STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
HALIFAX HOSPITAL MEDICAL CENTER ) d/b/a HALIFAX MEDICAL CENTER, )
)
Petitioner, )
)
vs. ) CASE NO. 95-0742
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION, )
)
Respondent, )
and )
) MEMORIAL HEALTH SYSTEMS, INC., ) d/b/a MEMORIAL HOSPITAL-ORMOND ) BEACH, )
)
Intervenor. )
)
RECOMMENDED ORDER
Pursuant to notice, a formal administrative hearing was held in this case before Patricia Hart Malono, Hearing Officer of the Division of Administrative Hearings, on May 2-5, 8-11, and 25-26, 1995, in Tallahassee, Florida.
APPEARANCES
The parties were represented at hearing as follows: For Petitioner: Robert A. Weiss, Esquire
Parker, Hudson, Rainer and Dobbs, P.A. The Perkins House
118 North Gadsden Street, Suite 200 Tallahassee, Florida 32301
Armando L. Basarrate, Esquire
Parker, Hudson, Rainer and Dobbs, P.A. 1500 Marquis Two Tower
285 Peachtree Center Avenue Northeast Atlanta, Georgia 30303
For Respondent: Richard Patterson, Esquire
Agency for Health Care Administration
325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131
For Intervenor: William B. Wiley, Esquire
Darrell White, Esquire
McFarlain, Wiley, Cassedy and Jones, P.A.
215 South Monroe Street, Suite 600 Tallahassee, Florida 32301
STATEMENT OF THE ISSUE
The issue presented is whether the Agency for Health Care Administration should approve or deny Halifax Hospital Medical Center's Certificate of Need Application, Number 7851, to provide adult open heart surgery services in District IV.
PRELIMINARY STATEMENT
On September 21, 1994, Halifax Hospital Medical Center d/b/a Halifax Medical Center (Halifax) filed an application for a Certificate of Need (CON) to establish an adult open heart surgery (OHS) program in District IV. On January 9, 1995, the Agency for Health Care Administration (Agency) notified Halifax of its intent to deny the application. Halifax timely filed its request for a formal hearing, and the case was referred to the Division of Administrative Hearings for assignment of a hearing officer. On February 28, 1995, Memorial Health Systems, Inc., d/b/a Memorial Hospital-Ormond Beach (Memorial-Ormond) filed a Petition to Intervene, which was granted in an order entered March 10, 1995.
At hearing, Halifax offered the testimony of the following witnesses: William J. Griffin, accepted as an expert in health care administration; Donald John Stoner, accepted as an expert in cardiology; James Douglas Wuamett, accepted as an expert in cardiovascular surgery; Sharon L. Brooks, accepted as an expert in intensive and critical care nursing and administration; Joseph Hatch, accepted as an expert in health care construction; Lizzie Mae Flynt, manager of Halifax's Community Health Outreach Program; Joe Nathan Lee, accepted as an expert in open heart surgical nursing and administration; Darlene Schleider, accepted as an expert in post-surgical open heart nursing and administration; Beverly Gabriel, a registered nurse who formerly worked in the OHS operating room at Memorial-Ormond; Robert Howard Meek, accepted as an expert in emergency medicine and the administration of emergency departments; Kim A. Klancke, accepted as an expert in cardiology; James B. Talano, accepted as an expert in cardiology and health policy; Richard Branoff, accepted as an expert in family practice medicine and family practice medicine graduate education; Christine Crosby, a registered nurse who formerly worked in the cardiovascular intensive care unit at Memorial-Ormond; Edward Simpson, accepted as an expert in managed health care; Gary W. Clifton, planning coordinator for Halifax; Judith
Horowitz, accepted as an expert in health care finance; and Margo Kelly, accepted as an expert in health care planning. Halifax Exhibits 1 through 21 were offered and received into evidence. Also offered and received into evidence was the deposition testimony of Michael C. Carroll, a witness who testified at hearing on behalf of Memorial-Ormond and who was accepted as an expert in health care planning, hospital strategic planning, and planning and development of integrated delivery systems (Halifax Exhibit 18) and of Clark P. Christianson, senior vice-president and administrator of Memorial- Ormond and Memorial Hospital-Flagler (Memorial-Flagler) (Halifax Exhibit 21).
The agency offered the testimony of Elizabeth Dudek, accepted as an expert in health care planning and Florida certificate of need administration. Agency Exhibits 1 and 2 were offered and received into evidence.
Memorial-Ormond offered the testimony of Richard Lind, accepted as an expert in hospital administration; James Carley, accepted as an expert in cardiology; Johnette Vodnicker, accepted as an expert in hospital and nursing administration; Jerry Alan Dabkowski, accepted as an expert in transportation engineering; Gail Ann Stillings, accepted as an expert in surgical nursing; Joanne Gaudio Shaw, accepted as an expert in critical care nursing; Michael C. Carroll, accepted as an expert in health care planning, hospital strategic planning, and planning and development of integrated delivery systems; James F. Baxa, accepted as an expert in hospital facility planning; Patricia Ezell, accepted as an expert in health care accounting and financing; and William B. Stason, accepted as an expert in cardiology, health care policy and research, and health care economics. Memorial-Ormond Exhibits 1 through 42, and 44 through 48 were offered and received into evidence. Official recognition was taken of the document offered as Memorial Exhibit 43, which is the Recommended Order and Order Closing File in the consolidated cases of West Florida Regional Medical Center v. State, Agency for Health Care Administration and Sacred Heart Hospital and Sacred Heart Hospital v. State, Agency for Health Care Administration and Baptist Hospital, Inc., DOAH Case Numbers 93-4886 and 93-4887 (April 18, 1995).
Also offered and received into evidence was the deposition testimony of Randall Lee Hafner, the chief operating officer of Volusia Medical Center (Memorial Exhibit 36); Lyle E. Wadsworth, an internist who practices in western Volusia County (Memorial Exhibit 37); Joseph B. De Peyster, an internist who practices in western Volusia County (Memorial Exhibit 38); William E. Sherman, an attorney who formerly represented the West Volusia Hospital Authority (Memorial Exhibit 39); James Douglas Wuamett, a witness who testified at hearing on behalf of Halifax and who was accepted as an expert in cardiovascular surgery (Memorial Exhibit 40); Kim A. Klancke, a witness who testified at hearing on behalf of Halifax and who was accepted as an expert in cardiology (Memorial Exhibit 41); James B. Talano, a witness who testified at hearing on behalf of Halifax and who was accepted as an expert in cardiology and health policy (Memorial Exhibit 42); Martin S. Feigenbaum, an internist who practices in Ormond Beach (Memorial Exhibit 44); Jeffrey Tait, supervisor of the cardiac catheterization and radiology special procedures laboratories at Memorial-Ormond (Memorial Exhibit 46); Sharon Lynn Brooks, who testified at hearing on behalf of Halifax and who was accepted as an expert in intensive and critical care nursing and administration (Memorial Exhibit 47); Darlene Schleider, who testified at hearing on behalf of Halifax and who was accepted as an expert in post-surgical open heart nursing and administration (Memorial Exhibit 48); Rick D. Mace, accepted as an expert in the administration of cardiology services, including adult OHS and cardiac catheterization programs (Memorial Exhibit 49, videotape and transcript); and David Henderson, a cardiologist who practices in Ormond Beach and Daytona Beach (Memorial Exhibit 50, videotape and transcript).
Joint Exhibits 1 through 5 were offered and received into evidence; included as Joint Exhibit 2 was the deposition testimony of John Walker, accepted as an expert in cardiology. In addition to the Recommended Order and Order Closing File in DOAH Case Numbers 93-4886 and 93-4887 referenced above, official recognition was taken of rule 59C-1.032, Florida Administrative Code, entitled Cardiac Catheterization and Angioplasty Institutional Health Services, and of a composite exhibit consisting of notices contained in the Florida Administrative Weekly and letters evidencing the Agency's determinations of non- reviewability for certain projects undertaken by Halifax. Finally, the parties stipulated to a number of facts which will be incorporated in this recommended order as appropriate.
The transcript of the hearing was filed with the Division, and the parties timely submitted proposed recommended orders. Specific rulings on the parties' proposed findings of fact can be found in the Appendix to this Recommended Order.
FINDINGS OF FACT
Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made:
The parties stipulated that this proceeding is governed by sections 408.031-.045 and chapter 120, Florida Statutes, and by rule chapter 59C-1, Florida Administrative Code. The specific statute and rule at issue in this proceeding are section 408.035(1) and (2) and rule 59C-1.033.
On August 5, 1994, the Agency published in the Florida Administrative Weekly a fixed need pool of zero for adult OHS programs in District IV for the January, 1997, planning horizon. District IV is composed of Baker, Clay, Duval, Flagler, Nassau, St. Johns, and Volusia counties. Halifax has not challenged the validity of the Agency's fixed need determination.
On August 17, 1994, Halifax filed a letter of intent to file an application for a CON to establish an adult OHS program in District IV, together with a resolution of its Board of Commissioners. The parties have stipulated that the letter of intent and the resolution were timely filed and complete, meeting all of the requirements of section 408.039(2)(c) and rule 59C- 1.008(1)(a)-(f). The parties have also stipulated that the notice of filing the letter of intent was published as required by section 408.039(2)(d) and rule
59C-1.008(1)(i).
Halifax timely supplemented its application with additional information requested by the Agency. The application was deemed complete on November 14, 1994. The parties stipulated that the application contains all of the information and documentation required by section 408.037.
Halifax proposes to develop an adult OHS program consisting of two new, fully equipped, state-of-the-art operating rooms dedicated to adult OHS and angioplasty backup. 1/ The operating rooms would be located close to the existing cardiac catheterization laboratory and within easy access of a newly renovated, six-bed cardiovascular intensive care unit (CVICU).
Because the Agency had determined that there was no need for an additional adult OHS program in District IV for the January, 1997, planning horizon, Halifax asserted in its application that compelling circumstances exist which would estabish the need for the proposed program and justify the Agency's approving its application for the requested Certificate of Need.
Parties
Respondent
The Agency for Health Care Administration is the state agency responsible for the administration of the Certificate of Need program in Florida pursuant to section 408.034, Florida Statutes.
Intervenor/existing provider
Memorial Health Systems is the legal name for the corporation which does business as Memorial Hospital-Ormond Beach, a not-for-profit system which operates three acute care hospitals in Volusia and Flagler counties, the southernmost counties in District IV.
Memorial-Ormond, the largest of these hospitals, is a 205-bed acute care hospital located in Ormond Beach, a moderately affluent residential community located in the northeastern portion of Volusia County. The hospital has been operating for more than 27 years and is one of six providers of adult OHS services in District IV. Memorial-Ormond's primary service area 2/ for general medical/surgical services is north Volusia and Flagler counties, and its primary service area for adult OHS services is all of Volusia and Flagler counties.
Memorial-Ormond has approximately 200 physicians on its medical staff, representing most specialties. It offers a full array of medical, diagnostic, and rehabilitation services, and it operates an active emergency room. Its surgical specialties include orthopedics, neurology, oncology, and general thoracic surgery. Memorial-Ormond's most significant area of service, however, is its cardiovascular program, particularly its OHS program. It is the only OHS program in District IV south of Jacksonville and is a very profitable program for the hospital, accounting for a significant portion of its total revenue.
Memorial-Ormond's mission has historically been to serve the residents of its primary service area as a community hospital, offering efficient, quality health care, educating the community, and providing state-of-the-art services and technology. This mission is undergoing a major reassessment, and the "vision" which is emerging is directed to making Memorial-Ormond as attractive as possible to third-party payors in the growing managed care environment. Accordingly, Memorial-Ormond is broadening its base of services and dedicating its resources to developing an integrated health delivery system 3/ in its primary service area.
Memorial-Ormond has recently constructed a 28,000 square foot addition to house its new women's and obstetrics center; this center includes 10 labor, delivery, postpartum, recovery (LDRP) suites and three rooms for general gynecological medical/surgical patients. Memorial-Ormond has also received a Certificate of Need to renovate a portion of the second floor of the hospital to house a 17-bed distinct unit skilled nursing facility.
Memorial-Ormond recently occupied a new, 60,000 square foot medical office building attached to the hospital. This contains a radiation therapy center; outpatient radiography facilities, including a mammography suite; a sports rehabilitation center; a self-contained, three-room outpatient ambulatory surgical facility; and medical, oncology, and diabetes offices. Outpatient services currently account for approximately 30 percent of Memorial-Ormond's total revenue.
Memorial-Ormond and Florida Hospital have jointly developed a radiation oncology program at the Ormond Beach campus, which operates as a unit of Memorial-Ormond. Florida Hospital is a 25 percent equity participant in this program, and Memorial- Ormond operates the program under a management contract with Florida Hospital.
In 1989, Memorial-Ormond acquired Memorial Hospital- Flagler (Memorial-Flagler), an 81-bed facility located in Bunnell, the county seat of Flagler County. Bunnell is located in central Flagler County, which is located immediately north of Volusia County and has a population of approximately
35,000. Memorial-Flagler is Flagler County's only acute care hospital. It is a designated rural hospital and a member of the St. Johns Rural Health Network, which is a group of hospitals and other providers in Flagler, Volusia, St.
Johns, and Clay counties providing health care services for persons living in the rural areas of those counties. Ownership of Memorial-Flagler has facilitated referrals and admissions to Memorial-Ormond's Ormond Beach facilities. Memorial-Ormond is planning to build an entirely new replacement hospital for Memorial-Flagler on a 100-acre tract it has purchased for this purpose.
In December, 1994, Memorial-Ormond entered into a 40-year lease to operate the 156-bed West Volusia Memorial Hospital, which is owned by the West Volusia Hospital Authority, a special taxing authority, and is located in Deland, about 30 miles southwest of Memorial-Ormond. The hospital operates as a not-for-profit corporation under the new name of Memorial Hospital-West Volusia, Inc. (Memorial-West Volusia). Memorial-Ormond has full responsibility for operating Memorial-West Volusia, and it has committed approximately $22 million of its cash reserves to fund a portion of the cost of renovating and expanding the facility. Memorial-West Volusia receives funding to provide care to charity patients residing in the special taxing district, as well as an operating subsidy payable over four years. Memorial-West Volusia operates an outreach indigent care clinic in DeLeon Springs, an agricultural community located to the north of Deland.
Memorial-Ormond has acquired the practices of 14 or 15 physicians and physician groups in Ormond Beach and Palm Coast, which is located in eastern Flagler County; it is also negotiating with several physicians in western Volusia County to acquire their practices and, thereby, to expand its presence in that area.
Memorial-Ormond, Memorial-Flagler, and Memorial-West Volusia are accredited by the Joint Commission for Accreditation of Healthcare Organizations (JCAHO).
Applicant
Halifax Hospital Medical Center is a major, public acute care hospital located in Daytona Beach, the approximate center of the most heavily populated area in Volusia County; it is located approximately 8 miles south of Ormond Beach, a 15 to 25-minute drive by automobile. Its primary service area for general medical/surgical services is Volusia County, and its proposed primary service area for OHS services is Volusia and Flagler counties.
Halifax has 595 licensed beds. In addition to its 336 general medical/surgical beds, Halifax has 59 monitored beds in its intensive care unit (ICU) and coronary care unit (CCU) and 30 monitored telemetry beds, as well as beds designated for obstetrics, pediatrics, neonatal intensive care, subacute skilled nursing, and psychiatric patients.
There are approximately 400 physicians on staff at Halifax, representing all specialties and subspecialties, and a full range of diagnostic and treatment services are provided, including cardiology, oncology,
neurosurgery, plastic surgery, vascular and thoracic surgery, orthopedic surgery, and special imaging nuclear medicine.
Halifax is authorized to provide Level II neonatal services, and it is a state-certified Level II trauma center. Its emergency room handled approximately 73,000 visits in 1994, making it one of the highest volume emergency rooms in the state.
Halifax has recently received Certificates of Need for a bone marrow transplant program, a 28-bed subacute, skilled nursing facility and a $25 million facility expansion project. Part of the facility expansion involves new construction which will increase the number of operating rooms from 12 to 14 and, in essence, create an entirely new surgical department.
Halifax has historically placed special emphasis on the development of its regional oncology center. The center provides a full range of inpatient and outpatient services, including radiation therapy and chemotherapy. The center operates satellite offices in New Smyrna Beach and Ormond Beach.
Halifax is a disproportionate share provider of health care services to Medicaid patients. It is also the predominant provider of health care services to self-pay and charity patients 4/ in Volusia and Flagler counties. Created in 1925 as a public, special taxing district hospital, 5/ Halifax is reimbursed for a portion of the services it provides to charity patients who are residents of its taxing district; a portion of this money is used to reimburse physicians who provide care to these charity patients through Halifax's programs. In addition, almost half of the patient visits to the Family Practice Center are Medicaid or self-pay patients.
Halifax provides care to residents of its primary service area through several facilities and programs. It operates Halifax Medical Center-Port Orange, located in western Volusia County about 10 miles southwest of the Daytona Beach campus. The Port Orange facility is a full-service ambulatory care facility and offers urgent care and ambulatory surgery, among other services. In 1994, Halifax affiliated with the Bert Fish Medical Center in New Smyrna Beach, a 100-bed hospital located about 13 miles south of Daytona Beach. In addition to cardiac and pulmonary rehabilitation programs, this affiliation has allowed Halifax to provide outpatient chemotherapy to cancer patients residing in the southeastern part of Volusia County.
