, and is located approximately 4 to 6 miles from Baptist. Escambia and Santa Rosa Counties are in Sacred Heart's primary service area. The secondary service area includes Okaloosa and Walton Counties, and sections of Alabama. Approximately 65 percent of the total open heart surgery patients in Escambia County, and 51 to 58 percent of the total from Santa Rosa County have open heart surgeries at Sacred Heart.

      
      

   4. West Florida Regional Medical Center ("West Florida") is a 547-bed existing provider of open heart surgery services, composed of 378 medical/surgical care, 21 skilled nursing, 89 psychiatric, and 58 comprehensive medical rehabilitative beds. West Florida is also a state Level II trauma center, in Pensacola. West Florida is approximately 7 to 9 miles from Sacred Heart, and approximately the same distance from Baptist. Open heart surgery services were initiated in 1975 at West Florida, which is the dominant provider to residents of Okaloosa and Walton Counties. West Florida Regional's service area includes all of District 1.

   5. Three open heart surgery programs exist in Mobile, Alabama, approximately one to one and a half hour drive from Pensacola, two more in Dothan, Alabama, and one in Panama City, in AHCA District 2. Over 90 percent of the population in District 1 is located within a two-hour average drive to an existing open heart surgery program.

      
      

      Numeric Need

      
      

   6. On February 5, 1993, AHCA published a fixed need pool of zero for additional adult open heart surgery programs in District I for the July 1995 planning horizon. Two subsequent publications of need for an additional open heart surgery program in the district have also resulted in zero numeric need. When zero numeric need is computed, using the formula in Rule 59C-1.033(7)(b), an applicant has to demonstrate not normal circumstances for the approval of the application.

      
      

   7. In addition, a new adult open heart surgery program will not normally be approved if the formula in subsection (c) of that rule yields a result less than 350, indicating that existing programs in the district will be reduced to volumes below 350 annual open heart surgery operations. The calculation to determine whether this condition applies was 346.67. A fixed need pool of zero was published and not challenged. Vol. 19, No. 5, Florida Administrative Weekly, February 5, 1993.

      
      

      Not Normal Circumstances for Need

      
      

   8. Baptist describes certain conditions as not normal circumstances for the approval of its open heart surgery program. The not normal circumstances described are (1) a lack of financial access for uninsured persons, (2) utilization and capacity problems at one of the two existing providers in the district, (3) the size of Baptist Hospital, and the size and complexity of its cardiology services, and the fixed price and minimum volume conditions proposed for the approval of the CON.

      
      

      Financial Access

      
      

   9. Baptist asserts that its program will serve uninsured patients, who are a financially underserved group in its service area. Baptist proposes in its pro forma to serve up to 15 uninsured open heart surgery patients in year one and up to 19 in year two. Assuming the percentage of uninsured persons in District 1 is comparable to that for the entire state and assuming the open heart surgery use rate for the uninsured would otherwise be the same, Baptist's expert claimed that 53 uninsured persons were denied open heart surgery services in District 1 in 1993. Baptist's opponents challenged the admissibility of evidence related to uninsured persons as an impermissible amendment not discussed in the application.

      
      

   10. Assuming arguendo, that the evidence is admissible, Baptist failed to document any unmet need for uninsured persons, which its proposal will alleviate. There was more credible evidence that uninsured persons have a lower use rate for reasons other than the absence of another program in the district, including age, lack of access to primary care physicians, lack of referrals to cardiovascular surgeons, and the failure to secure Medicaid coverage. No advantage is gained with referrals of patients to the same group of cardiologists and cardiovascular surgeons who currently serve both Sacred Heart and Baptist, in the absence of evidence that the doctors can and will accept

       more Medicaid and indigent patients. The use rate for Medicaid patients in District 1, adjusted for age, shows equal access to open heart surgery services, as compared to other payer groups.

       
       

       District 1 Demographics and Utilization

       
       

   11. AHCA District 1 includes Escambia, Santa Rosa, Okaloosa and Walton Counties. Approximately 250,000 people reside in Escambia County, with slightly over half of the district population located in the other three counties in the district. Escambia is the western-most county in the district and the state. From 1992 to 1997, adult population growth is projected to be lower in Escambia County (2.6 percent) than it is district-wide (6.5 percent) which, in turn, is lower than the statewide growth rates (9 percent).

       
       

   12. Open heart surgery services began in District 1 prior to 1988 at both Sacred Heart and West Florida. From 1988 to 1993, the volumes of procedures in District 1 and the state have been as follows:

       
       

       1988	1989	1990	1991	1992	1993
       District 1 805	803	733	901	1,006	848
       Statewide 18,961	19,819	22,010	23,748	26,078	25,190

       
       

       From July 1991 - June 1992, there were 498 and 493 open heart surgery procedures at Sacred Heart and West Florida Regional, respectively, for a total of 991 procedures in AHCA District I. At West Florida Regional, open heart surgeries declined from 533 in 1992 to 418 in 1993. Open heart surgery use rates in District 1 and statewide are declining or becoming comparatively more level.

       Most residents of the district receive open heart surgery services in the district, with fewer than 3 percent out-migration.

       
       

   13. Baptist's expert claimed that the 1993 decline was an anomaly rather than a trend, comparing District 1 to AHCA districts which experienced a 1993 decline, but are reporting larger volumes for the first quarter of 1994. The volumes were not annualized to take into account seasonal fluctuations. In fact, Baptist's cardiologists also noted the increase in alternative procedures such as angioplasty, electrophysiology, and drug therapies.