Halifax is part of a multi-level health system which includes a home health care agency and a hospice. It has developed a preferred provider organization (PPO), known as the Volusia Health Network, for the purpose of coordinating hospitals and physicians in developing services and negotiating managed care contracts with third-party payors. In 1994, Halifax acquired the Florida Health Care Plan, a health maintenance organization (HMO) serving approximately 46,000 members in Volusia and Flagler counties; it operates as a "staff model," which means that it employs its own physicians rather than contracting with physicians to provide services in their private offices. Also in 1994, Halifax opened the Associates of Medicine, an entity which employs primary care physicians, as part of its health care delivery system.
Halifax also established the Halifax Community Health Outreach Program in 1993 as part of its efforts to expand its primary care delivery system and to make health care more accessible to the Medicaid-eligible and uninsured residents of its primary service area. In addition to providing educational and church-based and school-based programs, it operates three clinics providing
general primary care, two in lower income areas in Daytona Beach and one in a lower income area in Ormond Beach. These facilities are staffed by a full-time physician at each clinic, by registered nurses, and by other clinical staff.
All three clinics see both adults and children, and charges are based on a sliding scale depending on the patient's ability to pay. Halifax also participates with the Volusia County Health Department in the operation of the Volusia Health Cooperative, a facility staffed by physicians who volunteer their time. The services provided include both primary and speciality care. Patients seen at the outreach clinics who need cardiology services are referred to the Halifax Cardiology Clinic
For the past 24 years, Halifax has operated its Family Practice Residency Program, which is one of 11 such programs in Florida accredited by the Accreditation Council for Graduate Medical Education. The program is affiliated with the University of South Florida College of Medicine, Department of Family Medicine, and it must meet strict curriculum, supervision, and evaluation requirements. The three-year program includes 21 residents, with seven residents accepted each year. The residents provide direct patient care under the supervision of a physician who is a member of the residency program faculty or of an attending physician on the medical staff, and they are responsible for providing primary care to the patients assigned to them. For three or four months of the 36-month program, residents can elect their educational rotation; in these elective rotations, the residents generally follow other physicians and observe treatment but do not provide direct patient care. Halifax's Family Practice Center is affiliated with the residency program and had more than 16,000 patient visits in the year ending June 30, 1994.
Halifax is accredited by JCAHO, having received a score of 96 in the survey conducted in February, 1994. This accreditation includes Halifax's surgical and medical intensive care units.
Statutory and rule criteria
All Certificate of Need applications must be evaluated in the context of the criteria set out in section 408.035(1) and (2). In addition, the Agency has established certain standards in rule 59C-1.033 which must be met by OHS programs.
An application to establish an OHS program must be evaluated in light of the Agency's inclusion of such programs in the list of "tertiary health services" contained in rule 59C- 1.002(66), Florida Administrative Code. A "tertiary health service" is defined in section 408.032(19), Florida Statutes, as a "health service which, due to its high level of intensity, complexity, 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."
Rule criteria
The Agency has included in rule 59C-1.033 requirements which must normally be met before an application for an OHS program will be approved: "A certificate of need for the establishment of an OHS program shall not normally be approved unless the applicant meets the applicable review criteria in section 408.035, F.S., and the standards and need determination criteria set forth in this rule." Rule 59C-1.033(1), F.A.C.
Service Availability
In rule 59C-1.033(3), the Agency has identified a number of services which must be provided as part of an OHS program and a number of services which must be available in any health care facility with an OHS program. The parties stipulated that Halifax's program would have the capability to perform all of the required open heart surgical procedures and would have available circulatory assist devices, including intra-aortic balloon pumps and equipment to facilitate prolonged cardiopulmonary partial bypass. In addition, the parties stipulated that Halifax currently provides all of the services specified in rule 59C- 1.033(3)(c), including cardiology, hematology, nephrology, pulmonary medicine, treatment of infectious disease, pathology, anesthesiology, radiology, neurology, inpatient heart catheterization, non-invasive cardiographics, intensive care, and 24-hour emergency care for cardiac emergencies.
Service Accessibility
In rule 59C-1.033(4), the Agency has identified certain factors which must be met in order to ensure that the residents of the district have access to OHS services. These factors include access with respect to travel time, to hours of operation, to OHS team mobilization, and to under served population groups.
Ninety percent of the residents of District IV currently have geographic access to an adult OHS program "within a maximum automobile travel time of two hours under average travel conditions," as required by rule 59C- 1.033(4)(a). More specifically, the residents of Volusia and Flagler counties are served by a number of adult OHS programs within the two-hour travel time. There are 13 adult OHS programs accessible to the residents of Daytona Beach under the Agency's travel-time standard, 12 accessible to the residents of New Smyrna Beach in southeast Volusia County, 16 accessible to the residents of Bunnell in central Flagler County, and 13 accessible to the residents of Deland in western Volusia County. Accordingly, the proposed Halifax program would not improve geographic access under the Agency's standard.
Should an adult OHS program be approved for Halifax, elective OHS would be available eight hours per day, five days per week. In emergencies, the medical support teams and the OHS teams would generally be mobilized within 30 minutes, but the maximum wait for an open heart surgical procedure would be two hours. Emergency services would be available 24 hours per day, seven days per week. The proposed Halifax program would, therefore, satisfy the requirements of rule 59C-1.033(4)(b) and (c).
Consistent with its function as a public hospital providing health care to charity patients and as a disproportionate share provider of health care to Medicaid patients, OHS services at Halifax will be available to all persons, regardless of their ability to pay. The proposed Halifax program would, therefore, satisfy the requirements of rule 59C-1.033(4)(d).
Service Quality
In rule 59C-1.033(5), the Agency has included standards to ensure the service quality of OHS programs, and the proposed Halifax program would satisfy the requirements of this rule. The parties stipulated that Halifax is accredited by the JCAHO, as required by rule 59C-1.033(5)(a).
Should its application for an adult OHS program be approved, Halifax and the group of board-certified cardiovascular surgeons which has agreed to provide open heart surgical services at Halifax would provide all of the staff specified in rule 59C- 1.033(5)(b) and would ensure that the staff was properly trained. All members of the cardiovascular surgery group are currently on staff at Halifax.
The proposed Halifax program would also satisfy the requirements of rule 59C-1.033(5)(c). Halifax would provide 24- hour nursing coverage for post- surgical care in a six-bed cardiovascular intensive care unit (CVICU), with one registered nurse responsible for providing care to no more than two patients during the first hours after OHS. It would ensure that physicians in each of the specialties identified in the rule would be available and on call for emergencies, that staff to operate the cardiopulmonary bypass pump would be available at all times, and that all members of its OHS team would be proficient in cardiopulmonary resuscitation.
In addition, the parties stipulated that Halifax would develop OHS program protocols, which would include guidelines for the selection of patients for surgery and angioplasty and for such other operational issues as standards of care, utilization review, and quality assurance. The 12 invasive cardiologists currently on staff at Halifax would consult with the OHS team regarding the selection of suitable candidates for surgery and would be responsible for the medical management of the OHS patients.
Patient charges
To satisfy the requirement in rule 59C-1.033(6) that the charges for a new OHS program be comparable with the charges of other facilities in the district providing OHS services, Halifax has committed to provide such services at charges lower than those of Memorial-Ormond and would accept this as a condition of its Certificate of Need.
Adult OHS Program Need Determination
The net numeric need for an additional adult OHS program in a district is determined using the formula set out in rule 59C- 1.033(7)(b). Pursuant to this formula, which includes the actual use rate for the district, the projected population in the district, the 350 procedures which each operational provider should perform annually to ensure a high quality program, and the number of existing programs in the district, there would be a net numeric need for two additional OHS programs in District IV for the January, 1997, planning horizon, based on data for the appropriate time period for this planning horizon. 6/
The Agency published a fixed need pool of zero because of the default provision in rule 59C-1.033(7)(a)2. Pursuant to this part of the need determination rule, even if there is a net numeric need for an additional adult OHS program, a program will "not normally" be approved if at least one operational provider in the district "performed less than 350 adult OHS operations during the 12 months ending three months prior to the beginning date of the quarter of the publication date of the fixed need pool." 7/
There are six adult OHS programs in District IV, five in Jacksonville and one at Memorial-Ormond. Three providers, all of them located in Jacksonville, performed fewer than 350 OHS procedures for the 1994 calendar year: University Medical Center at 225, Baptist Medical Center-Jacksonville at 327, and St. Luke's Hospital at 310. 8/
Halifax is located approximately 80 miles south of Jacksonville. Its primary service area of Volusia and Flagler counties is distinct from the primary service areas of the five Jacksonville OHS providers. Only 2.5 percent, or 17, of the 675 residents of Volusia and Flagler counties having adult OHS in the year ended June, 1993, traveled to a Jacksonville facility for the surgery. The Agency concedes that there would be no significant impact on the OHS volumes of any of the programs in Jacksonville if Halifax received approval to develop an adult OHS program.
Statutory criteria
Section 408.035(1) identifies the criteria which must be evaluated in reviewing all applications for certificates of need for health care facilities and services. Section 408.035(2) requires that reference be made in the Agency's findings of fact to certain criteria applicable to proposals involving capital expenditures for new health care services to inpatients. Both of these statutory sections apply to the review of Halifax's application for a Certificate of Need to establish an adult OHS program.
Section 408.035(1)(a): The need for the health care facilities and services and hospices being proposed in relation to the applicable district plan and state health plan.
State Health Plan
The 1993 Florida State Health Plan, which is applicable in this proceeding, lists six preferences for OHS programs.
The first state preference provides: Preference shall be given to applicants establishing new OHS programs in larger counties in which the percentage of elderly is higher than the statewide average and the total population exceeds 100,000.
The program proposed by Halifax is consistent with this preference. The parties stipulated that the population of Volusia County, the county in which Halifax's program would be located, exceeds 100,000 and that the percentage of Volusia County's population that is 65 years of age and older is higher than the statewide average. In fact, as of July 1, 1994, the population of Volusia County, which is the source of approximately 86 percent of the OHS volume at Memorial-Ormond, was 399,992, or 28 percent of the population of District IV; 43 percent of the population aged 65 years and older residing in District IV resided in Volusia County. Additionally, 23.3 percent of the total population of Volusia County as of July 1, 1994, was aged 65 years and older, compared with 15.2 percent of the total population of District IV and 18.6 percent of the total population of Florida.
The second state preference provides: Preference for new OHS programs shall be given to applicants clearly demonstrating an ability to perform more than 350 adult procedures annually within three years of initiating the program. Quality of care has been demonstrated to be directly related to volume; thus, facilities are expected to perform a minimum of 350 adult procedures annually.
The program proposed by Halifax is consistent with this preference. Halifax has projected that its annual volume of adult OHS procedures will be
278, 353, and 370 in the first three years of the program's operation. The parties stipulated that Halifax has the ability to attain these utilization projections.
The third state preference provides: Preference shall be given to applicants who will improve access to OHS for persons who are currently seeking the service outside of their HRS district. This will improve accessibility and reduce travel time for the residents in the district.
The program proposed by Halifax is not consistent with this preference. For the year ended June 30, 1993, 34.5 percent of the residents of Volusia and Flagler counties left District IV to obtain OHS and angioplasty, and in the year ended June 30, 1994, 26.7 percent did so. Most resided in western and southwestern Volusia County and outmigrated to District VII, either to Florida Hospital in Orlando or to Central Florida Regional Medical Center in Sanford, because these hospitals are geographically convenient, because the patients preferred these hospitals, or because physicians practicing in these areas traditionally have referred patients to the south rather than to the east where Memorial-Ormond and Halifax are located. An OHS program at Halifax would not materially improve accessibility or reduce travel time for the majority of persons leaving District IV to obtain OHS and angioplasty.
The fourth state preference provides: Preference shall be given to an applicant with a history of providing a disproportionate share of charity care and Medicaid patient days in the respective acute care subdistrict. Qualifying hospitals shall meet Medicaid disproportionate share hospital criteria.
Priority should be given to an applicant who provides services to all persons, regardless of their ability to pay.
Halifax's policies and practices with regard to providing health care to Medicaid and charity patients are consistent with this preference. The parties stipulated that Halifax is a disproportionate share provider under the relevant Medicaid program criteria. From 1990 through 1993, Halifax was responsible for between 65 and 73.5 percent of the total charity-care revenue and between 56.7 and 66.4 percent of the total Medicaid revenue for all Volusia County hospitals. In 1992 alone, Halifax provided 13.3 percent of its total patient days to Medicaid patients and 8.6 percent of its total revenue to charity care, significantly higher percentages than any other hospital in Volusia and Flagler counties. Halifax's policy since its inception in 1925 has been to provide health care to all persons, regardless of ability to pay.
The fifth state preference provides: Preference shall be given to an applicant that can offer a service at the least expense yet maintain high quality care standards. The physical plant of larger facilities can usually accommodate the required operating and recovery room specifications with lower capital expenditures than smaller facilities. Larger facilities also have a greater pool of specialized personnel needed for open heart surgical procedures.
Halifax can implement and operate its proposed OHS program and offer a high quality of care at an economical cost; the proposed program is, therefore, consistent with this preference. With 595 licensed beds, Halifax is a major regional hospital and is the largest hospital in Volusia and Flagler counties. In 1993, it was one of the five busiest hospitals in District IV as measured by total discharges, patient days, ICU-CCU days, surgery cases, and emergency visits.
At the time the application was submitted, Halifax employed sufficient personnel with recent OHS, CVICU, and telemetry unit experience to fill over
one-third of the FTEs necessary to staff the proposed program. It intends to recruit additional clinical staff with experience in OHS and post-surgical cardiovascular intensive care to supplement those already on staff and will provide both formal and on-the-job training. Halifax has 12 invasive cardiologists and five cardiovascular surgeons on its medical staff, and its 400-person medical staff can provide the specialized services required to support the proposed program.
Halifax would be able to convert and remodel existing space to accommodate the two dedicated OHS suites and the six-bed CVICU proposed for the program at a relatively low capital cost. Halifax also owns or maintains in its general inventory a substantial amount of the equipment necessary to implement the program. It already operates a state-of-the-art cardiac catheterization laboratory and has a second room which is fully wired and patterned for a second. Total capital costs of the proposed OHS program, including the cost of construction and remodeling to create two dedicated OHS suites and a six-bed CVICU and the cost of equipment which must be purchased by Halifax specifically for the program, is $2,694,000. This is within the lower range of estimated project costs contained in recent applications for OHS programs.
The sixth state preference provides: Preference shall be given to the applicant that performs percutaneous transluminal angioplasty, streptokinase, or other innovative techniques as alternatives to surgery for low-risk patients. The applicant shall include in its application a protocol for selection of patients for surgery or alternative non-surgical therapeutic cardiac procedures.
Halifax supports the use of alternatives to cardiovascular surgery, and its proposal is consistent with this preference. Halifax has in place a sophisticated, comprehensive cardiology program, in which alternatives to surgery are routinely considered in accordance with established protocols. The parties stipulated that Halifax treats patients meeting the appropriate clinical criteria with streptokinase and activase, which are alternatives to surgery for low-risk cardiac patients. Halifax operates a state-of-the-art cardiac catheterization laboratory which is fully equipped and staffed to provide percutaneous transluminal coronary angioplasty (angioplasty) and intra-coronary thrombolytic therapy, another invasive therapeutic procedure. However, because these procedures cannot be performed routinely unless an OHS operating room and surgical team are available as backup, invasive cardiologists perform these procedures at Halifax only in life-threatening situations and in accordance with strict guidelines. Halifax intends to expand its cardiac catheterization services to include routine angioplasty if its application for OHS is approved.
Halifax's proposed program is consistent with the intent of five of the state's six preferences for OHS programs.
District Allocation Factors
The 1992-1993 Certificate of Need Allocation Factors Report published by the Health Planning Council of Northeast Florida, Inc., identified eight review criteria applicable to applications for Certificates of Need for OHS programs.
The first district allocation factor favors applicants which demonstrate that they will meet identified needs by providing services which
meet commonly accepted quality standards in a most economical manner in terms of capital and operating expenditures.
Halifax qualifies for the preference expressed in this allocation factor. Halifax has identified three "needs" which it contends will be met by its proposed OHS program: The need for another OHS program to satisfy the demand for such services by residents of its primary service area of Volusia and Flagler counties; the need of Medicaid and charity patients for access to OHS services; and the need for managed care providers and employers to contract with an entity which can provide a full array of health care services at a reasonable price. Assuming that these needs do exist, Halifax can provide high quality OHS services in an economical manner for the reasons set forth in paragraphs 59 through 61, above.
The second district allocation factor favors applicants which demonstrate that they can alleviate a current or potential geographic access problem.
At hearing, Halifax conceded that its proposed program would not improve geographic access, and it does not, therefore, qualify for the preference expressed in this allocation factor.
The third district allocation factor favors applicants which commit in their application that they will not refuse a patient on the sole basis that the patient is HIV infected.
Halifax qualifies for the preference expressed in this allocation factor. In the year ended September 30, 1993, Halifax accounted for 56 percent of the total HIV-related admissions in Volusia and Flagler counties. It has demonstrated a longstanding commitment to provide care to HIV-infected patients, regardless of their ability to pay, and it has committed to continue providing such care.
The fourth district allocation factor favors applicants which demonstrate that the facility has access to an adequate supply of appropriate health manpower.
Halifax qualifies for the preference expressed in this allocation factor. The parties stipulated that, if its application is approved, Halifax would be able to recruit the surgical and nursing management personnel, nurses, technicians, and other staff required to operate an OHS program.
The fifth district allocation factor favors applicants which demonstrate that new or expanded bed capacity and/or service will not have a significant negative impact on similar adjacent inpatient facilities. 9/
There are six existing providers of OHS services in District IV. There would be no impact on the five existing providers of OHS in Jacksonville should Halifax establish an OHS program.
The sixth existing provider of OHS services in District IV is Memorial-Ormond. Halifax conceded at the hearing that its proposed OHS program would have a negative impact on both Memorial-Ormond's OHS volume and its overall financial performance, and Halifax did not include in its proposed recommended order a proposed finding of fact that its application meets this district allocation factor. Notwithstanding this concession, Halifax presented evidence at the hearing disputing Memorial-Ormond's claims regarding the
magnitude of the negative impact on both volume and financial performance. Since this district allocation factor requires examination of whether a new service would have a "significant" negative impact on an existing facility, it
is necessary to evaluate the probable magnitude of the negative impact Memorial- Ormond would experience if Halifax's application to establish an OHS program were approved.
The effect on the quality of OHS outcomes is the primary consideration in evaluating the significance of a decrease in a facility's OHS volume. Although many factors affect OHS outcomes, the volume of OHS procedures performed at a facility is generally used as a benchmark for evaluating program quality. The Agency has determined that an OHS provider must perform a minimum of 350 procedures annually to ensure that it provides a high quality OHS program. 10/ See rule 59C-1.033(7). Halifax has agreed to accept a condition to its Certificate of Need that it ensure that Memorial- Ormond's volume does not drop below 350 procedures annually.
The primary service area of the proposed OHS program at Halifax would be Volusia and Flagler counties, identical to that of Memorial-Ormond, and the major portion of the projected OHS volume at Halifax for its first three years of operation would consist of cases which would otherwise be performed at Memorial-Ormond. Halifax has projected that it would attain OHS volume of 278 procedures in the first year of operation of its program, 353 procedures in its second year, and 370 procedures in its third year. Using Halifax's projections, adjusted to reflect the estimated number of outmigration cases which Halifax could be expected to recapture, Memorial-Ormond calculated that it would lose
248 OHS procedures in 1998, the first year of operation of Halifax's proposed OHS program, 302 OHS procedures in 1999, and 300 procedures in 2000.
It does not follow, however, that the OHS volume at Memorial-Ormond would correspondingly decrease to the projected 401 procedures in 1998, 347 procedures in 1999, and 349 procedures in 2000. Memorial-Ormond chose to assume for purposes of its calculation that the OHS volume for 1998, 1999, and 2000 would remain the same as its volume for 1994, which was 649 procedures. This choice was apparently based on data purporting to show that utilization of OHS services has been leveling off over the past several years nationally, in District IV as a whole, and at Memorial-Ormond specifically. While the downward trend does appear to exist at the national and District IV levels, and even at Florida Hospital in Orlando, Memorial-Ormond has experienced no such "leveling- off."
In fact, the volume of OHS procedures at Memorial-Ormond increased 39 percent from 1990 through 1994, compared with an 11.6 percent increase in OHS procedures for all District IV providers. In 1994, Memorial-Ormond experienced a
15 percent increase in OHS volume from 1993, compared with a 4 percent increase for all District IV providers. Furthermore, during the first four months of 1995, Memorial-Ormond's OHS volume increased 38 percent from the same four-month period in 1994.
If the January through April, 1995, volume of 375 procedures was annualized and adjusted for seasonal fluctuations, the OHS volume at Memorial- Ormond for the 1995 calendar year would be more than 870 procedures, a 34 percent increase from the 649 procedures performed in 1994. The most conservative estimate of OHS volume for 1995 presented at the hearing was 750 to 800 procedures, a 15-to-20 percent increase from 1994. Even using the most conservative OHS volume projection of 750 procedures as a benchmark and using Memorial-Ormond's estimate of the number of cases it would lose to Halifax, its
annual OHS volumes in 1998, 1999, and 2000 would be 502, 448, and 450 procedures, respectively.
There are several demographic factors 11/ which indicate that the number of Volusia County and Flagler County residents utilizing OHS services will increase between 1995 and 2000 even if the utilization of OHS services continues to level off nationally and in District IV. For the year ended June 30, 1994, the utilization rate of OHS services for the adult population of Volusia and Flagler counties was greater than that of the other counties in District IV, and the rate of increase in the utilization rate for Volusia and Flagler residents was greater between 1993 and 1994 than the rate of increase in the other counties in District IV. One reason for this local trend is the disproportionate number of persons aged 65 years and older residing in Volusia and Flagler counties. The use rate for OHS services by this age cohort is approximately twice that of persons aged 15 to 64 years. Both the total population and the number of persons aged 65 years and older are expected to increase in Volusia and Flagler counties at a higher rate than in Florida and in District IV as a whole. Because of the anticipated population increases and higher utilization rates in Volusia and Flagler counties, it is probable that the number of residents of Volusia and Flagler counties seeking OHS services will continue to increase despite national and district utilization trends. 12/
Consequently, it is likely that the actual volume of OHS procedures performed at Memorial-Ormond would be significantly greater in 1998, 1999, and 2000 than the 401, 347, and 349 procedures Memorial-Ormond projected using its 1994 OHS volume. Moreover, it is likely that the volume would be greater than the 502, 448, and 450 procedures projected using the conservative estimate of 750 OHS procedures in 1995. These volumes would be sufficient to ensure that both the cardiovascular surgeons operating at Memorial-Ormond and the Memorial- Ormond surgical teams would perform enough OHS procedures to maintain a high level of proficiency.
Memorial-Ormond is taking affirmative steps to increase its market share in both Volusia and Flagler counties. 13/ It is aggressively positioning itself to increase its OHS market share in western Volusia County, which provided only 9.5 percent of Memorial-Ormond's OHS volume for the year ended March 31, 1994. Western Volusia County is the fastest growing population center in Volusia County and is expected to grow at twice the rate of eastern Volusia County over the next several years. Western Volusia County, especially the southwestern portion, is also the area with the greatest number of residents outmigrating to obtain OHS services. As of March 31, 1994, only 22.7 percent of the residents of western Volusia County seeking OHS services obtained these services at Memorial-Ormond. Florida Hospital in Orlando and Central Florida Regional Medical Center in Sanford, both of which are located in District VII, provided OHS services to 51.9 percent (121 patients) and 19.7 percent (46 patients), respectively, of the residents of western Volusia County seeking such services.
The outmigration from western Volusia County to Florida Hospital reflects longstanding referral patterns of the physicians practicing in the area. These traditional referral patterns will be influenced by Memorial- Ormond's taking over operation of Memorial-West Volusia in December, 1994, pursuant to a 40-year lease. Additionally, at the time of the hearing, Memorial-Ormond was in the final stages of negotiating the purchase of several physicians' practices in western Volusia County. Although Memorial-Ormond's operation of Memorial-West Volusia and its acquisition of physician practices may not immediately influence the existing referral relationships with
cardiologists and cardiovascular surgeons practicing at Florida Hospital, eventually referrals will be redirected from Florida Hospital to Memorial- Ormond. 14/
Memorial-Ormond is also aggressively seeking to expand its penetration of the managed care market. As the only provider of OHS services in Volusia and Flagler counties, it has contracts for OHS services with a number of the managed care organizations which serve the residents of these counties. Humana alone sent approximately 200 to 250 members a year to Memorial-Ormond for OHS, and the other large HMO in the area, Florida Health Care Plan, sent 80 members to Memorial-Ormond for OHS and 88 members for angioplasty in the 10 months ended April 30, 1995.
Although it is not possible to quantify the exact number of OHS procedures which would be performed at Memorial-Ormond in 1998, 1999, and 2000 should Halifax's application for an OHS program be approved, it is probable that its OHS volume would significantly exceed 350 procedures annually. If this did not occur as a result of the overall increase in OHS volume, Halifax would be bound to ensure that Memorial-Ormond's volume not fall below the 350 procedures which the Agency considers sufficient to ensure a quality OHS program. 15/
In addition to its relevance in terms of the quality of an OHS program, the volume of procedures performed at a facility affects its bottom line net operating income. If Halifax were granted a Certificate of Need to establish an OHS program, a significant portion of its OHS cases would be drawn from Memorial-Ormond, and Memorial-Ormond would lose a corresponding volume of angioplasty and diagnostic cardiac catheterization volume. This lost volume would result in a negative impact on Memorial-Ormond's financial position, but the magnitude of the impact cannot be ascertained from this record.
The OHS program is a major program for Memorial-Ormond, producing approximately 20 percent of its total revenue. An analysis purporting to quantify the adverse financial impact Memorial-Ormond would experience in 1998, the first year of operation of Halifax's proposed program, concluded that it would lose approximately 42 percent of its net operating revenues as a result of lost OHS and angioplasty volumes. This would purportedly reduce its operating margin from 4.4 percent to 2.7 percent in 1998, below the state average of 3.2 percent. The validity of these conclusions is, however, questionable.
Memorial-Ormond's impact analysis calculated the lost contribution margin/lost revenue anticipated from the projected decrease of 248 procedures and 281 procedures, respectively, in its OHS and angioplasty volumes during the first year of operation of Halifax's OHS program. The lost angioplasty volume was calculated based on the 721 procedures performed during the year ended March 31, 1994. 16/ The contribution margin per case for each diagnostic related group (DOG) was calculated by subtracting the variable cost per case for each DRG from the net revenue per case for each DRG. 17/ For OHS procedures, the total lost volume of 248 procedures was broken down by DRG based on the historical distribution of OHS cases. The lost contribution margin/lost revenue per DRG for OHS and angioplasty was then calculated by multiplying the contribution margin per case per DRG by the number of cases which Memorial- Ormond estimated it would lose in each DRG. This methodology for calculating lost contribution margin/lost revenue is reasonable, but the accuracy of some of the inputs are questionable.
Contribution margin does not measure profitability. Profitability is measured by subtracting the total cost of a procedure from the net revenue it
generates. Memorial-Ormond's projections indicate that it would lose money on each OHS procedure in DRGs 104 through 108. Although the projections show that angioplasties and cardiac catheterization procedures, DRGs 112, 121, 122, 124, and 125, are profitable, the OHS program as a whole would be only marginally profitable based on the numbers included in Memorial-Ormond's analysis. Several conclusions could be drawn from this result: the net revenues used in the calculation were not correct; the total costs used in the calculation were not correct; and/or the program's contribution to Memorial-Ormond's bottom line net operating income is minimal. Since it cannot be determined whether any or all of these conclusions are valid, the negative impact of the projected lost OHS and angioplasty volumes on Memorial-Ormond's net operating income cannot be estimated with any degree of certainty from the evidence presented.
Moreover, even assuming that the lost contribution margin/lost revenue calculation is correct, it is questionable whether the impact of the projected lost volume of OHS and angioplasty cases would result in the estimated decrease in operating margin from 4.4 percent to 2.7 percent. The impact analysis projected lost revenue for 1998, year one of the proposed Halifax program, but the analysis was based on a "snapshot" of Memorial-Ormond's financials and OHS and angioplasty volumes taken in 1994. As a result, the impact analysis did not take into consideration the possibility that Memorial-Ormond's revenues in 1998 might be higher than those forming the basis of the operating margin calculation. In fact, the impact analysis did not include revenue attributable to the increase in OHS volume Memorial-Ormond experienced between July 1, 1994, and March 31, 1995, nor did it include revenue attributable to the increase in angioplasties during the same time period. The increased revenue generated by this increased volume would not be negligible since the OHS program purportedly contributes between 20 and 25 percent of Memorial-Ormond's total revenue.
Because the "annualized impact of the lost volume" included in the operating margin calculation would remain the same regardless of whether revenues increased, the "recast profit" would be greater than projected based on the increases in Memorial-Ormond's OHS and angioplasty volumes for the year ended March 31, 1995. Accordingly, Memorial-Ormond's operating margin would be greater than 2.7 percent for the first year of operation of an OHS program at Halifax. And, even if the operating margin did decrease to 2.7 percent, Memorial-Ormond would still be profitable, and its operating margin would be twice that required by its existing bond covenants. 18/ In light of these considerations, approval of Halifax's application would have a negative impact on Memorial-Ormond's currently very strong financial position but would not threaten its financial viability.
On the basis of the evidence of record, it cannot be said that Halifax's proposed OHS program would have a significant negative impact on Memorial-Ormond's ability to maintain a high quality OHS program or on its financial viability. Thus, Halifax qualifies for the preference expressed in the fifth district allocation factor.
The sixth district allocation factor favors applicants which commit to maximizing services to rural residents.
Halifax qualifies for the preference expressed in this allocation factor. The parties stipulated that Halifax would make available and provide OHS and angioplasty services to rural residents. Halifax would also make all of its services available to rural residents if its request for designation as a provider member of the St. John's River Rural Health Network, currently headed by Memorial-Ormond, is approved.
The seventh district allocation factor favors applicants located in an area of concentrated population (100,000 or more within a 10-mile radius) in which existing programs have the highest area use rates.
Halifax qualifies for the preference expressed in this allocation factor. The population of its primary service area of Volusia and Flagler counties was estimated at approximately 430,000 as of July 1, 1994, and is expected to increase to approximately 490,000 by 1998. The major population center of these counties is the strip of land in eastern Volusia County located between Interstate 95 and the Atlantic Ocean; Halifax is located in the approximate geographic center of this population center.
Memorial-Ormond is the only District IV OHS provider currently serving Volusia and Flagler counties, and few residents of Volusia and Flagler travel to other facilities in District IV for OHS. The OHS use rate for residents of Volusia and Flagler counties was 2.192 per thousand for the year ended June 30, 1994, compared with a use rate for all other counties in District IV of 1.896 per thousand.
The eighth district allocation factor favors applicants who formally commit to a program of charity care, with the commitment spelled out in their CON application.
Halifax is qualified for the preference expressed in this allocation factor. It has agreed to accept a condition to its Certificate of Need that it provide at least 10 percent of its total OHS and angioplasty volume to charity and Medicaid patients. Halifax has historically provided services to a substantial number of charity and Medicaid patients.
Halifax's proposed program is consistent with the intent of five of the six state preferences for OHS programs, and it qualifies for the preferences expressed in seven of the eight district allocation factors. On balance, Halifax has shown need for the proposed program in relation to the applicable district and state health plans.
Section 408.035(1)(b) and (2)(b) and (d): The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district of the applicant; in the case of proposed new services to inpatients, whether existing inpatient facilities providing inpatient services similar to those proposed are being used in an appropriate and efficient manner; in the case of proposed new services to inpatients, whether patients will experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service.
There are two distinct markets for OHS services in District IV, with one market in the extreme northern part of the district and the other in the extreme southern part of the district. Accordingly, it is necessary to evaluate only Memorial-Ormond with respect to these statutory criteria, since it is the only District IV provider which would be affected should Halifax's application be approved.
Memorial-Ormond's OHS services are geographically accessible to 90 percent of the residents of District IV pursuant to the two-hour driving time rule. Given its longstanding policy of providing health care services to everyone in need, without regard to ability to pay, its OHS services are
accessible economically to charity and Medicaid patients. The OHS facilities and staff at Memorial-Ormond are, for the most part, being utilized in an efficient and appropriate manner; however, as discussed more fully below, there are some inefficiencies in the use of call teams to staff the cardiac catheterization laboratories.
The parties stipulated, and the evidence establishes, that Memorial- Ormond provides high quality surgical and post- surgical care to patients in its OHS program. The evidence presented raises questions, however, as to whether Memorial-Ormond has the capacity to continue providing quality care to the increasing number of residents of Volusia and Flagler counties seeking access to OHS services. It is reasonable to expect that at least 750 OHS procedures will be performed at Memorial-Ormond for the 1995 calendar year, based on the number of procedures performed from January through April, 1995. It is also reasonable to expect that, in the absence of an OHS program at Halifax, the volume of procedures performed at Memorial-Ormond will continue to increase for the foreseeable future.
The capacity of an OHS program is a function of the number of surgical suites available for OHS and angioplasty backup, the number of cardiac catheterization laboratories, the number of critical care beds available for post-surgical care of OHS patients, and the available surgical and critical care personnel.
There are 15 cardiologists and five cardiovascular surgeons on staff at Memorial-Ormond; the cardiovascular surgeons are members of the same group, and three of the surgeons perform OHS full-time, while one performs both OHS and other cardiovascular procedures. Two of Memorial-Ormond's eight inpatient operating rooms are dedicated to OHS, and a third operating room is equipped for OHS and serves as a backup unit for angioplasty. The two OHS operating rooms are staffed 10.5 hours per day, from 7:00 a.m. to 5:30 p.m., five days per week. Using a pure mathematical calculation, Memorial-Ormond projects that 918 OHS procedures could be performed in the two OHS operating rooms, assuming 80 percent efficiency.