       
       

   14. In the first quarter of 1994, there were 250 open heart surgery procedures in the district, as compared to 265 in 1992, and 208 in 1993. Annualized for the entire year to adjust for seasonal variations, 980 open heart surgeries are expected in 1994. Expert projections of total open heart surgeries at District 1 facilities for 1995-1998 are in a range as follows:

       
       

       1995	1996	1997	1998
       880 - 1,051	894 - 1,069	908 - 1,085	921 - 1,100

       
       

   15. Sacred Heart's occupancy for total acute care beds was 74.8 percent in 1991, 74.5 percent in 1992, and 74.4 percent in 1993. However, Sacred Heart's critical care unit ("CCU") is frequently at capacity during the peak season in the winter months. Delays of 1 to 3 days before patients are admitted for elective open heart surgery operations and elective angioplasties, are not uncommon. Elective procedures are those performed on patients who are stabilized with drug therapies pending the procedure. There is no evidence of delays in transfers for emergency angioplasties or emergency open heart surgeries, other than the time required to follow transfer protocols. Actual Sacred Heart CCU utilization was 83.4 percent in 1991, 84.4 percent in 1992, and

       81.2 percent in 1993. Sacred Heart's expert in health planning, Mark

       Richardson's opinion that over 75 to 77 percent occupancy in a CCU means inadequate capacity to add a new open heart program, but not to serve an existing program is accepted. In addition, Sacred Heart plans to add 12 beds to the critical care unit in early 1996, and has improved case management procedures to alleviate capacity limits in the CCU, and scheduling heart surgeries. Two of the three cath labs at Sacred Heart are used for cardiac caths, electrophysiological studies and angioplasties. Sacred Heart has the capacity to perform 4,200 total cases a year. There are no problems associated with the capacity of the cardiac cath labs at Sacred Heart.

       
       

   16. The expert testimony is undisputed that West Florida Regional provides excellent quality of care, has excess cath lab, CCU and operating room capacity, and is in an excellent position to increase utilization without additional construction and with minimum additional staff. Cardiologists at Baptist resist transferring patients to West Florida, where they have not sought staff privileges. The statement in Baptists' CON application that the "closed medical staff arrangement at West Florida Regional limits referrals" from Baptist and Sacred Heart is not supported by the evidence. Staff privileges in various categories, including temporary privileges are available to physicians who apply. There was an inference that only doctors affiliated with the hospital's clinics gain privileges at West Florida. From September 1993 to April 1994, over one hundred doctors not affiliated with West Florida's Medical Clinic referred patients to the cath lab at West Florida. West Florida has the capacity to perform from 2500 to 3000 procedures in the two cardiac cath labs and one electrophsiology lab and from 800 to 1000 open heart surgery procedures in its 2 dedicated operating rooms. In 1993, there were 1453 cardiac cath, 387 angioplasties, and 418 open heart surgery procedures at West Florida Regional.

       
       

   17. A resident of the Baptist area and former patient, and a doctor with privileges at Baptist complained that the drive to West Florida takes up to 30 minutes. There is no credible claim of geographic access problems to West Florida, as defined by Rule 59C-1.033(4)(a), Florida Administrative Code, which provides that "[a]dult open heart surgery shall be available within a maximum automobile travel time of 2 hours under average conditions for at least 90 percent of the district's population." Medical risks of transfers do not outweigh the benefits of concentrated expertise in open heart surgery programs. That determination is one basis for AHCA's rule designating open heart surgery services as tertiary services.

       
       

   18. Cardiology Consultants is a group of cardiologists, cardiac surgeons, nurses and support staff which provides services to Baptist and Sacred Heart. The chairman of Cardiology Consultants does not travel to West Florida Regional because it is an inefficient use of his time. Because their patients would have to be transferred to cardiologists other than themselves or others in their group, the cardiologists are reluctant to make referrals from Baptist to West Florida Regional for open heart surgery. The cardiologists and one former patient who testified agreed that Sacred Heart's open heart surgery services provided excellent quality of care.

       
       

   19. By contrast, Baptist's expert, Dr. Luke, claimed that an analysis of severity adjusted mortality rates showed outcomes at Sacred Heart significantly below that statistically expected, and below that experienced at West Florida Regional. That testimony is not reliable due to his lack of an explanation of the methodology involved in the compilation of the report. The analysis was offered to demonstrate that Baptist could capture a larger market share than Sacred Heart. If Dr. Luke's assertions on quality of care are true, the conclusion would suggest that Baptist-based cardiologists refer patients almost

       exclusively to a lower quality facility to avoid referrals to cardiologists outside their group at West Florida. That conclusion is rejected based on the expert's admission of his lack of clinical expertise to render opinions on quality of care.

       
       

   20. One of the reasons advanced for the approval of the Baptist CON is that Baptist and Sacred Heart operate, in effect, a unified, high quality single cardiology program with a shared chief cardiologist, shared on-call cath lab staff, and virtually identical, overlapping medical staffs from the Cardiology Consultants group. Cardiology Consultants maintains offices at both Sacred Heart and Baptist. Because the group staffs both hospitals, Baptist argues that its cardiology program should be viewed in terms of serving a 1000 bed hospital, and the statutory criterion on joint or shared programs would apply. In fact, an agreement for a shared or joint CON application was rejected by Sacred Heart. Baptist, in this case, is seeking to establish a program which competes with that at Sacred Heart.

       
       

       Baptist's Size and Programs

       
       

   21. Baptist cited its size and the breadth of its existing cardiology services as a not normal basis for approval of its open heart surgery program. Baptist is one of only three hospitals in Florida exceeding 500 beds, performing over 1100 cardiac caths without open heart surgery backup. There are also 58 Florida hospitals with cardiac cath services without an open heart surgery program. The Baptist network in District 1 includes two other hospitals of 60 and 55 beds, and affiliations with four of the five hospitals located in Baldwin and Escambia Counties, Alabama. Baptist's actual medical/surgical bed size is 388, as compared to 391 operational and 40 more approved for a total of 431 at Sacred Heart, and 379 at West Florida Regional. All three of the Pensacola hospitals are described by AHCA's witnesses as "large."