From a practical standpoint, however, there are capacity constraints in the OHS operating rooms which may compromise quality of care as OHS volumes increase at Memorial-Ormond. Ten percent of patients require OHS on an emergent/urgent basis, which means that surgery must be performed within several hours. Emergent/urgent patients are given priority, and, if surgery is to be performed after hours or on a weekend, a "call team" is available 24 hours per day, seven days a week. Memorial-Ormond's facilities have always been able to handle emergent/urgent OHS, and a high quality of care is provided to these patients.
Approximately 90 percent of patients requiring OHS are in the elective surgery category, which means that surgery generally must be performed within 72 hours of diagnosis. One OHS surgeon can comfortably perform two cases per day. In order to organize their schedules, which, in addition to surgery, include hospital rounds and office hours, the OHS surgeons prefer to begin their first elective case at 8:00 a.m. and to complete their second case by middle-to- late afternoon.
For the year ended March 31, 1994, 578 OHS procedures were performed at Memorial-Ormond; during the same period of time, three or more procedures were performed on 112 days and OHS procedures were performed on 272 days, 22 days more than the 250 days per year the OHS operating rooms are normally
staffed. The increase in OHS cases at Memorial-Ormond between January and April, 1995, 19/ required the cardiovascular surgeons to perform elective OHS in the evenings one or two and, sometimes, three times a week and occasionally on a weekend. If an OHS procedure continues beyond the normal operating room hours, the hospital's surgical team completes the procedure but is paid overtime; a "call team" handles all elective and emergency OHS performed after regular hours or on weekends. Memorial-Ormond does not provide additional OHS staff during periods of high volume. This operating schedule and staffing policy is not optimal for ensuring quality of care or for the efficient use of hospital resources, and the number of elective surgeries which must be delayed and scheduled after normal operating hours and on weekends will increase as the number of OHS procedures increases.
A great deal of evidence was presented by both sides regarding problems scheduling diagnostic cardiac catheterizations and angioplasties (including arthrectomies) at Memorial-Ormond. Except in acute emergencies, angioplasties can only be performed with OHS back-up. Therefore, Memorial- Ormond is the only facility in Volusia and Flagler counties at which cardiologists can perform elective and most emergency angioplasties.
Memorial-Ormond operates one laboratory dedicated to diagnostic cardiac catheterizations and angioplasty, and cardiologists use about 80 percent of the time available in a second laboratory shared with radiology; this laboratory is not favored by cardiologists because the equipment is inferior to that in the dedicated cardiac catheterization laboratory. The laboratories are staffed from 7:00 a.m. until 3:30 p.m., five days per week, and procedures are scheduled beginning at 7:30 a.m. If procedures are scheduled outside normal laboratory hours, they are covered by a "call team" which always works at overtime pay; the "call team" is composed of laboratory staff who take call on a rotating basis. Four time slots are available for angioplasties each day, and, in 1994, Memorial-Ormond opened an eight-bed PTCA unit, to which patients are transferred for care after having angioplasties.
Scheduling elective angioplasties is often difficult because of the need to coordinate a complex array of factors, including the limited number of time slots; the availability of laboratory staff; the immediacy of the patient's need for angioplasty; the cardiologist's schedule; and the need to coordinate angioplasties with the availability of an OHS operating room and all the personnel necessary for OHS as back up in case the angioplasty fails and the patient needs immediate OHS.
Many cardiologists using the Memorial-Ormond cardiac catheterization laboratories are not able to perform all of their elective angioplasties during normal laboratory hours, especially during the busy season. 20/ This may be due to scheduling delays caused by the laboratory supervisor cancelling or postponing scheduled procedures to accommodate an emergency angioplasty, by physicians having scheduling conflicts during the laboratories' normal hours of operation, or by the unavailability of OHS backup, among other factors. Regardless of the cause of the scheduling problems, most of the cardiologists doing cardiac catheterizations at Memorial-Ormond complained about these problems during the 12 months prior to May, 1995. Moreover, the capacity constraints and scheduling problems cause friction between some of the cardiologists and the laboratory staff when the staff is required to work overtime on days when several regular time slots are not filled.
Scheduling and capacity problems have not yet compromised the high quality of care available at Memorial-Ormond; patients needing angioplasty on an
emergent or urgent basis have always been given priority access to the laboratories, and patients needing elective angioplasty have generally been accommodated within a reasonable period of time. However, there is an increasing risk that scheduling problems may result in negative impacts to patient care at Memorial-Ormond because of the increasing demand for interventional cardiac catheterization, as illustrated by the substantial increase in the number of angioplasties performed at Memorial-Ormond from 721 for the year ended March 31, 1994, to 844 for the year ended March 31, 1995.
During periods of high demand, Memorial-Ormond does not increase the number of OHS surgical teams or the hours or staff in the catheterization laboratories. Rather, the staff generally works more overtime, and the call team is used more often for elective, after-hours procedures.
In addition to the capacity problems with the cardiac catheterization laboratories and OHS operating rooms, Memorial- Ormond has capacity problems with its OHS post-operative critical care capability. The capacity of an OHS program is limited by the availability of CVICU and concentrated cardiac care unit (CCCU) beds and staff, and one of the most serious capacity constraints at Memorial-Ormond is the limited number of CVICU beds. Post-operative OHS patients do not go to a separate recovery area but are taken directly to the CVICU, which is staffed by nurses and other personnel who are specially trained to provide care to post- operative OHS patients.
In 1994, Memorial-Ormond initiated a "fast-track" program designed to shorten the total average length of stay (ALOS) of an OHS patient. Patients who are good risks will stay in the CVICU for approximately 24 to 48 hours, with an ALOS of 1.9 days. Approximately 15 to 20 percent of the OHS patients meet the criteria for the program and can be placed on the "fast track"; the ALOS in CVICU for these patients can be reduced to between 18 and 24 hours. Post- operative OHS patients are routinely transferred to the CCCU from CVICU, and, as a result of the "fast track" program and other similar programs, the ALOS in the CCCU is 4.4 days. However, the critical care needs of patients are subject to change depending on changes in their medical condition. Accordingly, patients who start out on the "fast track" may not continue on it throughout their hospital stay. Patients who are or become bad risks will stay in CVICU longer, but they are generally moved to the CCCU, or step-down unit, after 72 hours because the CVICU is designed to provide acute care to OHS immediate post- surgical patients.
Memorial-Ormond operates a six-bed CVICU and a 14-bed CCCU. For the 1994 calendar year, Memorial-Ormond operated its CVICU and CCCU at an average occupancy of 78.3 and 78.2 percent, respectively, 21/ and its other critical care units operated at approximately the same average occupancy rate. While Memorial- Ormond provided quality care even when these units operated at this capacity, the optimal occupancy level for a CVICU is between 70 and 75 percent and between 75 and 80 percent for a CCCU. Because there is less flexibility in using beds in smaller units such as Memorial-Ormond's, the acceptable maximum occupancy rate is on the lower end of this range.
Under these standards, Memorial-Ormond operated its CVICU and CCCU substantially in excess of optimal occupancy levels in 1994. In fact, from January through April, 1994, both the CVICU and CCCU operated at approximately
90 percent capacity. For the same period in 1995, substantially more patients received OHS, and, as a result, several days each week between January and April, 1995, patients were transferred out of CVICU less than 24 hours after surgery because the beds were needed for fresh OHS post- operative patients.
22/ Patients were also transferred to non-cardiac critical care units because of lack of capacity in the CCCU.
Although it is not reasonable to judge the overall capacity of an OHS program exclusively on the basis of seasonal peak volumes, the ability of a program to handle peak seasonal volumes which persist for several months of the year is relevant when considering possible adverse consequences to the quality of care. In the case of Memorial-Ormond, its CVICU and CCCU were operating at dangerously high occupancy levels during the first four months of both 1994 and 1995. In addition, Memorial-Ormond sometimes does not adequately staff its critical care units during peak seasonal demand. Because it is reasonable to expect that the number of residents of Volusia and Flagler counties seeking OHS services will continue to increase and because of Memorial-Ormond's aggressive efforts to increase its volume through increasing its market penetration and entering into managed care contracts, the lack of capacity in Memorial-Ormond's CVICU and CCCU could affect the quality of care provided its OHS patients.
At the time of the hearing, Memorial-Ormond's management was in the early stages of planning a $5 million project which would include enhancements to increase the capacity of its OHS program. Just prior to, and in anticipation of, the hearing, Memorial-Ormond's Board of Directors passed a resolution accepting management's recommendation that it go forward with the planning process for renovations and modifications involving the relocation of two major pieces of equipment, the addition of two beds to the CVICU and seven beds to the CCCU, the purchase of equipment for a fourth OHS operating room, and the addition of a second, dedicated cardiac catheterization laboratory. 23/ The proposed project had not, at the time of the hearing, been through the Memorial- Ormond's formal budgeting process. 24/
Regardless of the number of OHS operating rooms, the availability of critical care beds imposes a limit on the number of OHS procedures which can be performed at a facility. If Memorial-Ormond were to add the critical care beds as planned, it could accommodate the increase in OHS volume expected over the near term and still provide an acceptable quality of care. 25/ However, Memorial-Ormond's ability to increase its critical care capacity is finite. Of the 133 licensed beds not devoted to critical care, Memorial-Ormond has committed 17 beds to a distinct skilled nursing facility, and 13 beds were included in the women's center opened in late 1994. It also intends to open a pediatrics subunit which will contain several beds, leaving fewer than 106 beds available for general medical/surgical patients. In sum, Memorial-Ormond has a limited number of licensed beds available to devote to all of the services it currently provides and to all of the services it is adding in order to realize its new vision of developing an integrated health care delivery system.
Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant's record of providing quality of care.
There is no question that Halifax's record of providing quality care is excellent. It has been a major regional facility for many years and offers sophisticated and highly specialized health care services.
Halifax also has the ability to provide excellent quality of care in an OHS program if its application were to be approved. As noted above, Halifax meets the service quality criteria set out in rule 59C-1.033(5), and it would provide the physical facilities, equipment, and administrative support necessary to ensure a high quality of care. In addition, Halifax would provide sufficient trained and experienced staff to provide high quality care to patients receiving
OHS. Even if it has underestimated the number of FTEs (full time equivalents) needed to staff its OHS critical care beds, it has the resources to remedy any staffing shortfalls.
There are 12 invasive cardiologists and five cardiovascular surgeons on staff at Halifax, all of whom are on staff at Memorial-Ormond. Halifax is the predominant provider of cardiology services in Volusia County, having admitted approximately 1800 patients in 1993 with a diagnosis of MDC 5, Diseases and Disorders of the Circulatory System. With the exception of OHS and routine angioplasty, it offers the full range of cardiovascular services, including cardiac screening, diagnostic testing, acute cardiac care, and a cardiac rehabilitation program. It operates a state-of-the-art cardiac catheterization laboratory, which provided inpatient and outpatient cardiac catheterization services to over 1200 patients in the year ended March 31, 1994. It sponsors educational and outreach programs, and it has developed a cardiac rehabilitation program for those recovering from heart attacks and for post-surgical patients
The group of five cardiovascular surgeons which performs OHS at Memorial-Ormond would also staff the OHS program at Halifax. Currently, three members of this group perform only OHS, and one member devotes about one-half of his practice to OHS. The group is recruiting an additional cardiovascular surgeon and an additional perfusionist, which would provide sufficient personnel to cover both facilities. The group has committed to make every effort to ensure both that a new OHS program at Halifax would provide a high quality of care and that the OHS program at Memorial-Ormond would continue to provide a high quality of care.
In addition, 10 of the 12 invasive cardiologists practicing at both Memorial-Ormond and Halifax wrote letters to the Agency in support of Halifax's application, urging that it be approved based on community need and the capacity constraints of Memorial-Ormond's OHS program. Almost all of the cardiologists testifying at the hearing and by deposition expressed their commitment to assist Halifax in operating a quality OHS program, while also working to maintain the quality of care available at Memorial-Ormond.
As a state-certified Level II trauma center, Halifax often must provide care for patients with extremely severe injuries, including those with injuries to the great vessels of the heart. These patients need immediate access to cardiopulmonary bypass capability in order to survive. Although the parties have stipulated that Halifax did not transfer a single trauma patient to Memorial-Ormond for OHS in 1992, 1993, and 1994, a reasonable explanation is that those trauma patients needing cardiopulmonary resuscitation are so seriously injured that they cannot survive the transfer.
If Halifax were to offer OHS and angioplasty services, it could enhance the quality of care provided to the residents of Volusia and Flagler counties who use the services of Halifax's emergency room. Halifax has one of the largest emergency rooms in the state, with approximately 73,000 visits in 1994, and the volume for the early part of 1995 increased approximately 8 percent over the same period in 1994. Approximately 30 percent of the patients seen at Halifax's emergency room are Medicaid patients, 15 percent are uninsured patients whose charges are likely to be written off as uncollectible, and 12 to
13 percent are "patient assistance" patients who qualify for care paid out of special taxing district revenue.
Approximately 5,000 patients a year present at Halifax's emergency room with cardiac-related problems, and approximately 500 of these patients
present with acute myocardial infarction (MI). Many of the patients presenting with acute MI respond to thrombolytics and can be stabilized and sent to intensive care. Generally, 85 to 90 percent of patients presenting with acute MI respond to thrombolytic therapy. Of the patients whose arteries are opened initially by this treatment, 50 percent will require urgent angioplasty because the artery did not open sufficiently to prevent further deterioration of heart muscle or because it closed again. Approximately 10 to 15 percent of the patients presenting with acute MI do not respond to thrombolytic therapy. These patients must be stabilized, usually with an intra-aortic balloon pump, and prepared for emergency angioplasty or OHS. In either case, the patient must be transported by ambulance to Memorial- Ormond.
On average, approximately five to eight patients die each month in the Halifax emergency room of cardiogenic shock and heart failure, and perhaps one or two patients each month could be saved if Halifax had an OHS program and the patients had immediate access to OHS or angioplasty. Although state guidelines permit cardiologists to perform angioplasties without OHS backup in dire emergencies, physicians are reluctant to do so if the patient has any blood flow at all to the heart. For the year ended March 30, 1994, 33 emergency angioplasties were performed at Halifax.
Cardiologists practice by the maxim that "time equals muscle." This means that the sooner a patient can be stabilized and the blood flow to the heart restored, the better the chance of survival and the less permanent damage done to the heart. Although thrombolytics are currently the first choice for stabilizing patients with acute MI, studies have shown that immediate access to angioplasty and/or OHS not only improves the survival rate, it also improves the outcome and quality of life for patients with less severe heart disease by preserving more heart muscle.
Halifax's proposed OHS program would also improve the quality of care available to the Medicaid-eligible and uninsured residents in Volusia and Flagler counties. Medicaid-eligible and uninsured residents have historically been under served with regard to OHS services in Volusia and Flagler counties. As of July 1, 1993, approximately 72,000, or 20.5 percent, of the residents of Volusia and Flagler counties were either uninsured or eligible for Medicaid. Persons in the lower income groups likely to be uninsured or eligible for Medicaid are more at risk of heart disease than the population as a whole because of a higher incidence of diabetes and hypertension, more cholesterol in the diet, and a higher incidence of smoking, among other factors.
For the year ended December 31, 1993, members of the lower income groups aged 15 to 64 years received only 37 OHS procedures, or 5.1 percent of the total number of procedures performed on residents of Volusia and Flagler counties. The use rate for Medicaid-eligible residents aged 45 to 64 years for this period was 1.59 per thousand, and the use rate for uninsured residents was
1.2 per thousand. This compares with a use rate for insured residents of the same age cohort of 2.725 per thousand. If the use rate for Medicaid-eligible and uninsured residents for this age cohort were the same as the use rate for insured residents, 57 procedures, rather than 37, would have been performed on this population group. If these residents had full access to OHS services, both the use rate and the total number of procedures would be even greater due to the increased incidence of heart disease.
It is undisputed that Memorial-Ormond provides OHS services to all patients admitted to its facility, without regard for the patient's ability to pay. For the year ended March 31, 1994, it provided 5.6 percent of its OHS
patient days to Medicaid and uninsured/charity patients. It is also undisputed that the cardiologists and cardiovascular surgeons practicing at Memorial- Ormond provide services to all patients referred to them, without regard for the patient's ability to pay. Although both the hospital and the physicians are somewhat compensated for the care provided Medicaid-eligible residents, neither the hospital nor the physicians receive any reimbursement for care provided to uninsured/charity patients.
As a special taxing district, Halifax receives ad valorem tax revenue to assist in financing health care for those residents of the taxing district who qualify as charity patients. Halifax pays a portion of these monies to compensate physicians who provide services at its facilities. Physicians providing OHS and angioplasty services to qualified patients would be compensated at the rate of 16 percent of their usual and customary charges.
This compensation system could lead to an increase in referrals from those physicians who may be inclined to treat heart disease in some patients with drug therapy rather than refer them for OHS or angioplasty to colleagues whom they know will not be paid for their services. Thus, an OHS program at Halifax would improve the quality of care available to the under served population of Volusia and Flagler counties.
Section 408.035(1)(d): The availability and adequacy of other health care facilities and services and hospices in the service district of the applicant, such as outpatient care and ambulatory or home care services, which may serve as alternatives for the health care facilities and services to be provided by the applicant.
The parties stipulated that this criterion is not applicable in this case.
Section 408.035(1)(e): Probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources.
The parties stipulated that this criterion is not applicable in this case.
Section 408.035(1)(f): The need in the service district of the applicant for special equipment and services which are not reasonably and economically accessible in adjoining areas.
As noted above, there are numerous OHS programs available to 90 percent of the residents of Volusia and Flagler counties within a two-hour automobile drive. For the year ended June 30, 1994, 71.5 percent received OHS services at Memorial-Ormond and 1.7 percent received OHS services at the five District IV OHS providers located in the Jacksonville area. For the same period, 14.5 percent of the residents of Volusia County received OHS services at Florida Hospital in Orlando, which is located in District VII; 9.1 percent received OHS services at Central Florida Regional Medical Center (Central Florida Regional) in Sanford, which is also located in District VII; and 2.1 percent received OHS services at facilities other than those in Districts IV or VII.
Florida Hospital has 1500 licensed beds, with 800 beds at its main facility in Orlando where its OHS program is located. Florida Hospital has the highest adult OHS volume in Florida, with annual volumes ranging between 2,000 and 2,200 procedures since 1991. Florida Hospital has five OHS operating rooms
which are run 10 to 16 hours each day during the busy season; a sixth OHS operating room is approved for construction. Its six cardiac catheterization laboratories are staffed by two shifts and run 16 hours each day all year around. It has a 19-bed CVICU. Ten cardiovascular surgeons perform OHS at Florida Hospital and at the three other hospitals in the greater Orlando area which have OHS programs
For the year ended June 30, 1994, 112 procedures were performed at Florida Hospital on residents of Volusia County and one on a resident of Flagler County. The patients from Volusia County are almost exclusively from the western portion of the county, and the choice of Florida Hospital rather than Memorial- Ormond is a function of longstanding physician referral patterns. The percentage of Volusia County residents seeking OHS services at Florida Hospital decreased from 28.1 percent for the year ended June 30, 1993, to the 14.5 percent for the same period in 1994, that is, from 187 patients to 112 patients.
Much of this decrease can be attributed to the opening of a new adult OHS program at Central Florida Regional. Since Central Florida Regional is the closest facility with an OHS program to residents of western Volusia County, several physicians who practice there are changing their referral patterns from Florida Hospital to Central Florida Regional; 71 residents of Volusia County received OHS services from that facility in the year ended June 30, 1994. Central Florida Regional's OHS program is not yet mature, having opened in September of 1993, and, at the time of the hearing, it had not yet attained the required minimum volume of 350 OHS procedures per year.
Florida Hospital and Central Florida Regional provide OHS services to almost 25 percent of the residents of Volusia County seeking OHS services.
While an OHS program at Halifax might capture 10 to 15 percent of the residents of Volusia County who outmigrate to receive OHS services, it would not significantly alter the existing referral patterns to Florida Hospital and Central Florida Regional.
On the other hand, it is much more difficult for residents of Ormond Beach, eastern Volusia County, and Flagler County to access Florida Hospital and Central Florida Regional. While these facilities are accessible within the two- hour drive time standard set by the Agency, residents of these areas comprise
90.2 percent of the OHS volume at Memorial-Ormond and would comprise a substantial portion of Halifax's projected OHS volume. Given the increasing number of residents of Volusia and Flagler counties seeking OHS services and the existing and anticipated capacity constraints at Memorial-Ormond, there would be a need for an OHS program at Halifax to serve residents of these areas notwithstanding the availability of OHS services in Sanford and Orlando.
Section 408.035(1)(g): The need for research and educational facilities, including, but not limited to, institutional training programs and community training programs for health care practitioners and for doctors of osteopathy and medicine at the student, internship, and residency training levels.
For over 20 years, Halifax has operated a family practice residency program in conjunction with the University of South Florida College of Medicine, Department of Family Medicine, as described in paragraph 29, above. Many of the physicians who complete their residencies at Halifax remain in the community as primary care physicians. Because the family practice residents provide direct patient care, an OHS program at Halifax would supplement the training these residents receive in the treatment of cardiovascular disease by providing them with experience in the treatment of pre-OHS and post-OHS patients. Halifax
family practice residents may do an elective rotation at Memorial-Ormond to observe the treatment of OHS patients, but it is not possible for them to provide direct patient care because of the demands of the residency curriculum.
Section 408.035(1)(h): The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; the effects the project will have on clinical needs of health professional training programs in the service district; the extent to which the services will be accessible to schools for health professions in the service district for training purposes if such services are available in a limited number of facilities; the availability of alternative uses of such resources for the provision of other health services; and the extent to which the proposed services will be accessible to all residents of the service district.
The parties stipulated that, if its application is approved, Halifax will be able to recruit the surgical and nursing management personnel, nurses, technicians, and other staff required to operate an OHS program.
The parties also stipulated that Halifax has demonstrated that it will have available the funds for capital and operating expenditures for the accomplishment and operation of its proposed OHS program, including funds to purchase all new equipment needed to operate the program. The expenses for project implementation included in Halifax's application reflect the total cost of the program and are reasonable.
In addition to its family practice residency program, Halifax is affiliated with several universities and community colleges and provides clinical experience for students in nursing and other health care professions. The addition of an OHS program will provide these students with additional opportunities for clinical training.
If Halifax's application for an OHS program is approved, the services will be accessible to all residents of the service district, both geographically and economically.
Sections 408.035(1)(i): The immediate and long-term financial feasibility of the project.
The parties stipulated that Halifax's proposed OHS program will be financially feasible in the immediate and long term; that it has available the funds necessary to undertake the capital expenditures required to establish its proposed OHS program; that the program will generate revenues in excess of expenses in the second year of operation; and that the projected annual salaries for surgical and critical care staff are adequate and reasonable.
Section 408.035(1)(j) and (l): The special needs and circumstances of health maintenance organizations; the probable impact of the proposed project on the costs of providing health services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services which foster competition and service to promote quality assurance and cost-effectiveness.
Managed care is an approach to providing health care to a target population or group; it focuses on competitive market purchasing, utilization review, and quality assessment and improvement in order to provide comprehensive
health care which is appropriate and cost-effective. At the time of the hearing, there were approximately eight managed care organizations operating in Volusia and Flagler counties, three devoted exclusively to Medicaid patients and five commercial organizations. The two largest organizations are Humana and Florida Health Care Plan, a not-for-profit HMO which has been in existence for over 20 years and was recently acquired by Halifax. Both of these organizations have approximately 45,000 members, and a total of more than 125,000 residents of Volusia and Flagler counties are members of a managed care organization.
Membership in managed care organizations is increasing at the rate of about 10 percent a year, and this increase is expected to continue.
Memorial-Ormond has contracts with both Humana and Florida Health Care Plan for OHS services, as well as for acute care services. For the year ended June 30, 1994, 29.8 percent of the total OHS volume at Memorial-Ormond was provided to members of HMOs or preferred provider organizations (PPOs), and it expects its managed care contract with Humana to result in a substantial increase in its future volume of OHS services. Florida Health Care Plan members had 60 OHS procedures and 72 angioplasties for the year ending June 30, 1994, and 80 OHS procedures and 88 angioplasties for the 10 months ending April 30, 1995; except perhaps for emergencies occurring out of the Volusia County and Flagler County area, all of these procedures were performed at Memorial-Ormond.
Over the past several years, Memorial-Ormond has, through acquisition or creation of new programs, developed an integrated health care delivery system capable of providing the complete spectrum of health care services required by managed care organizations. Because it has an exclusive franchise on OHS and angioplasty in the eastern Volusia County and Flagler County area, it has no need to be competitive in pricing either its OHS services or its acute care services, and it can require that managed care organizations include acute care services in contracts for OHS services. 26/ Because Memorial-Ormond either owns, operates, or participates in the management of the two main acute care hospitals in western Volusia County and Flagler County, it can control pricing of and access to the acute care services of those hospitals as well.
Although managed care organizations with the majority of their membership in western Volusia County could negotiate managed care contracts for OHS services with Central Florida Regional and Florida Hospital or other Orlando area providers, those whose membership is derived mainly from residents of eastern Volusia and Flagler counties may find they cannot market contracts providing OHS services only at District VII facilities. These managed care organizations would be in a better position to negotiate lower priced contracts if there were another OHS program in the area.
In addition, charges for OHS services in general would likely be lower if there were a second OHS program serving Volusia and Flagler counties. Halifax has agreed to accept a condition of a Certificate of Need to operate an OHS program that it set its charges for OHS services below those of Memorial- Ormond. Lower charges for OHS services would have an impact on both the charges payable by third-party payors and on the amount of co-pay charges and deductibles which must be paid directly by patients. In addition, since Memorial-Ormond could respond to the lower charges for Halifax's OHS services by lowering its own charges and/or enhancing the quality of care provided, competition, cost-efficiency, and quality assurance would be promoted by an OHS program at Halifax.
There are significant costs generated by the emergency transfer of a patient from Halifax to Memorial-Ormond for OHS or angioplasty. A study was
done comparing a group of patients admitted to Halifax and then transferred to Memorial-Ormond for coronary bypass surgery without cardiac catheterization (DRG
107) and for angioplasty (DRG 112) with a group of patients admitted directly to Memorial-Ormond and receiving coronary bypass surgery and angioplasty. For both procedures, total ALOS and the average total charges were significantly higher for the patients transferred from Halifax than for those admitted directly to Memorial-Ormond.
The results of the study showed that the patients transferred from Halifax for coronary bypass surgery had an ALOS of 13.4 days compared with an ALOS of 11.4 days for patients admitted directly to Memorial-Ormond. The total average charges were $47,108 for patients transferred from Halifax and $37,743 for patients admitted directly to Memorial-Ormond. The patients transferred from Halifax for angioplasty had an ALOS of 6.6 days compared with 2.6 days for patients admitted directly to Memorial-Ormond. The total average charges were
$20,230 for patients transferred from Halifax and $8,763 for patients admitted directly to Memorial-Ormond.
Increased costs related to the care of patients transferred from an admitting hospital to a facility offering OHS and angioplasty are inherent in the delivery of tertiary health services. However, the costs associated with the transfer of patients from Halifax to Memorial-Ormond for OHS and angioplasty are substantial because of the volume of transfers generated by the large number of patients presenting at Halifax's emergency room with acute MI. Figures presented by Memorial-Ormond show that, for the year ended March, 1994, Halifax transferred 99 patients to Memorial-Ormond with the OHS DRGs 104 through 108. Even though it cannot be assumed that each transfer generated an additional cost to the system of $10,000, it can be inferred that the costs of providing OHS to residents of Volusia and Flagler counties would be substantially reduced if Halifax had an OHS program.
OHS and angioplasty services could be provided to the residents of Volusia and Flagler counties in a more cost-effective manner if Halifax's application to operate an OHS program were approved. Managed care organizations would benefit from the competition created by having two OHS providers available in the eastern Volusia/Flagler primary service area, and both third-party payors and OHS and angioplasty patients would benefit from the lower charges generated by the competition between Halifax and Memorial-Ormond. In addition, quality assurance would be promoted because quality of care, as well as lower charges, attract patients and managed care organizations to a health care provider.
Section 408.035(1)(k): The needs and circumstances of those entities which provide a substantial portion of their services or resources, or both, to individuals not residing in the service district in which the entities are located or in adjacent service districts. Such entities may include medical and other health professions, schools, multidisciplinary clinics, and specialty services such as open-heart surgery, radiation therapy, and renal transplantation.
The parties stipulated that this criterion is not applicable in this case.
Section 408.035(1)(m): The costs and methods of the proposed construction
Halifax was granted a Certificate of Need in 1993 for a $25 million new construction project which will add approximately 81,000 square feet to the existing facility. One of the major components of this project is the
construction of an entirely new surgical department on the third floor of Halifax's central medical tower. This new construction will include storage space which, if Halifax's application for an OHS program were approved, could be converted into two dedicated OHS operating rooms. The total construction costs associated with remodeling the storage space would be approximately $487,000, an amount which, although somewhat high, is reasonable and adequate.
A six-bed CVICU would be located on the fourth floor in remodeled space which previously housed the surgical recovery unit. The total construction costs associating with remodeling the existing space would be approximately
$323,500, an amount which is reasonable and adequate.
A bridge leading to the CVICU from the dedicated OHS operating rooms would be the only new construction needed if Halifax's application were approved. The total construction costs would be approximately $107,000, an amount which is reasonable and adequate.
Total construction costs, which include a contingency of 10 percent of total project cost and a cost increase based on a 3 percent rate of inflation, are projected at $1,071,000. This amount is reasonable and adequate.
The estimated cost of the equipment which Halifax must purchase specifically for the proposed OHS program would total $1,488,500. This amount includes all fixed and movable equipment necessary to implement the OHS program, including the two dedicated operating rooms and the CVICU, except for the equipment that is built in during construction and included in the construction costs. It does not, and need not, include the cost of general equipment and supplies which are available from Halifax's existing inventory, which are included for purchase in Halifax's annual capital budgets, or which are purchased routinely from the hospital's equipment budget. The parties stipulated that the unit costs and depreciation periods for the "new purchase" equipment included in Halifax's application are reasonable.
The parties stipulated that the estimated costs of architectural/engineering fees and the Certificate of Need filing fee reflected in Halifax's estimated project costs are reasonable and adequate.
The parties stipulated that the proposed design of the dedicated OHS operating rooms and the CVICU are reasonable from an architectural point of view. They also stipulated that the proposed design and methods of construction for the OHS operating rooms and the CVICU are reasonable and that the project completion forecast set forth in Halifax's application is reasonable with respect to the number of days required for each step.
Section 408.035(1)(n) and rule 59C-1.030: The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent; the extent to which medically underserved groups in the community will have access to the services proposed
Halifax is a disproportionate share provider of health care services to Medicaid patients, and it has historically provided more care to Medicaid and charity patients than any other hospital in Volusia and Flagler counties. Halifax is willing to condition its Certificate of Need for an OHS program on providing over 10 percent of its annual OHS patient days to the care of Medicaid and indigent/charity patients. Halifax has projected that it will provide 10.8
percent of its total OHS patient days to these patients in the first year of operation and 11.2 percent of its total OHS patient days in the second and third years of operation.
As discussed in paragraphs 134 through 137, above, there is an unmet need in Volusia and Flagler counties for additional OHS services for Medicaid- eligible and uninsured residents. Many of these underserved residents access the health care system only through visits to Halifax's emergency room; over 50 percent of the emergency room visits are by Medicaid and indigent/charity patients. Halifax has established a community outreach program consisting of four community clinics designed to lessen dependence on emergency room visits and to provide members of the lower income groups with convenient access to primary care services. Halifax operates a Family Practice Center as part of its family practice residency program, and 42 percent of its volume was Medicaid and indigent/charity patients during the year ended June 30, 1994. Primary care physicians working in the clinics and Family Practice Center that treat patients with cardiovascular disease can refer patients for cardiology services to Halifax's indigent clinic when indicated. All physicians providing OHS and angioplasty to qualifying charity patients at Halifax receive some compensation for their services.
Section 408.035(1)(o): The applicant's past and proposed provision of services which promote a continuum of care in a multilevel health care system, which may include, but is not limited to, acute care, skilled nursing care, home health care, and adult congregate living facilities.
The parties stipulated that Halifax's past provision of services has promoted a continuum of care in a multilevel health system and that its proposed open heart surgery program will promote that goal.
Section 408.035(2)(a)and (c): In the case of proposed new services to inpatients, that less costly, more efficient, or more appropriate alternatives to such inpatient services are not available and the development of such alternatives has been studied and found not practicable; in the case of proposed new services to inpatients involving new construction, that alternatives to new construction, for example, modernization or sharing arrangements, have been considered and have been implemented to the maximum extent practicable.
Halifax will use renovation and modernization of existing facilities to house the components of its OHS program.
There is little likelihood that Memorial-Ormond and Halifax could successfully develop a joint or shared OHS program. Over the years, proposals to develop joint or shared programs have been visited and revisited. In 1992-1993, the management, boards, and physicians at both facilities explored the possibility of establishing a joint venture for a radiation-oncology program and, at Halifax's request, a joint venture for the OHS program. Memorial-Ormond was not satisfied with Halifax's proposal for the radiation-oncology program and resisted development of a joint OHS program. Discussions broke off, although Memorial-Ormond's management perceived that there were still questions in the community regarding whether a joint OHS program might be developed. As a result, in January, 1994, at a time when Halifax was considering filing an application for an OHS program, Memorial-Ormond sponsored a study to explore the need for and the possibility of developing a joint OHS program with Halifax.
The model proposed by Memorial-Ormond's consultant was ultimately rejected by Memorial-Ormond because it was felt that the model proposed was not applicable to the particular circumstances existing between Halifax and Memorial-Ormond.
Section 408.035(2)(e): In the case of proposed new services to inpatients and in the case of a proposal for the addition of beds for the provision of skilled nursing or intermediate care services, that the addition will be consistent with the plans of other agencies of the state responsible for the provision and financing of long-term care, including home health services.
The parties stipulated that this criterion is not applicable in this case.
Summary and overall evaluation of the application in terms of need and statutory and rule criteria.