       
       

   22. Since the late 1980's, Baptist has followed a long range plan to develop a first floor heart center. The most recent cath lab construction included shelled-in space to relocate the backup lab from the fourth floor to the first floor. The projected cost of moving the lab, as is, is $50,000 to

       $60,000. By comparison to the first floor lab, the fourth floor lab equipment is not state-of-the-art. Upgrading the fourth floor lab is expected to cost

       $400,000.

       
       

   23. Baptist has a large volume cardiology program, with a broad range of services, and claims to treat sicker cardiac patients. In fiscal year 1993, there were 1106 cardiac caths, 146 electrophysiology studies, 118 pacemaker implants, 69 coronary angioplasties, 20 vascular angioplasties, and 28 defibrillator implants. Baptist's claim that it provided services to more severe cardiac cases, based on a computer analysis of unknown variables with inadequately explained data input is not substantiated.

       
       

   24. If open heart surgery services are not approved at Baptist, the cardiology program will not be able to expand to include alternative less invasive techniques which require open heart surgery backup. Without open heart surgery, however, other cardiology services at Baptist have been able to develop and currently contribute approximately $12 million annually to net revenue, with a $6.4 million contribution margin. In the cardiac diagnostic categories, 80 percent of Baptist patients come from Escambia County with an additional 5 percent from Santa Rosa County.

   25. Baptist anticipates having the capacity in its two cardiac cath labs to handle the anticipated increase of 100 to 150 angioplasties, expected to result from the establishment of an open heart surgery program, in its two laboratories which are currently at 65 percent utilization. Utilization is approximately 80 percent in the first floor cath lab, which is used for almost all cardiac caths and angioplasties. The fourth floor cath lab is used exclusively for pacemaker implants and electrophysiology studies, not for cardiac caths or angioplasties. If approved, Baptist can meet the requirement of AHCA rules related to adequate staffing and the availability and quality of its service.

       
       

   26. Angioplasties were performed at Baptist, prior to the requirement for back-up open heart surgery services. However, an exception was given to Baptist in a letter from AHCA's predecessor agency in 1987. Baptist is allowed to have invasive cardiologists perform angioplasties in an emergency or if open heart surgery is not a viable option, as happens for some patients who have had prior open heart surgeries.

       
       

       Proposed CON Conditions

       
       

   27. As a condition for approval of this project, Baptist proposes to set charges, through September 1997, at the lesser of actual charges or 85 percent of the inflated average charges of the two existing providers, but not less than

       50 percent of charges. Initially, Baptist proposed to adhere to the condition for the first three years, from July 1994 to September 1997. Having been delayed due to litigation, Baptist's expert financial witness testified that Baptist would adhere to the condition for three years after approval of the application. Baptist did not agree to adhere permanently to the fixed price structure, although no time limit is set in the AHCA draft of the proposed condition.

       
       

   28. AHCA did not consider the proposed condition a not normal circumstance in this or a prior Baptist application. District 1 already has the lowest average charges statewide for open heart surgery services. Statewide charges are 27 percent higher than the average for Pensacola and 42 percent higher than Sacred Heart's. There will not be an enhancement of financial access as a result of approval of the Baptist CON. In addition, relatively few patients would benefit from the proposed fixed charges. Medicare, Medicaid, and managed care contractual agreements will not be affected by the proposed fixed rate charge structure.

       
       

   29. Baptist also proposed to adhere to a CON condition to monitor and maintain annual minimum volumes of 350 open heart surgeries at Sacred Heart and West Florida. In its CON application, Baptist projects 85 to 100 of its projected 165 open heart surgeries in year one would otherwise have been performed at Sacred Heart. The loss of net income was projected at $1.37 million or 9.6 percent of total net income. Baptist projected 35 surgeries lost to West Florida Regional, and the financial loss of a half a million dollars, or

       6 percent of net income. Baptist's expert, Dr. Luke, noted that at least 925 open heart procedures must be performed in 1997 to allow Sacred Heart and West Florida Regional to maintain the 350 minimum volume of procedures. If there are three open heart surgery providers in Escambia County in 1998, Dr. Luke conceded that one of those programs will not have a minimum volume of 350 open heart surgery procedures a year. Historically, the required volume of open heart surgeries was exceeded only in 1992, and the highest projected volume by Baptist's expert is 1,100 for 1998. See, Findings of Fact 12 and 14. Baptist's

       expert asserted that the surgeons volume is more directly related to quality than the hospital's volume, but the hospital volume requirement is specifically recognized as a factor in Rule 59C-1.033(7)(c).

       
       

   30. To the extent that open heart surgery volumes at an existing provider decline, it is unlikely that Baptist can control decisions which are made based on the convenience of cardiologists and cardiovascular surgeons, increasingly by health maintenance organizations and other insurers, and the preferences of patients or their families. While the proposed 350 minimum condition is intended to avoid adverse effects of the approval, there is no reason to create and then have to alleviate that potential problem absent a showing of need or not normal circumstances. The proposed condition is not, in and of itself, a not normal circumstance.

       
       

       Other Criteria Related To Need Local Health Plan

   31. The 1992 District 1 Allocation Factors Report is the applicable local health plan to the review of Baptist's CON application. However, the 1990 District 1 Allocation Factors were analyzed by Baptist, and therefore, the Baptist application addressed only those preferences common to the two plans.

       
       

   32. Preference one favors an applicant demonstrating cost efficiency, lower project costs, and the least increase in patient charges. Beyond the first three years of the program for very few patients, the fixed rate charge structure will not be effective in keeping patient costs lower. Therefore, Baptist does not meet the preference. The lowest cost expansion of open heart surgery services in the district is the use of the excess capacity at West Florida Regional, with capacity for 800 to 1000 open heart surgeries as compared to the highest district-wide projection of 1,100 open heart surgeries in 1998. See, Finding of Facts 14 and 16.

       
       

   33. The second preference for bed conversions to increase utilization is not applicable to the proposed project.

       
       

   34. Preference three favors converting existing capacity to expand services over new construction. Baptist proposed to dedicate 2 exising rooms for open heart surgery, and to renovate 9,660 square feet, including a 2-bed expansion of the existing 8-bed cardiac care unit (CCU), to relocate a 6-bed eye unit, to expand by 9-beds an existing 18-bed step-down unit, to establish of a 12-bed progressive care unit, and to relocate a cystoscopy room. Total project costs are projected to equal $2,350,000. The Baptist proposal for renovations is preferable to new construction, but cannot be favored due to the alternative of using exising capacity at West Florida Regional.

       
       

   35. Preference four for joint ventures or shared services that mutually increase efficiency as opposed to unilateral CON applications is not given to Baptist. Although the same group of cardiologists presently operates the cardiovascular surgeries as a unified program at both Baptist and Sacred Heart, this application is a unilateral application, not a joint program. It is a duplicative program.

       
       

   36. The fifth preference, for applicants proposing to serve patients regardless of ability to pay, favors the Baptist application.

   37. In response to the sixth preference, for applicants agreeing to provide the greatest percentage of Medicaid and indigent services, Baptist proposes 3.03 percent of cases to be Medicaid patients and 3.03 percent indigent patients for the first year of operation, and 2.44 percent Medicaid and 2.93 percent indigent for the second year, or up to 15 indigents in year one, and 19 in year two of initiating a open heart surgery program. In total operations at Baptist in 1991, Medicaid was approximately 20 percent and charity 3 percent. Sacred Heart which, like Baptist, is a disproportionate share provider, averaged approximately 23 percent Medicaid and 5 percent charity. West Florida provided approximately 4 percent Medicaid and 9 percent charity. Baptist is entitled to partial preference to the extent that its provision of Medicaid exceeds that of West Florida.

       
       

   38. Preference seven, for applicants demonstrating a history of serving the greatest percentage of indigent and Medicaid patients, is met by Baptist. Baptist is a disproportionate share provider of services to Medicaid and charity care. In 1991, Baptist also provided 7.3 percent charity and uncompensated care.

       
       

   39. The eighth preference, for expansion of existing facilities as opposed to the establishment and construction of a freestanding facility, is not applicable to this case.

       
       

   40. Preference nine for applications which increase a facility's weighted occupancy rate, preference ten for a facility with an actual occupancy rate equal to or above the weighted occupancy rate and preference eleven to avoid a decrease in a facility's weighted occupancy rate were not addressed by Baptist, having not been included in the earlier local plan.

       
       

   41. Preference twelve is given to CON applicants who describe the impact on patient case load and the estimated increase in subdistrict case load, but not to applicants who do not supply this information. Baptist met the preference by providing an analysis of the impact on patient case loads at Sacred Heart and West Florida Regional.

       
       

   42. Preference thirteen is given for CON applications that include a five year projected occupancy rate for the applicant facility that is equal to or greater than the rule standard rate for facilities, as specified in the state rule paragraph 59C-1.038(7)(e), currently 75 percent. Baptist did not provide five year projected occupancy rates.

       
       

   43. Preference fourteen, related to pediatric units, is not applicable to Baptist's proposal.

       
       

   44. Preference fifteen, related to eliminating ICU/CCU units of less than

       10 beds, is not applicable to this project.

       
       

   45. Preference sixteen is met by Baptist's plans to establish periodic internal evaluations of staff and equipment performance.

       
       

   46. Baptist committed to meet preference seventeen by providing initial and ongoing training and educational programs for staff members treating or caring for open heart patients, including training staff at an existing high- volume hospital in Orlando.

   47. Preference eighteen is given for the creation and use of data collection systems to monitor and report patient volume, patient origin, charges, safety problems and complications. Baptist agrees to meet preference eighteen by collecting and reporting data for open heart surgery services, as it currently does for all other services.

       
       

   48. Preference nineteen for written referral agreements between facilities in District 1 is not met by Baptist.

       
       

   49. Preference twenty for a plan to record instances of service repetition due to poor results, data, or images, is met. An index of performance currently exists for cardiac cases at Baptist.

       
       

   50. The preference for applicants that demonstrate a history of or willingness to commit to provide health care services to AIDS patients, preference twenty-one, was not addressed by Baptist.

       
       

   51. Preference twenty-two, given to CON applicants that demonstrate they have provided the greatest percentage of the facility's available annual patient days to AIDS patients has not been addressed.

       
       

   52. On balance, Baptist failed to demonstrate compliance with the applicable local health plan, in part by failing to address some of the preferences. Baptist does meet preferences for serving patients regardless of their ability to pay, for its proposal to serve Medicaid and indigent patients, for having done so in the past, for quality assurance, data collection and training programs, and for including an impact analysis.

       
       

       State Health Plan

       
       

   53. The 1989 Florida State Health Plan provides six allocation preferences related to the review of CONs to establish open heart surgery programs.

       
       

   54. The first state plan preference favors applicants establishing new open heart surgery programs in larger counties in which the percentage of elderly is higher than the statewide average and the total population exceeds 100,000. Although the population of Escambia County exceeds 250,000, the preference is not met because the percentage of the population age 65 or over is

       12.24 percent, in contrast to the statewide average of 18.59 percent.