None of the statutory and rule criteria applicable to applications for certificates of need for adult OHS programs have been overlooked in evaluating Halifax's application. Halifax has proven by a preponderance of the evidence that there is a community need for an additional adult OHS program in District IV to serve the residents of Volusia and Flagler counties. Halifax has also proven by a preponderance of the evidence that its proposed program substantially satisfies the relevant rule and statutory criteria.
The fixed need pool for adult OHS programs in District IV was zero for the January, 1997, planning horizon. Halifax has, however, established by the greater weight of the evidence that community need for an additional adult OHS program in District IV is supported by "not normal" circumstances
A "not normal" circumstance arises out of the application of the Agency's need determination rule to the facts of this case. The formula for calculating net numeric need projects need for two additional adult OHS programs in District IV for the January, 1997, planning horizon. The only bar to publication of a fixed need pool of one additional program was the "350- procedure" standard: Three of the five OHS providers in Jacksonville failed to perform 350 OHS procedures annually for the relevant time period. However, it is undisputed that there would be no impact at all on the volume of OHS procedures performed at these three Jacksonville providers if Halifax's application were approved. Since the purpose of the "350-procedure" standard is to ensure that existing providers in the district have a sufficient volume of OHS procedures to ensure a high quality program, need for an additional program is established in this case because there is clearly a net numeric need and the purpose of the "350-procedure" standard would not be thwarted.
A "not normal" circumstance in this case results from the increasing utilization of Memorial-Ormond's OHS and angioplasty services. Memorial- Ormond's OHS program was operating very close to capacity in 1994, especially in terms of the available critical care beds, and the number of OHS procedures performed at that facility increased significantly in the first five months of 1995. Even if it were to expand the capacity of its program as planned,
Memorial-Ormond would still not have sufficient capacity over the long term to handle the increasing number of residents of Volusia and Flagler counties seeking access to OHS and angioplasty services. The population of these counties is expected to increase at a greater rate than that of Florida and District IV as a whole, and the percentage of the total population of Volusia County aged 65 years and older is significantly larger than that of District IV as a whole and of Florida. And, notwithstanding the demographics of the population of Volusia and Flagler counties, Memorial-Ormond's was the only
District IV OHS program serving their 430,000 residents; in contrast, the ratio of OHS programs to population in the other counties of District IV was one-to- 200,000 residents.
A "not normal" circumstance in this case is the under- utilization of OHS services by low income residents in Volusia and Flagler counties. Neither Memorial-Ormond nor the cardiologists or cardiovascular surgeons providing OHS and angioplasty services at Memorial-Ormond have refused to treat a patient because of his or her inability to pay. However, because of its status as a special taxing district, Halifax is able to compensate physicians providing charity services through its facilities. Therefore, an OHS program at Halifax would encourage referrals from primary care physicians to cardiologists and thence to cardiovascular surgeons, thereby increasing economic access to OHS services.
In addition to having proved community need for an additional adult OHS program in District IV, Halifax has established by the greater weight of the evidence that its proposed program is consistent with the statutory and rule criteria governing certificates of need for adult OHS programs. Specifically, the proof is sufficient to demonstrate that Halifax's proposed program will not cause the volume of OHS procedures performed at Memorial-Ormond to fall below the minimum threshold of 350 procedures per year and will not, therefore, jeopardize the existing high quality of care provided by that program.
On the basis of the facts found herein and pursuant to a balanced consideration of the relevant statutory and rule criteria, Halifax's application for a Certificate of Need to establish an adult OHS program should be approved.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of these proceedings. 120.57(1), Fla. Stat.
The criteria set out in section 408.035(1) and (2), Florida Statutes, and in rules 59C-1.008, 1.030, and 1.033, Florida Administrative Code, are applicable to this proceeding.
As the applicant, Halifax has the burden of proving its entitlement to a Certificate of Need, Boca Raton Artificial Kidney Center, Inc. v. Department of Health and Rehabilitative Services, 475 So. 2d 260 (Fla. 1st DCA 1985), and a balanced consideration must be made of the applicant in light of all the matters specified in the relevant criteria. Human, Inc. v. Department of Health and Rehabilitative Services, 469 So. 2d 889 (Fla. 1st DCA 1985); Department of Health and Rehabilitative Services v. Johnson and Johnson, 447 So. 2d 361, 363 (Fla. 1st DCA 1984). Varying weight must be accorded each criterion depending on the facts and circumstances of each case. Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So. 2d 83 (Fla. 1st DCA 1985).
As described in the findings of fact, Halifax has, on balance, demonstrated its entitlement to a Certificate of Need to establish an adult OHS program.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration issue Certificate of Need Number 7851 to Halifax Hospital Medical Center, with the conditions that it ensure that the volume of adult open heart surgery procedures performed at Memorial Hospital-Ormond Beach not fall below 350 procedures annually, that it set its charges for open heart surgery services lower than the charges of Memorial Hospital-Ormond Beach, and that it provide at least 10 percent of its annual open heart surgery patient days to Medicaid and uninsured/charity patients.
DONE AND ENTERED this 30th day of September, 1996, in Tallahassee, Leon County, Florida.
PATRICIA HART MALONO, 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 30th day of September, 1996.
ENDNOTES
1/ Coronary angioplasty may be performed only in a hospital which has an OHS program. Rule 59C-1.032(6)(b), F. A. C.
2/ A hospital's "primary service area" is generally defined as the geographical area in which 80 percent of its patients reside. This is not to be confused with the "Adult Open Heart Surgery Program Service Area," which is defined in rule 59C-1.033(2)(b) as the district within which the program is located.
3/ Integrated health systems consist of a variety of health care providers gathered into one organization, either through ownership or contractual relationships, in order to be in a better position to negotiate contracts with major third-party payors and block group purchasers of health care services.
4/ Patients identified as self-pay patients are those who do not have health insurance; the charges for their care are likely to be written off as bad debts or handled as charity care. Patients are qualified as charity patients at Halifax when their income is 150 percent or less of the federal poverty level.
5/ Halifax Hospital Medical Center was created as a special taxing district within Volusia County in chapter 79-577, Laws of Florida (1979), the successor to the special taxing districts of Halifax Hospital Tax District and Halifax Hospital Medical Center established by the legislature in 1925. Chapter 79-577 authorized the imposition of an ad valorem tax to help finance health services for the indigent residents of that part of Volusia County included in the taxing district. The district, acting through its Board of Commissioners, was authorized to establish and operate hospitals, clinics, outpatient facilities,
and such other services as needed to meet the health care needs of the community. Although indigent residents of the taxing district have the first claim to admission, the facilities and services are, and historically have been, available to everyone in the community, both residents and nonresidents of the taxing district, regardless of their ability to pay.
6/ Because rule 59C-1.033(7)(b) permits approval of only one additional program for a given planning horizon, the Agency could, based solely on the calculation of net numeric need, have published a fixed need pool of only one OHS program in District IV for the January, 1997, planning horizon.
7/ The Health Facilities and Services Development Act, sections 408.031-.045, Florida Statutes (1993) does not provide for the delicensure of hospitals which chronically fail to meet the "350 annual procedures" requirement. One of the recommendations in The Florida Health Security Plan, Healthy Homes 1994, published in December, 1993, was that the Act be modified to allow delicensure under these circumstances.
8/ St. Luke's Hospital is the only one of the three Jacksonville providers which attained an annual volume of more than 350 open heart surgeries between January, 1990, and December, 1994; during the 1990 calendar year, it had a volume of 363 procedures. Between January, 1990, and December, 1994, the highest annual volume of adult open heart operations performed at University Medical Center was 225 during the 1994 calendar year, and the highest annual volume at Baptist Medical Center-Jacksonville was 327 during the 1994 calendar year.
9/ Because this is an allocation factor developed by the Health Planning Council of Northeast Florida, the local health council for District IV, it must be presumed that the term "adjacent inpatient facilities" refers to facilities located in District IV.
10/ It is undisputed that, up to a point, the higher the volume of OHS procedures performed at a facility, the lower the mortality rate from OHS. There is, however, some dispute regarding the point beyond which the volume of OHS procedures has no impact on the quality of OHS outcomes; estimates range from 250 procedures to 600 or more procedures annually. For purposes of this analysis, the Agency's determination that 350 procedures annually is sufficient to ensure a quality program is entitled to deference.
11/ Memorial-Ormond objected at hearing to the introduction of evidence of any demographic characteristics of the population of Volusia and Flagler counties, arguing that the court in Health Quest Realty XII v. Department of Health and Rehabilitative Services, 477 So. 2d 576, 579 (Fla. 1st DCA 1985), held that demographic characteristics are considered in the Agency's need methodology and may not be considered "not normal" factors which would justify a finding of need notwithstanding publication of a zero fixed need pool. The factors raised in Health Quest XII were specifically included as elements of the formula used by the Agency to calculate net numeric need for additional nursing home beds.
In contrast, the demographic characteristics introduced by Halifax related to population distribution in District IV, actual use rates in selected areas of the district, and percentages of population by age cohort in selected areas of the district. These characteristics are not included as elements of the formula used by the Agency to calculate net numeric need for an additional OHS program. The only demographic elements of the formula in rule 59C- 1.033(7)(b) are the actual use rate, defined as the number of adult OHS procedures performed in the district for the time period specified, and the projected population aged 15
years and older in the district for the applicable planning horizon. Therefore, the holding in Health Quest XII does not bar the introduction of evidence relating to the demographic characteristics of Volusia and Flagler counties.
12/ Memorial-Ormond presented testimony relating to the overall decrease in utilization of OHS services expected to result from the use of the 1992 American College of Cardiology/American Heart Association diagnostic guidelines for cardiac surgery; from the increase in managed care and in the use of capitation; and from technological and clinical advances in the prevention and treatment of heart disease. If there is, indeed, a direct relationship between these factors and the apparent leveling off of demand for OHS services nationally, these factors have not affected utilization in Volusia and Flagler counties. First, there has been an increase in the OHS utilization rate for residents of Volusia and Flagler counties since 1992, so it appears that the ACC/AHA diagnostic guidelines have not caused a decrease in utilization.
Secondly, no evidence was presented quantifying the impact of the increased use of capitation and regionalization, which is, as yet, entirely speculative.
The same is true with regard to the introduction of new drugs, clinical procedures, and technologies for the prevention and treatment of heart disease and as substitutes for OHS. To the extent that a number of these drugs, clinical procedures, and technologies have not yet been proven effective, any prediction of their future effect on OHS utilization is speculative.
Finally, there was no showing that the statistics presented by Memorial- Ormond contrasting the 1992 national utilization rates of OHS services by members of HMOs and by the general population account for possibly relevant distinctions between those persons likely to be members of HMOs and the general population. In addition, at the time of the hearing, approximately 125,000 residents of Volusia and Flagler counties were members of an HMO or other managed care organization, an approximately 30 percent penetration given the counties' combined population of approximately 430,000. Nevertheless, the volume of OHS procedures authorized during the 10-month period ending April 30, 1995, by one Volusia/Flagler HMO increased 25 percent over the volume authorized in the preceding 12-month period. In addition, there was testimony that HMOs are responsible for providing access to OHS services to residents of Volusia and Flagler counties who had previously not had access to such services and that OHS volumes at Memorial-Ormond had actually increased as a result of its contract with Humana, one of the largest HMOs in the area. It is, therefore, not clear that the anticipated increase in HMO penetration will result in a decrease in OHS utilization in Volusia and Flagler counties.
13/ Memorial-Ormond's OHS market shares for the year ended March 30, 1994, were
94.2 percent of the residents of Ormond Beach who sought OHS services (98 patients), 92.7 percent of the residents of eastern Volusia County south of Ormond Beach (343 patients), 22.7 percent of the residents of western Volusia County (53 patients), and 79.3 percent of the residents of Flagler County (65 patients).
14/ Whether the number of western Volusia County residents obtaining OHS services at Central Florida Regional Medical Center will be affected by Memorial-Ormond's increased presence in western Volusia County is more problematic. As Central Florida's OHS program matures, it is attracting new cardiologists and cardiovascular surgeons to its primary service area. Central
Florida is also much closer geographically to western Volusia County than either Memorial-Ormond or Florida Hospital.
15/ Memorial-Ormond argued that this condition would be meaningless and unenforceable because cardiologists and cardiovascular surgeons control the
number of patients admitted to a hospital for OHS, not the hospital, and because the only sanction available to the Agency would be the imposition of an administrative fine of $2,000 per day against Halifax for each day that the condition is not met. This contention is not persuasive. The group of cardiovascular surgeons which would perform OHS at both Memorial-Ormond and Halifax has committed to ensure that the minimum 350-procedure condition is met. A member of one of the larger cardiology groups practicing at Memorial-Ormond and Halifax estimated that, at the time of the hearing, his group sent approximately 350 patients to Memorial-Ormond for OHS each year. Several members of this group support the Halifax application and have agreed to assist Halifax in meeting the condition. One of these cardiologists is the medical director of the Humana HMO and has the authority to designate how many OHS cases are sent to Memorial-Ormond. In addition, a fine of $2,000 per day would provide an incentive for Halifax to do everything possible to ensure that the condition is met.
16/ For the year ended April 30, 1995, 844 angioplasties were performed at Memorial-Ormond.
17/ Net revenue per case for each DRG was calculated by multiplying the average gross charge per case times the average collection percentage for each DRG. The variable cost per case for each DRG was calculated by multiplying the total cost per case by 60 percent to reflect the estimated variable-to-fixed costs ratio.
18/ The negative financial impact of the proposed Halifax OHS program may also be mitigated by revenue generated by the new programs Memorial-Ormond is inaugurating. Its new joint oncology radiology program with Florida Hospital and its new women's program will likely be profitable by 1998 and will contribute to its net operating income.
19/ Between January and April, 1995, the number of procedures performed each month has varied from the number performed during the same period in 1994 as follows:
January volumes: +22, from 58 to 80
February volumes: +11, from 57 to 66
March volumes: +25, from 58 to 83
April volumes: +26, from 59 to 85
These increases do not appear to be abnormal since, with three exceptions, the volume of OHS procedures performed at Memorial- Ormond has increased each month between May, 1994, and January 1995. The following are the 1994 decreases/increases from corresponding 1993 volumes:
May volumes: -12, from 52 to 40 (compare with the projected 1995 volume of 61 procedures)
June volumes: -1, from 41 to 40
July volumes: +24, from 30 to 54
August volumes: +5, from 47 to 52 September volumes: no change at 49 October volumes: +12, from 47 to 59
November volumes: +17, from 46 to 63
December volumes: +17, from 46 to 63
In addition, although January through April is the height of the annual "season" in Volusia and Flagler counties, during which the OHS surgeons are approximately 20 percent busier than in the "off-season," the seasonal difference in OHS volume is not as dramatic as it was in the past.
20/ For the year ended March 31, 1994, 721 angioplasties and 1,433 diagnostic cardiac catheterizations were performed in Memorial-Ormond's 1.8 cardiac catheterization laboratories. For the year ended March 31, 1995, the total was 844 angioplasties and 1550 diagnostic cardiac catheterizations. The calculations of cardiac catheterization laboratory capacity presented by Memorial-Ormond projected that, with increased hours of operation, Memorial- Ormond could handle a total of 859 angioplasties and 3,812 diagnostic procedures per year; with two cardiac catheterization laboratories, it could handle a total of 680 angioplasties and 3,000 diagnostic procedures per year; and, with both increased hours and two laboratories, it could handle a total of 900 angioplasties and 3,990 diagnostic procedures per year.
21/ At hearing, Memorial-Ormond pointed out that information it provided Halifax in discovery regarding CVICU and CCCU occupancy levels was misleading in that it overstated the number of OHS patients occupying those units. In fact, the information included patients who had other cardiovascular procedures and even patients who were admitted for observation after having had a cardiac catheterization. Because Memorial-Ormond did not present any adjusted figures, there is no evidence to contradict the evidence submitted by Halifax on this issue.
22/ Memorial-Ormond used a purely mathematical calculation to show that, at 75 percent occupancy, its six-bed CVICU with an ALOS of 1.9 days could accommodate 864 patients per year. Nothing is factored into this calculation to account for the daily, weekly, and monthly fluctuations in demand for CVICU beds. For example, 80 or more OHS cases were performed at Memorial-Ormond in January, March, and April, 1995; however, based upon a purely mathematical calculation (864 divided by 12), the CVICU could accommodate only 72 patients per month. It is also of note that, as previously discussed, the volume of OHS cases at Memorial-Ormond for 1995 could approach 846 procedures, based on the number of OHS cases actually performed at Memorial-Ormond in the first four months of 1995, seasonally adjusted and annualized.
23/ The additional cardiac catheterization laboratory would be used primarily to increase the number of diagnostic cardiac catheterizations that could be performed at Memorial-Ormond. See endnote 20, supra. These procedures are not considered part of the services provided within an OHS program; rather, they are governed by separate Certificate of Need rules.
24/ The estimated $5 million project cost of the proposed expansion is substantially more than the $2.7 million project cost to renovate existing space and purchase additional equipment at Halifax to start up an OHS program.
25/ Memorial-Ormond used a purely mathematical calculation to show that, at 75 percent occupancy, an eight-bed CVICU with an ALOS of 1.9 days could accommodate 1,153 patients per year. From an empirical, rather than a planning, perspective, this is substantially overstated for the reasons stated in endnote 22, supra.
26/ There was evidence that Memorial-Ormond's contract with the Florida Health Care Plan included acute care charges somewhat higher than those in its contract with other acute care hospitals in the area, including Halifax. There was no evidence that the charges included for OHS services in Memorial-Ormond's managed care contracts were any higher than the norm.
APPENDIX
To comply with the requirements of section 120.59(2), Florida Statutes, the following rulings are made on the proposed findings of fact submitted by the parties:
Petitioner's proposed findings of fact.
Paragraphs 1 and 2: Addressed in paragraph 3.
Paragraph 3: The proposed finding of fact in the first sentence is dealt with in the Preliminary Statement; the proposed finding of fact in the second sentence is addressed in paragraph 3.
Paragraphs 4 through 6: Addressed in paragraph 4 except where subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraphs 7 through 9: Dealt with in the Preliminary Statement.
Paragraph 10: Addressed in paragraphs 25, 28, 38, and 57 and in endnote 5.
Paragraph 11: Addressed in paragraphs 19 and 98.
Paragraph 12: Addressed in paragraphs 20, 21, 34, 63, and 126.
Paragraph 13: Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 14: Addressed in paragraphs 8, 10, 15, and 16.
Paragraph 15: Accepted in substance and incorporated in paragraph 7, although not verbatim.
Paragraph 16: Addressed in paragraphs 3 and 5 and in endnote 1.
Paragraphs 17 through 22: Accepted in substance and incorporated in paragraphs 4 and 5, although not verbatim.
Paragraph 23: The proposed findings of fact in the first and fourth sentences are rejected as contrary to the facts as found in paragraphs 54, 55, 64, and 102; the remaining proposed findings of fact are addressed in paragraphs
50 through 53 and 56 through 63.
Paragraph 24: The proposed finding of fact in the second sentence is rejected as contrary to the facts as found in paragraphs 74, 76, 94, and 102; the remaining proposed findings of fact are addressed in paragraphs 65 through 67, 70 through 73, and 95 through 101.
Paragraph 25: The proposed findings of fact in the first and second sentences are addressed in paragraphs 45 and 176; the proposed finding of fact in the third sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 26: Rejected because mischaracterizes the evidence; Ms. Dudek testified at hearing that the factors identified in this proposed finding of fact were considered by the Agency and supported its approval of the Naples Community Hospital OHS program.
Paragraph 27: Not incorporated into findings of fact because, even if true, would not be dispositive of the issues presented; each application for a Certificate of Need must be evaluated in light of facts and circumstances specific to that case.
Paragraphs 28 and 29: Accepted in substance and incorporated in paragraphs
44 through 47, although not verbatim.
Paragraph 30: The proposed finding of fact in the first sentence is addressed in paragraph 126; the proposed finding of fact in the second sentence is rejected because not supported by the greater weight of the credible evidence.
Paragraph 31: The proposed finding of fact in the first sentence is addressed in paragraphs 51, 82, and 178; the proposed finding of fact in the second sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 32: Not incorporated in the findings of fact because subordinate to the facts as found or irrelevant to the issues presented.
Paragraph 33: Addressed in paragraphs 108 and 109.
Paragraph 34: The proposed finding of fact in the first sentence is addressed in paragraphs 105 through 123; the proposed finding of fact in the second sentence is rejected because not supported by the greater weight of the credible evidence and rejected as contrary to the facts as found in paragraph 115.
Paragraph 35: The proposed finding of fact in the first sentence is accepted in substance and incorporated in paragraph 106, although not verbatim; the proposed finding of fact in the second sentence is addressed in paragraph 107; the proposed finding of fact in the third sentence that Memorial intends to enhance its OHS capacity is accepted in substance and incorporated in paragraph 122, although not verbatim; the remaining proposed finding of fact in the third sentence is rejected because it is irrelevant to the issues presented.
Paragraphs 36 through 41: Addressed in paragraphs 80 and 117 through 121
and in endnotes 19 and 21.
Paragraph 42: Accepted in substance and incorporated in paragraph 110, although not verbatim.
Paragraph 43: Addressed in paragraph 110 except that the proposed finding of fact that Memorial-Ormond experienced a significant degree of staff turnover is rejected because not supported by the greater weight of the credible evidence.
Paragraph 44: Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 45: The proposed finding of fact in the second sentence is rejected because not supported by the greater weight of the credible evidence; the remaining proposed findings of fact are addressed in paragraph 121.
Paragraph 46: The proposed findings of fact in the first and second sentences are addressed in paragraphs 112 and 114 and in endnote 20; the proposed finding of fact in the fourth sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the proposed finding of fact in the third sentence is accepted as true as far as it goes, however the evidence demonstrated that 80 percent of the time available in the second cardiac catheterization laboratory is actually used for cardiology procedures.
Paragraph 47: The proposed finding of fact in the fourth sentence is rejected as contrary to the facts as found in paragraph 115; the remaining proposed findings of fact are addressed in paragraph 115.
Paragraph 48: Addressed in paragraphs 114 and 115.
Paragraph 49: The proposed finding of fact in the first clause of the first sentence is accepted in substance and incorporated in paragraph 116, although not verbatim; the proposed finding of fact in the second clause of the first sentence is rejected because not supported by the greater weight of the credible evidence and because subordinate to the facts as found in paragraph 114; the proposed finding of fact in the second sentence is addressed in paragraphs 112, 114, and 115.
Paragraph 50: Not incorporated into findings of fact because, even if true, it would not be dispositive of the issues presented.
Paragraph 51: Accepted in substance and incorporated in paragraphs 46, 51, 82, 177, and 178, although not verbatim.
Paragraph 52: The proposed finding of fact in the first part of the first sentence is rejected because it mischaracterizes the evidence, which demonstrated that residents of Volusia and Flagler counties have higher mortality rates from cardiovascular and heart disease not that they have higher disease rates; the remaining proposed findings of fact are accepted in substance and incorporated in paragraphs 82 and 83, although not verbatim.
Paragraphs 53 through 55: Addressed in paragraphs 53, 78 through 81, 83,
and 87.
Paragraph 56: The proposed findings of fact in the first and second sentences are rejected because not supported by the greater weight of the credible evidence; the proposed finding of fact in the third sentence is not incorporated in the findings of fact because subordinate to the facts as found.
Paragraph 57: Addressed in paragraphs 55, 84, 140, 142, and 143.
Paragraph 58: The proposed finding of fact in the first sentence is rejected as contrary to the facts as found in paragraphs 55 and 144; the proposed finding of fact in the second sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraphs 59 and 60: Accepted in substance and incorporated in paragraphs
16 and 85, although not verbatim.
Paragraph 61: Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 62: The proposed findings of fact in the first and third sentences are addressed in paragraphs 86, 152, and 153 and in endnote 12; the proposed finding of fact in the second sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the proposed finding of fact in the fourth sentence is rejected because not supported by the greater weight of the credible evidence.
Paragraph 63: Addressed in paragraph 82 except to the extent not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 64: The proposed findings of fact in the first, second and fourth sentences are accepted in substance and incorporated in paragraph 130, although not verbatim; the proposed finding of fact in the third sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 65: The proposed finding of fact in the first sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed findings of fact are accepted in substance and incorporated in paragraph 131, although not verbatim.
Paragraph 66: Accepted in substance and incorporated in paragraphs 131 and 133, although not verbatim.
Paragraph 67: The proposed finding of fact in the first sentence is accepted in substance and incorporated in paragraphs 131 and 133, although not verbatim; the proposed finding of fact in the second sentence is accepted in substance and incorporated in paragraph 131, although not verbatim, except that there is not sufficient persuasive evidence to support the proposed finding that drug therapy is insufficient for 40 percent of heart attack patients; the proposed finding of fact in the third sentence is accepted as inherent in the issue presented in this proceeding; the remaining proposed findings of fact are addressed in paragraphs 63 and 131 through 133.
Paragraph 68: The proposed finding of fact in the first sentence is addressed in paragraph 131; the proposed findings of fact in the second and third sentences are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented, except that the increase in costs is accepted in substance and incorporated in paragraphs 157 through 159, although not verbatim; the proposed finding of fact in the fourth sentence is rejected because not supported by the greater weight of the credible evidence.
Paragraph 69: Addressed in paragraphs 129 and 132.
Paragraph 70: Not incorporated into findings of fact because, even if true, they would not be dispositive of the issues presented.
Paragraph 71: Addressed in paragraph 157.
Paragraph 72: The proposed finding of fact in the first sentence is not incorporated in the findings of fact because subordinate to the facts as found in paragraph 158; the remaining proposed findings of fact are addressed in paragraph 158.
Paragraph 73: Accepted in substance and incorporated in paragraph 158, although not verbatim.
Paragraph 74: Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 75: Not incorporated into findings of fact because, even if true, it would not be dispositive of the issues presented.
Paragraph 76: Addressed in paragraph 129.
Paragraph 77: The proposed finding of fact in the first sentence is addressed in paragraph 130; the proposed finding of fact in the second sentence is rejected because merely recites or summarizes testimony.
Paragraph 78: The proposed finding of fact in the first sentence is addressed in paragraphs 59 and 126; the proposed finding of fact in the second sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 79: The proposed finding of fact in the fourth sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed findings of fact are addressed in paragraphs 22, 23, 37, and 40.
Paragraphs 80 through 88: Accepted in substance and incorporated in paragraphs 30, 34, 37, 39 through 42, and 125, although not verbatim.
Paragraph 89: The proposed findings of fact in the first and second sentences are accepted in substance and incorporated in paragraphs 40 and 127, although not verbatim; the proposed finding of fact in the third sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraphs 90 and 91: Accepted in substance and incorporated in paragraphs 41, 42, 60, and 126, although not verbatim.
Paragraph 92: Addressed in paragraph 61.
Paragraphs 93 and 94: Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 95: Accepted in substance and incorporated in paragraph 173, although not verbatim.
Paragraphs 96 and 97: Addressed in paragraphs 122 and 123.
Paragraph 98: Accepted in substance and incorporated in paragraphs 29 and 146, although not verbatim.
Paragraph 99: The proposed finding of fact in the first sentence is accepted in substance and incorporated in paragraph 29, although not verbatim; the remaining proposed findings of fact are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraphs 100 and 101: Accepted in substance and incorporated in paragraph 146, although not verbatim.
Paragraph 102: The proposed finding of fact in the first sentence is accepted in substance and incorporated in paragraph 149, although not verbatim; the proposed finding of fact in the second sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraphs 103: The proposed findings of fact in the first and third sentences are accepted in substance and incorporated in paragraph 148, although
not verbatim; the proposed finding of fact in the second sentence is rejected because not a finding of fact but a reference to the record.
Paragraph 104: Accepted in substance and incorporated in paragraphs 73 and 147, although not verbatim.
Paragraph 105: Addressed in paragraphs 125 and 166.
Paragraph 106: Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 107: Accepted in substance and incorporated in paragraph 151, although not verbatim.
Paragraph 108: The proposed finding of fact in the second clause of the second sentence is addressed in paragraph 125; the remaining proposed findings of fact are accepted in substance and incorporated in paragraph 151, although not verbatim.
Paragraph 109: Accepted in substance and incorporated in paragraph 152, although not verbatim.
Paragraph 110: The proposed finding of fact in the second clause of the second sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed findings of fact are addressed in paragraphs 27 and 152.
Paragraph 111: Addressed in paragraph 153.
Paragraph 112: The proposed findings of fact in the first and sentences are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the proposed finding of fact in the third sentence is addressed in paragraph 154.
Paragraph 113: Addressed in paragraph 155.
Paragraph 114: The proposed finding of fact in the first sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the proposed finding of fact in the second sentence is addressed in paragraphs 10, 99, and 154.
Paragraph 115: Accepted in substance and incorporated in paragraph 156, although not verbatim.
Paragraph 116: Addressed in paragraphs 44 and 77 and in endnote 10.
Paragraph 117: The proposed findings of fact in the first, fifth, and sixth sentences are addressed in paragraphs 86, 94, 128, and 180 and in endnote 15; the proposed findings of fact in the second, third, and seventh sentences are accepted in substance and incorporated in paragraphs 77 and 87 and in endnote 15, although not verbatim; the proposed finding of fact in the third sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 118: Rejected because not supported by the greater weight of the credible evidence.
Paragraph 119: Addressed in paragraph 83.
Paragraph 120: Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 121: Addressed in paragraphs 16 and 94.
Paragraph 122: The proposed finding of fact in the first sentence is addressed in paragraph 93; the proposed finding of fact in the second sentence is rejected because not supported by the greater weight of the credible evidence.
Paragraph 123: Addressed in paragraphs 88 through 91 and 93.
Paragraph 124: The proposed finding of fact in the first sentence is addressed in paragraphs 11 through 14 and 92 and in endnote 18; the proposed finding of fact in the second sentence is rejected because not supported by the greater weight of the credible evidence.
Paragraphs 125 and 126: Accepted in substance and incorporated in paragraphs 15, 16, 84, 85, and 168, although not verbatim.
Paragraph 127: The proposed finding of fact in the second sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed findings of fact are accepted in substance and incorporated in paragraphs 61 and 162 through 165, although not verbatim.
Paragraphs 128, 131, 133, and 134: Accepted in substance and incorporated
in paragraphs 25, 28, 29, 130, 137, 170 and 179 and in endnote 5, although not verbatim.
Paragraphs 129, 130, and 132: Addressed in paragraphs 25, 28, 38, 57, 169,
and 170.
Paragraph 135: Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 136: The proposed finding of fact in the first sentence is accepted in substance and incorporated in paragraph 169, although not verbatim; the proposed finding of fact in the second sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 137: The proposed finding of fact in the fourth sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed findings of fact are accepted in substance and incorporated in paragraphs 134, 135, 137, and 179, although not verbatim.
Paragraph 138: The proposed finding of fact in the first clause of the first sentence that Memorial-Ormond's policy is to provide services to the indigent is accepted in substance and incorporated in paragraph 136, although not verbatim; the remaining proposed findings of fact are not incorporated into findings of fact because, even if true, they would not be dispositive of the issues presented.
Paragraph 139: Addressed in paragraphs 27 and 171.
Respondent's proposed findings of fact.
Paragraph 1: Accepted in substance and incorporated in paragraphs 8, 9, 15, and 16, although not verbatim.
Paragraphs 2 through 4: Addressed in paragraphs 8 through 10, 15, 16, 18,
and 19.
Paragraphs 5 and 6: Accepted in substance and incorporated in paragraphs
10 and 13, although not verbatim.
Paragraph 7: Not incorporated into findings of fact because the relevance to the issues presented has not been demonstrated in the record.
Paragraph 8: The proposed findings of fact in the sixth and seventh sentences are not incorporated in the findings of fact because unnecessary to resolve the issues presented; the remaining proposed findings of fact are addressed in paragraphs 19, 20, 25, and 28 and in endnote 5.
Paragraph 9: The proposed finding of fact in the first sentence is accepted in substance and incorporated in paragraph 7, although not verbatim; the remaining proposed findings of fact are not incorporated in the findings of fact because, even if true, they are unnecessary or irrelevant to resolving the issues presented.
Paragraph 10: The proposed finding of fact in the third sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed findings of fact are addressed in paragraphs 10 and 89.
Paragraph 11: The proposed findings of fact in the first, second, third, sixth, seventh, and eleventh sentences are Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed findings of fact are addressed in paragraphs 107, 112, and 119.
Paragraph 12: The proposed finding of fact in the sixth sentence is rejected in part because not supported by the greater weight of the credible evidence - the evidence is not persuasive that Memorial- Ormond's Board had actually approved the budget containing the capital expenditures for the proposed expansion at the time of the hearing; the proposed finding of fact in the seventh sentence is rejected because not supported by the evidence cited; the remaining proposed findings of fact are addressed in paragraph 122.
Paragraph 13: Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 14: The proposed finding of fact in the second sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed findings of fact are accepted in substance and incorporated in paragraphs 104 and 136, although not verbatim.
Paragraph 15: Accepted in substance and incorporated in paragraph 107, although not verbatim.
Paragraph 16: Addressed in paragraphs 107 and 110.
Paragraph 17: The proposed finding of fact in the first sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the proposed finding of fact in the third sentence is rejected because not supported by the evidence cited; the remaining proposed findings of fact are rejected because not supported by the greater weight of the credible evidence and contrary to the facts as found in paragraphs 107, 110, 117, and 178.
Paragraph 18: The proposed finding of fact in the fourth sentence is rejected because not supported by the greater weight of the credible evidence - although a second cardiovascular surgeon might assist in OHS, he or she is usually not present during the entire procedure; the remaining proposed findings of fact are accepted in substance and incorporated in paragraphs 40, 60, 107, and 127 although not verbatim.
Paragraph 19: The proposed finding of fact in the second sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the proposed finding of fact in the third sentence is addressed in paragraph 127; the remaining proposed findings of fact are rejected because not supported by the greater weight of the credible evidence and contrary to the facts as found in paragraphs 87, 94, and 127.
Paragraph 20: Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 21: The proposed findings of fact in the first and sixth sentences are addressed in paragraphs 107, 108, and 110; the remaining proposed findings of fact are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 22: Addressed in paragraphs 108 through 110.