       
       

   55. State plan preference two, for new open heart surgery programs which will reach a volume of 350 adult procedures annually within three years of initiating the program, is not met. Baptist projects that it will perform 165 open heart surgery procedures in the first year of operation and 205 operations in its second year of operation. Baptist did not include a third year projection. With a CON condition that Sacred Heart and West Florida will retain a minimum of 350 procedures, Baptist's expert, Dr. Luke, conceded that Baptist cannot achieve the 350 volume by its third year of operation.

       
       

   56. State preference three, for improved geographic accessibility and reduced travel time for residents leaving the district for open heart surgeries is not met by the Baptist application. Out-migration from District 1 is extremely low, approximately 3 percent, and the geographic access standard is met.

       
       

   57. State plan preference four, for hospitals which meet Medicaid disproportionate share criteria, is met by Baptist.

   58. State preference five which, in general, favors larger more efficient facilities is met by Baptist. Baptist has 388 medical/surgical beds, with $12 million in net revenue annually from its cardiology program. A large hospital is described by AHCA witnesses as one exceeding 350 to 400 beds.

       
       

   59. State health plan preference six, for applicants with protocols for the use of alternative non-surgical therapeutic cardiac procedures, is met by Baptist.

       
       

   60. On balance, Baptist's CON application does not comply with the state health plan. Although it meets the preferences for treating patients regardless of ability to pay, for a disproportionate share provider, and for a large, efficient hospital, and for the types of services proposed, Baptist is not located in an area with demographic characteristics indicative of need, and does not have the ability to attract enough patients from that population to reach sufficient open heart surgery volumes to assure a quality program.

       
       

       AHCA Review of the Baptist CON Application

       
       

   61. Dr. James T. Howell, the AHCA Division Director for Health Policy and Cost Containment, made the decision to approve the Baptist open heart surgery CON, because of Baptist's substantial, active, sophisticated cardiology program, its status as a high disproportionate share provider, its size, and because the results of the numeric need calculation and the formula for determining the reduced volume at existing providers were close to that required by rule. See, Finding of Fact 7.

       
       

   62. In February, 1993, after the numeric need publication and prior to the filing of the application at issue in this case, Dr. Howell, Albert Granger, and Robert Sharpe of AHCA met with the Mayor of Pensacola who is also Senior Vice President of Baptist Health Care and President of Baptist Health Care Foundation, and Baptist's Vice President for Planning who expressed frustration over the denials of its prior open heart surgery CON applications. Baptist submitted CON applications for open heart surgery in 1987, 1989, 1991, 1992, and 1993. Among the issues of concern was the status of Sacred Heart and West Florida Regional as grandfathered providers resulting in their having "a permanent franchise." Baptist representatives expressed concern about their ability ever to secure an open heart surgery program under the current rules.

       
       

   63. After that meeting, the rule amendment process was initiated to allow consideration of data reported up to 3 months, rather than 6 months prior to the publication of the fixed need pool. At the time the Baptist application for CON 7184 was reviewed, the amendment had not been adopted. No other change in the open heart surgery rule has been made subsequent to the review of the prior Baptist CON application.

       
       

   64. When the Baptist application for CON 7184 was filed initially, Laura MacLafferty was assigned as AHCA's primary reviewer. The state agency action report ("SAAR") represents her factual analysis of the application, although she did not and, routinely, does not make recommendations to issue or deny CONs.

       
       

   65. Ms. MacLafferty and her supervisor, Alberta Granger, are not aware of any AHCA non-rule policy to determine if a calculation of minimum volume is "close" enough to the 350 standard of the rule, nor any agency guidelines to determine when a hospital is "large" or "operates a large cardiology program" which should include open heart surgery.

   66. Subsequent to reviewing the Baptist application, in December 1993, Ms. MacLafferty reviewed another open heart surgery application from District 1, filed on behalf of Fort Walton Beach Medical Center.

       
       

   67. In her review of both the Baptist and Fort Walton applications, Ms. MacLafferty found no documentation that patients in District 1 experienced problems with access to open heart surgery services.

       
       

   68. Ms. MacLafferty submitted the draft SAAR to a supervisor, Alberta Granger. The draft SAAR was retrieved from her desk, prior to Ms. Granger's reviewing it. It was removed by Elizabeth Dudek, who heads AHCA's CON and health care board sections. Ms. Granger did not review the SAAR, which was prepared by Ms. MacLafferty. The final draft was returned to Ms. Granger for her to sign on July 7, 1993. This was the only time since Ms. Granger became supervisor in the CON office, that she has not reviewed and discussed with Ms. Dudek SAARs prepared by her staff. Ms. Granger had been the primary reviewer of Baptist's 1989 CON application.

       
       

   69. Ms. Granger and her supervisor, Ms. Dudek, are aware that in this case and in one or more of its prior CON open heart surgery applications, Baptist argued that its size, scope of cardiology services, and proposed fixed rate structure were reasons to approve its proposal. Ms. Granger stated, and Ms. Dudek confirmed, that the usual procedure was not followed in the review of this and one other application in this batching cycle. In this batching cycle, Dr. Howell requested that Mr. Sharpe, head of AHCA's planning section, also review those two open heart surgery applications.

       
       

   70. Ms. Dudek recalls, that prior to 1987, there were two batches of approximately 12 total applications in which agency personnel other than the CON staff was involved in the review of CON applications.

       
       

   71. In making his decision on the Baptist application, Dr. Howell consulted Ms. Dudek and Mr. Sharpe. Ms. Dudek, who heads the CON and health care board section, was not initially in favor of the approval of the Baptist application. Mr. Sharpe, head of the planning section, prepared a 9 page analysis of the pros and cons of the Baptist proposal.

       
       

   72. The Sharpe analysis demonstrates that an increase of 9 additional open heart surgeries during the 12 month reporting period, and the use of the more current data under the pending rule revision would have resulted in the need for one additional open heart surgery program in District 1. The memorandum also demonstrated that a lower future volume of open heart surgeries is projected by using the actual use rate, as required by Rule 59C-1.033(7)(6)2, rather than a trended use rate. If these adjustments to the data are made to achieve numeric need, then Baptist's application could be approved without a showing of not normal circumstances.

       
       

   73. The memorandum also reported the October 1991-September 1992 volumes of cardiac cath admissions at Baptist as 2,677, at Sacred Heart as 2053, and at HCA West Florida as 1,915, with the conclusion that Baptist "had the largest number of cardiac catheterization admissions of the three hospitals." The evidence in this proceeding is that the memorandum was in error. Actual volumes for October 1991-September 1992 were 912 at Baptist, not 2677.

   74. Dr. Howell found Baptist's proposal consistent with health care reform trends towards eliminating the need for CON regulation by enhancing market competitive forces, as a part of Florida's managed competition model, as explained in the Sharpe analysis. Similarly, Dr. Luke described the 1980's use of the CON process to control costs by limiting duplication and the rejection of institution specific planning as outdated. Dr. Luke also favors a model of competition for cost controls. At this time, however, these positions have not been adopted in Florida Statutes and rules. The 1994 Florida Health Security Plan, however, recommends the continuation of CON review of all tertiary services, including open heart surgery. That plan was submitted as a part of AHCA's 1994 legislative proposals.

       
       

   75. Ms. Dudek described traditional "not normal" circumstances as issues related to financial, geographic, or programmatic access to the proposed service by potential patients, and not facility specific concerns. Facility specific concerns, in this case, include Baptist's attempt to retain cardiologists who wish to perform procedures not approved at Baptist and to improve its position to compete for managed care contracts.

       
       

   76. Baptist has failed to show not normal circumstances for the departure from the open heart surgery rule, statutes and prior complications of the criteria to the review of CON applications.

       
       

   77. Baptist has also failed to demonstrate that the facts of this case justify a departure from the guidelines set by rule for the need methodology, use rate and population projections, and the minimum volumes at existing providers.

       
       

       CONCLUSIONS OF LAW

       
       

   78. The Division of Administrative Hearings has jurisdiction over the subject matter and parties to this proceeding, pursuant to Subsections 120.57(1) and 408.039(5), Florida Statutes.

       
       

   79. Baptist, as the applicant, has the burden of establishing its entitlement to a CON to establish and adult open heart surgery program. Boca Raton Artificial Kidney Center, Inc. v. HRS, 475 So.2d 260 (Fla. 1st DCA 1985).

       
       

   80. In this case, due to the absence of a published finding of numeric need by AHCA, using the methodology established in Rule 59C-1.033(7))(b), Florida Administrative Code, Baptist is required to demonstrate not normal circumstances for the approval of its CON application. The applicable criteria must be balanced with regard to the specific facts of this case to determine not normal circumstances resulting in a need for the proposed open heart surgery program at Baptist. Balsam v. HRS, 486 So.2d 1341 (Fla. 1st DCA 1986).

   81. Open heart surgery is a tertiary service, defined as follows: "Tertiary health service" means a health service

       which, due to its high level of intensity, complex-

       ity, specialized or limited applicability, and cost,

       should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost-effectiveness of such service.

       . . .

       
       

       Section 408.032(19), Florida Statutes (1993). As authorized by the statute, AHCA has included open heart surgery in the list of tertiary services in Rule 59C-1.002(66).

       
       

   82. There are no demographic characteristics of District 1 to demonstrate not normal circumstances, such as population growth, percentage of persons over

       65 in age, mal-distribution within the district, or geographic barriers. In fact, approval of Baptist's application could aggravate rather than correct any mal-distribution or geographic access problems. See, Finding of Fact 11.

       
       

   83. The fact that the existing provider, with the higher critical care utilization, is preferred by Baptist's cardiologists for reasons unrelated to any criteria in CON statues, rules, or orders is not a not normal circumstance. See, 9 FALR 3159.

       
       

   84. The scope, size and development of the cardiology program at Baptist are not unlike that described in St. Anthony's Hospital v. HRS, etc., 11 FALR 2193 (DOAH Case No. 88-0637 (F.O. 3/31/89), as follows:

       
       

       1. . . . It also provides cardiology services including cardiac catheterization. It has a historic commitment to cardiology services, establishing a cardiac catheterization lab in 1961, a coronary care unit in 1968, and a holter monitor service in 1973. In 1975, it established the community's first echocardiography laboratory, and as early as 1965, seriously considered estab- lishing an open heart surgery program at the

          facility. This program was not, however, developed at the time.

          
          

       2. St. Anthony's continued its involvement in the area of cardiography and its program covers a full array of diagnostic services including echocardiography, nuclear cardiography, and basic electrocardiography, and possesses a magnetic resonance imaging unit which can be used in the diagnosis of heart problems. Additionally, it

          has a well equipped vascular laboratory and peri- pheral vascular disease program as well as a cardiac rehabilitation program and a wellness center that is aimed at early identification

          and prevention.

          
          

       3. St. Anthony's is also the site of the Rogers Heart Foundation, a nonprofit, privately funded foundation established in the late 1950's to

          perform research, education, and clinical diagnostic studies in the field of cardiovascular diseases.

          As a result of the activities of the foundation,

          St. Anthony's is well known by physicians in the area as a center for cardiac training and expertise,

          and until recently, was a participant with Emory University in that institution's cardiac fellowship training program.

          
          

   85. Similarly, the concerns expressed for the future of the cardiology program at the St. Anthony's, were similar to those expressed by Baptist:

       
       

       St. Anthony's cannot fully implement a cardiac catheterization program by adding angioplasty without the concomitant open heart surgery capability required for the full operation of angioplasty and its related programs. Without open heart surgery, . . . it's ability to provide

       a full array of non-open heart cardiac catherization [laboratory] services is constrained.

       
       

   86. Nevertheless, in the absence of numeric need, the Hearing Officer concluded there were no "not normal" circumstances to justify approval of an open heart surgery program. St. Anthony's, supra, at 2220. The institution- specific factors raised by Baptist in this case are also not circumstances which justify approval of a program which is not needed.

       
       

   87. Baptist's proposed fixed rate charge structure, under the factual circumstances of this case, is not a not normal circumstance. See, Finding of Fact 27 and 28.

       
       

   88. The proposed condition to monitor and maintain 350 minimum annual open heart surgeries at the existing providers is not, in and of itself, a not normal circumstance. Unless there is some not normal circumstance for the approval of Baptist's proposal, the condition is unnecessary. See, Finding of Fact 30.

       
       

   89. Baptist has not demonstrated not normal circumstances by failing to show that District One residents do not have geographic, programmatic or financial access to open heart surgery services.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying the application of

Baptist Hospital of Pensacola for certificate of need number 7184 to establish an adult open heart surgery program in Agency for Health Care Administration District 1.

DONE AND ENTERED this 18th day of November, 1994, in Tallahassee, Leon County, Florida.

ELEANOR M. HUNTER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 1994.

APPENDIX

To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact:

Sacred Heart Hospital of Pensacola's Proposed Findings of Fact.

1-11. Accepted in or subordinate to Finding of Fact 3. 12-14. Accepted in or subordinate to Finding of Fact 15.

1. Accepted in or subordinate to Finding of Fact 4.

2. Accepted in Finding of Fact 16.

3. Accepted in Finding of Fact 2.

4. Accepted in Findings of Fact 2, 3 and 4.

5. Accepted in Finding of Fact 5.

6. Accepted in Finding of Fact 3.

7. Accepted in Findings of Fact 3 and 4.

8. Accepted in Finding of Fact 5.

9. Accepted in Findings of Fact 3 and 4.

10. Accepted in Finding of Fact 24.

11. Accepted in Finding of Fact 18.

12. Issue not reached.

27-28. Accepted in Findings of Fact 11 and 12.

1. Accepted first two sentences in Findings of Fact 15 and 16. Remainder issue not reached.

2. Accepted.

3. Accepted.

32-35. Accepted in Findings of Fact 11 - 16.

36. Accepted in Findings of Fact 6 and 7.

37-38. Subordinate to Finding of Fact 6 and 7.

39. Accepted in Finding of Fact 60.

40-46. Accepted in or subordinate to Finding of Fact 15. 47-49. Accepted in or subordinate to Finding of Fact 16. 50-53. Accepted in or subordinate to Finding of Fact 26.

54-64. Accepted in or subordinate to Findings of Fact 3 and 15. 65-70. Accepted in or subordinate to Findings of Fact 12 and 15.

71. Issue not reached.

72-78. Accepted in or subordinate to Findings of Fact 4, 12, and 16. 79-88. Accepted in or subordinate to Findings of Fact 18-20.

89-95. Accepted in Finding of Fact 15.

96. Accepted in Finding of Fact 20.

97-101. Accepted in or subordinate to Finding of Fact 15.

1. Subordinate to Findings of Fact 4 and 16.

2. Accepted in or subordinate to Findings of Fact 4 and 16.

3. Accepted in Finding of Fact 3.

105-110. Accepted in or subordinate to Findings of Fact 21-30 and 75.

1. Accepted in Finding of Fact 12.

2. Accepted in Findings of Fact 3-5 and 17.

113-121. Accepted in or subordinate to Finding of Fact 29 and 30. 122-126. Accepted in or subordinate to Finding of Fact 27.

127-135. Issue not reached.

136-138. Accepted in or subordinate to Findings of Fact 9 and 10. 139-141. Accepted in general in Findings of Fact 74 - 77.

142-149. Accepted in or subordinate to Findings of Fact 29 and 30.

West Florida's Proposed Findings of Fact.

1. Accepted in Findings of Fact 3 and 4.

2. Accepted in Findings of Fact 1 and 6.

3-13. Accepted in or subordinate to Findings of Fact 61-76.

14-15. Accepted in or subordinate to Findings of Fact 1 and 68.

16. Accepted in or subordinate to Findings of Fact 64-68 and 75. 17-21. Accepted in Findings of Fact 6-7.

22-24. Accepted in or subordinate to Finding of Fact 17.

25. Accepted in Findings of Fact 2 and 11. 26-27. Accepted in Findings of Fact 3 and 4.

28. Subordinate to Finding of Fact 3 and 4. 29-30. Accepted in Finding of Fact 17.

31-32. Accepted in Finding of Fact 11.

33. Accepted in Findings of Fact 15 and 16.

34-36. Subordinate to Findings of Fact 11 and 12.

37-45. Accepted in or subordinate to Findings of Fact 4 and 16. 46-55. Accepted in or subordinate to Findings of Fact 11-14.

56-79. Accepted in or subordinate to Finding of Fact 14, 29, 30 and 55.

80-83. Accepted in Findings of Fact 68, 75 and 77.

84. Accepted in Findings of Fact 29 and 30.

85-87. Accepted in Findings of Fact 27 and 28.

88. Accepted in Findings of Fact 17-19.

89-90. Accepted in Findings of Fact 21-24. 91-92. Accepted in Finding of Fact 15.

93-97. Accepted in Finding of Fact 16.

98-100. Accepted in or subordinate to Findings of Fact 61, 63, 71-74 and

77.

101. Accepted in Findings of Fact 27-28.

102-105. Accepted in Findings of Fact 9 and 10.

1. Accepted in or subordinate to Finding of Fact 11.

2. Accepted in Finding of Fact 75.

3. Accepted in Findings of Fact 23-24.

Baptist Hospital, Inc.'s and AHCA's Proposed Findings of Fact.

1. Accepted.

2. Accepted in Finding of Fact 1.

3. Accepted in Finding of Fact 6.

4. Accepted in Finding of Fact 12.

5. Accepted in Finding of Fact 7.

6. Accepted in Finding of Fact 72.

7. Accepted in Finding of Fact 8.

8. Accepted in Finding of Fact 2.

9-11. Accepted in Finding of Fact 21.

1. Accepted in Findings of Fact 2, 51 and 60.

2. Accepted in Finding of Fact 24.

14-16. Accepted in Finding of Fact 34.

1. Accepted in Finding of Fact 3.

2. Accepted in Finding of Fact 4.

19-24. Accepted in Findings of Fact 21-23.

25-30. Accepted in or subordinate to Finding of Fact 26.

31-37. Accepted in or subordinate to Findings of Fact 21-26.

38. Rejected in Finding of Fact 23.

39-53(a-g) Accepted in or subordinate to Findings of Fact 18-24.

54. Rejected in Finding of Fact 20.

55-58. Accepted in Finding of Fact 15.

1. Rejected in Finding of Fact 15.

2. Accepted in Finding of Fact 15.

3. Accepted in Finding of Fact 26.

4. Accepted in Finding of Fact 15.

63-66. Rejected conclusions in Finding of Fact 15.

1. Accepted in or subordinate to Finding of Fact 15.

2. Rejected conclusions in Finding of Fact 15.

69-78. Accepted in or subordinate to Finding of Fact 15. 79-81. Rejected in or subordinate to Finding of Fact 17.

82-84. Rejected in or subordinate to conclusion in Finding of Fact 17.

85. Subordinate to Finding of Fact 15.

86-87. Accepted in or subordinate to Findings of Fact 13 and 21. 88-90. Accepted in or subordinate to Finding of Fact 18.

91-94. Rejected in Finding of Fact 15.

95-97. Accepted in or subordinate to Finding of Fact 15.

98-121. Issues not reached or rejected in Findings of Fact 74-77 except that the reference to a shared cardiology program should be understood to mean unified operation of programs under one group of cardiologists serving two hospitals, not "joint, cooperative or shared," as AHCA has previously defined those terms in construing subsection 408.035(1)(e), Florida Statutes.

1. Accepted in or subordinate to Finding of Fact 4.

2. Accepted in Finding of Fact 4.

124-132. Issue not reached or rejected in Findings of Fact 74-77 except that the reference to a shared cardiology program should be understood to mean unified operation of programs under one group of cardiologists serving two hospitals, not "joint, cooperative or shared," as AHCA has previously defined those terms in construing subsection 408.035(1)(e), Florida Statutes.

133-134. Accepted in Findings of Fact 15-18.

135. Accepted in Finding of Fact 75.

136-138. Conclusion not support by testimony cited.

139-145. Accepted in Findings of Fact 2, 36, 37, 38 and 57.

146-152. Accepted in or subordinate to Findings of Fact 1, 29 and 30. 153-165(a-c) Rejected conclusions that highest projections of growth in

open heart surgery is reasonable in District 1 in Findings of Fact 11-16.

165(d) Rejected as insignificant number in Finding of Fact 12. 165(e-g) Rejected in Finding of Fact 19.

165(h) Accepted in Findings of Fact 9-10.

1. Rejected in Finding of Fact 29.

2. Accepted as shared is defined in Finding of Fact 20. 168-172. Rejected in Findings of Fact 29-30.

173-177. Rejected conclusions in Findings of Fact 29-30. 178-181. Rejected in Findings of Fact 4, 16, 17 and 18.

182-186. Accepted in 1 as explained in Findings of Fact 27 and 28.

1. Rejected in part in Finding of Fact 52 and accepted in part in Findings of Fact 60.

2. Rejected as most relevant in Findings of Fact 60. 189-199. Accepted in Finding of Fact 25.

200-201. Issue not reached.

COPIES FURNISHED:

William Wiley, Esquire Darrell White, Esquire Charles A. Stampelos, Esquire

McFarlain, Wiley, Cassedy & Jones 600 First Florida Bank Building

215 South Monroe Street Tallahassee, Florida 32301

John Radey, Esquire Jeffrey Frehn, Esquire

Aurell, Radey, Hinkle, Thomas & Baranek

101 North Monroe Street, Suite 1000 Post Office Drawer 11307 Tallahassee, Florida 32302

Michael J. Cherniga, Esquire Greenberg, Traurig, Hoffman Post Office Drawer 1838 Tallahassee, Florida 32302

W. Dexter Douglass, Esquire John A. Rudolph, Jr., Esquire Douglass & Powell

Post Office Box 1674 Tallahassee, Florida 32302

Richard Patterson, Esquire

Agency for Health Care Administration

325 John Knox Road Tallahassee, Florida 32303

R. S. Power, Agency Clerk

Agency for Health Care Administration Atrium Building, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Harold D. Lewis, Esquire The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this recommended order. All agencies allow each party at least ten days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 93-004886CON

Orders for Case No: 93-004886CON