Paragraph 23: It is accepted in substance and incorporated in paragraph
105 that Memorial-Ormond has a high quality OHS program; the remaining proposed findings of fact are addressed in paragraphs 105 through 123.
Paragraph 24: The proposed finding of fact in the fourth sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed findings of fact are addressed in paragraphs 112 through 115.
Paragraph 25: The proposed finding of fact in the fourth sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; The proposed finding of fact in the sixth sentence is rejected as contrary to the facts as found in paragraph 115; the remaining proposed findings of fact are addressed in paragraphs 112 through 115 and in endnote 20.
Paragraph 26: Accepted in substance and incorporated in paragraph 115, although not verbatim.
Paragraph 27: The proposed finding of fact in the first sentence is rejected because merely statement of petitioner's position, not a finding of fact; the proposed finding of fact in the second sentence is accepted in substance and incorporated in paragraph 107; the remaining proposed findings of fact are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 28: The proposed findings of fact in the first and second sentences are accepted in substance and incorporated in paragraphs 114 and 115, although not verbatim; the proposed finding of fact in the third sentence is rejected because not supported by the evidence cited; the remaining proposed findings of fact are addressed in paragraphs 112 and 114.
Paragraph 29: The proposed findings of fact in the first and second sentences are merely generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have failed to state the relevance of the proposed findings to resolving the issues presented in this case; the proposed finding of fact in the third sentence is addressed in paragraph 115; the proposed finding of fact in the fifth sentence is rejected because, even though it is accepted that Halifax has one cardiac catheterization laboratory, the meaning of "concrete" in reference to the second laboratory is ambiguous in the context presented; the remaining proposed findings of fact are not incorporated in the findings of fact because unnecessary or irrelevant to resolve the issues presented.
Paragraph 30: Rejected because it is an over generalization and oversimplification of the evidence cited, which includes a number of assumptions and contingencies which are not addressed in the proposed finding of fact.
Paragraph 31: Addressed in paragraphs 113 and 114.
Paragraph 32: The proposed findings of fact in the first and second sentences are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed findings of fact are rejected because, even if true, they are not relevant to resolving the issues presented in this case - although OHS patients may be placed in these critical care units, there was no persuasive evidence that the units are staffed with personnel trained to provide post-operative care to OHS patients.
Paragraph 33: Addressed in paragraphs 117 through 119.
Paragraph 34: The proposed findings of fact in the first and seventh sentences are rejected because not supported by the greater weight of the credible evidence and contrary to the facts as found in paragraphs 119, 120, 121, 123, and 178; the proposed finding of fact in the second sentence is not incorporated in the findings of fact because subordinate to the facts as found; the proposed findings of fact in the third and sixth sentences and in the first clause of the fifth sentence are addressed in paragraphs 79 and 81 and in endnote 25; the remaining proposed findings of fact are not incorporated into findings of fact because, even if true, they are unnecessary to resolve the issues presented because the persuasive evidence demonstrates that an average annual occupancy rate of 80 percent for a six-bed or an eight- bed CVICU caring for post- operative OHS patients is unacceptably high.
Paragraph 35: The proposed findings of fact in the first and second sentences are addressed in paragraphs 105, 119 and 121; the remaining proposed
findings of fact are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 36: The proposed findings of fact in the first and second sentences are accepted in substance and incorporated in paragraph 118, although not verbatim; the proposed finding of fact in the third sentence is rejected because not supported by the evidence cited; the remaining proposed findings of fact are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 37: The proposed finding of fact in the first sentence is addressed in paragraph 119; the proposed findings of fact in the second, third, and fourth sentences are accepted as accurate statements of the results of the mathematical calculation contained in Memorial-Ormond's analysis but not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented except to the extent addressed in paragraphs 119, 120, and 121 and in endnotes 22 and 25; the remaining proposed findings of fact are rejected because not supported by the greater weight of the credible evidence and contrary to the facts as found in paragraphs 120, 121, and 178.
Paragraph 38: Even though an accurate statement of the evidence presented, the proposed finding of fact is rejected for the reasons stated in the ruling on the proposed findings of fact in paragraph 32.
Paragraph 39: Addressed in paragraphs 119 and 120 and in endnote 21.
Paragraph 40: Addressed in paragraphs 120 and 121.
Paragraph 41: The proposed findings of fact in the sixth and seventh sentences are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case; the remaining proposed findings of fact are generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 42: Not incorporated in the findings of fact because unnecessary or irrelevant to resolve the issues presented.
Paragraph 43: The proposed finding of fact in the first sentence is accepted in substance and incorporated in paragraph 104, although not verbatim; the remaining proposed findings of fact are not expressly incorporated in the findings of fact because they are argument, subordinate to the facts as found, or unnecessary or irrelevant to resolve the issues presented.
Paragraph 44: The proposed findings of fact in the first and second sentences are accepted in substance and incorporated in paragraph 9, although not verbatim; the remaining proposed findings of fact are addressed in paragraphs 84 and 85.
Paragraph 45: Addressed in paragraphs 9, 19, 127, and 128.
Paragraphs 46 and 47: The proposed findings of fact are mere recitations of statistical evidence presented at hearing, and are not incorporated in the findings of fact because, even if the statements are accurate, the respondents have not stated their relevance to resolving the issues presented in this case; see, however, the findings of fact in paragraphs 84, 85, 140, and 142 through
144 and in endnote 15.
Paragraph 48: The proposed finding of fact in the first sentence is rejected because it is not a finding of fact; the remaining proposed findings of fact are mere recitations of statistical evidence presented at hearing, and, even if the statements are accurate, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 49: The proposed finding of fact in the first sentence is accepted in substance and incorporated in paragraphs 55 and 144, although not verbatim; the remaining proposed findings of fact are mere recitations of
evidence presented at hearing, and, even if the statements are accurate, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 50: The proposed finding of fact in the fourth sentence is Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed findings of fact are addressed in paragraphs 55, 84, 85, and 144.
Paragraph 51: The proposed findings of fact in the first and second sentences are accepted in substance and incorporated in paragraph 2, although not verbatim; the proposed finding of fact in the third sentence is rejected as contrary to the facts as found in paragraphs 44 and 177; the remaining proposed findings of fact are addressed in paragraph 44.
Paragraph 52: Rejected because argument, not findings of fact, or not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 53: The proposed finding of fact in the first sentence is addressed in paragraph 45; the proposed finding of fact in the second sentence is rejected as a legal conclusion; the remaining proposed findings of fact are rejected as contrary to the facts as found in paragraphs 176 through 179.
Paragraph 54: The proposed findings of fact are merely generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 55: Rejected as contrary to the facts as found in paragraphs 47 and 177.
Paragraph 56: To the extent that the proposed findings of fact in the first and second sentences are not argument, they are accepted in substance and incorporated in paragraphs 25, 38, 57, 136, 169, and 179, although not verbatim; the remaining proposed findings of fact are generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 57: The proposed finding of fact is merely a generalized statement which is not incorporated in the findings of fact because, even if true, the respondents have not stated its relevance to resolving the issues presented in this case.
Paragraph 58: The proposed finding of fact in the first sentence is not incorporated in the findings of fact because unnecessary to resolve the issues presented; the proposed finding of fact in the second sentence is not incorporated in the findings of fact because, even if true, the respondents have not stated its relevance to resolving the issues presented in this case; the remaining proposed finding of fact is addressed in paragraph 129.
Paragraph 59: Rejected as contrary to the facts as found in paragraph 82 and 178.
Paragraph 60: The proposed finding of fact in the first sentence is not incorporated in the findings of fact because unnecessary to resolve the issues presented; the remaining proposed findings of fact are addressed in paragraphs 77, 86, and 87 and in endnote 15.
Paragraph 61: Rejected because argument, not findings of fact.
Paragraph 62: The proposed finding of fact in the first sentence that patients and families may experience increased costs as a result of transfer for OHS is addressed in paragraphs 157 through 159; the remaining proposed findings of fact are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 63: Not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 64: The proposed finding of fact in the first sentence is addressed in paragraph 121 and endnote 19; the remaining proposed findings of
fact are generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 65: The proposed findings of fact in the first and second sentences are rejected because argument, not findings of fact; the remaining proposed finding of fact is rejected as contrary to the facts as found in paragraphs 175 through 181.
Paragraph 66: Rejected because argument, not findings of fact.
Paragraph 67: The proposed finding of fact that the OHS programs are geographically accessible is accepted in substance and incorporated in paragraph 36, although not verbatim; the remaining proposed findings of fact are rejected because not supported by the greater weight of the credible evidence - there was no evidence presented with regard to the quality, efficiency, and economic accessibility of all of the existing OHS programs in District IV and adjacent service districts.
Paragraph 68: The proposed findings of fact are merely generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 69: The proposed finding of fact in the second clause of the sentence is accepted in paragraph 36 as a requirement of rule 59C-1.033(4)(a), however the causal connection stated in the proposed finding of fact is rejected as merely an expert witness's interpretation of the law.
Paragraph 70: Accepted in substance and incorporated in paragraphs 36 and 140, although not verbatim.
Paragraph 71: The proposed finding of fact in the fourth sentence is merely a generalized statement which is not incorporated in the findings of fact because, even if true, the respondents have not stated its relevance to resolving the issues presented in this case; the remaining proposed findings of fact are addressed in paragraphs 36, 55, 84, and 140 and in endnote 14.
Paragraphs 72 and 73: These proposed findings of fact are merely recitations of the evidence presented at hearing, and they are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 74: The proposed finding of fact in the fourth sentence is rejected because not supported by the greater weight of the credible evidence; the remaining proposed findings of fact are merely recitations of the evidence presented at hearing and are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case, see, however, paragraphs 55, 84, 85, 140, and 142
through 144 and in endnote 14.
Paragraph 75: The proposed finding of fact in the first sentence is accepted and incorporated in paragraph 143; the proposed finding of fact in the sixth sentence is addressed in paragraph 143 and in endnote 14; the remaining proposed findings of fact are merely recitations of evidence presented at hearing and are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 76: The proposed findings of fact are merely recitations of evidence presented at hearing and are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 77: The proposed finding of fact in the sixth sentence is rejected because not supported by the greater weight of the credible evidence or by the evidence cited; the remaining proposed findings of fact are addressed in paragraph 141, unless not incorporated in the findings of fact because
subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraphs 78 and 79: The proposed findings of fact are merely recitations of evidence presented at hearing and are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 80: The proposed findings of fact in the first and second sentences are accepted in substance and incorporated in paragraphs 104, 136, and 179, although not verbatim; the proposed finding of fact in the fourth sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed finding of fact is addressed in paragraphs 134 through 137, and 179.
Paragraph 81: The proposed finding of fact in the first sentence is accepted in substance and incorporated in paragraph 136, although not verbatim; the remaining proposed findings of fact are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 82: The proposed finding of fact in the first sentence is rejected as contrary to the facts as found in paragraphs 135, 170, and 178; the proposed finding of fact in the second sentence is not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed finding of fact is rejected because it mischaracterizes the evidence cited.
Paragraph 83: The proposed finding of fact in the second sentence is addressed in endnote 26; the proposed finding of fact in the fifth sentence is rejected as contrary to the facts as found in paragraph 156; the remaining proposed findings of fact are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraph 84: Except to the extent that the definition of "tertiary health service" is accepted and incorporated in paragraph 32, the proposed findings of fact are merely generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 85: The proposed findings of fact are merely generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 86: The proposed finding of fact in the first sentence is merely a generalized statement which is not incorporated in the findings of fact because, even if true, the respondents have not stated its relevance to resolving the issues presented in this case; the proposed finding of fact in the first clause of the second sentence and the proposed finding of fact in the fifth sentence are addressed in paragraph 152 and in endnote 24; the proposed finding of fact in the second clause of the second sentence and the proposed finding of fact in the third sentence are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the proposed findings of fact in the fourth and seventh sentences are rejected because not supported by the greater weight of the credible evidence generally and because the evidence cited in support is not persuasive; the proposed finding of fact in the sixth sentence is rejected as contrary to the facts as found in paragraph 151.
Paragraphs 87 and 88: The proposed findings of fact are merely generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 89: The proposed finding of fact in the first sentence is rejected as misleading because, although the volume of inpatient cardiac catheterizations has decreased, the evidence demonstrates that the number of outpatient cardiac catheterizations has been increasing; the remaining proposed findings of fact are generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case; see, however, paragraph 79 and endnote 12.
Paragraph 90: The proposed finding of fact in the second sentence is accepted in substance and incorporated in paragraph 46, although not verbatim; the remaining proposed findings of fact are merely generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case; see, however, paragraphs 79 and 80 and endnote 8.
Paragraph 91: The proposed finding of fact in the first sentence is rejected as contrary to the facts as found in paragraph 80; the proposed findings of fact in the second sentence and in the first clause of the third sentence are addressed in paragraph 80 and in endnote 19; the proposed finding of fact in the second clause of the third sentence is rejected because the evidence cited is not persuasive.
Paragraph 92: The proposed findings of fact are merely generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case; see, however, paragraphs 86, 152, and 153 and endnote 12.
Paragraph 93: The proposed finding of fact in the first sentence is merely a generalized statement which is not incorporated in the findings of fact because, even if true, the respondents have not stated its relevance to resolving the issues presented in this case, but see endnote 12; the proposed finding of fact in the sixth sentence is addressed in paragraph 153; the remaining proposed findings of fact are merely recitations of the evidence presented at hearing and are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraph 94: The proposed findings of fact are merely generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case.
Paragraphs 95 through 98: The proposed findings of fact are merely generalized statements which are not incorporated in the findings of fact because, even if true, the respondents have not stated their relevance to resolving the issues presented in this case; see, however, endnote 12.
Paragraphs 99 through 103: The proposed findings of fact in the sixth sentence of paragraph 102 and in paragraph 103 are not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented; the remaining proposed findings of fact are addressed in paragraphs 10 and 76 through 94 and in endnotes 10, 17, and 18.
Paragraph 104: Rejected because not supported by the greater weight of the credible evidence and because contrary to the facts as found in paragraph 93.
Paragraph 105: The proposed finding of fact in the fourth sentence is rejected because not supported by the greater weight of the credible evidence; the remaining proposed findings of fact are addressed in paragraphs 76 through 87.
Paragraph 106: Addressed in paragraphs 77 and 83 and in endnote 10.
Paragraph 107: The proposed finding of fact is accepted as true but not incorporated in the findings of fact because subordinate to the facts as found or unnecessary to resolve the issues presented.
Paragraphs 108 through 111: Addressed in paragraphs 41, 60, and 125.
COPIES FURNISHED:
Robert A. Weiss, Esquire
Parker, Hudson, Rainer and Dobbs, P.A. The Perkins House
118 North Gadsden Street, Suite 200 Tallahassee, Florida 32301
Armando L. Basarrate, Esquire
Parker, Hudson, Rainer and Dobbs, P.A. 1500 Marquis Two Tower
285 Peachtree Center Avenue Northeast Atlanta, Georgia 30303
Richard Patterson, Esquire
Agency for Health Care Administration
325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131
William B. Wiley, Esquire Darrell White, Esquire
McFarlain, Wiley, Cassedy and Jones, P.A.
215 South Monroe Street, Suite 600 Tallahassee, Florida 32301
Jerome W. Hoffman, General Counsel Agency For Health Care Administration 2727 Mahan Drive
Tallahassee, Florida 32308-5403
Sam Power, Agency Clerk
Agency For Health Care Administration Fort Knox Building 3, Suite 3431
2727 Mahan Drive
Tallahassee, Florida 32308-5403
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 10 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.
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
AGENCY FOR HEALTH CARE ADMINISTRATION
HALIFAX HOSPITAL MEDICAL CENTER d/b/a HALIFAX MEDICAL CENTER,
Petitioner,
CASE NO.: 95-0742
vs. CON NO.: 7851
RENDITION NO.:
STATE OF FLORIDA, AGENCY FOR AHCA-97-0099 FOF-CON HEALTH CARE ADMINISTRATION and
MEMORIAL HEALTH SYSTEMS, INC. d/b/a MEMORIAL HOSPITAL-ORMOND BEACH,
Respondents.
/
FINAL ORDER
This cause came on before me for the purpose of issuing a final agency order. The Administrative Law Judge (ALJ) assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Agency for Health Care Administration (AHCA). The Recommended Order entered September 30, 1996, by ALJ Patricia Hart Malono is incorporated by reference.
RULING ON EXCEPTIONS FILED BY RESPONDENTS AHCA AND MEMORIAL HOSPITAL
At issue in this proceeding is whether there is need for an additional open heart surgery program in the agency's District 4; specifically, the application of Halifax for a certificate of need (CON) to establish a new program in Volusia County.
The Respondents except to the Administrative Law Judge's (ALJ) conclusion that certain facts are "not normal" circumstances sufficient to justify approval of Halifax's proposal for a second open heart surgery program in Volusia County despite lack of numeric need for another program. The circumstances cited by the ALJ are as follows: one, the lack of numeric need is caused by the existence of three under-utilized open heart surgery programs in the northern part of the district, Jacksonville, and there would be no significant adverse impact on the volume of open heart procedures at the Jacksonville hospitals if a new program is established in Volusia. 1/ Two, concern that over the long term Memorial may not be able to handle demand for open heart services in Volusia and Flagler Counties. This concern is addressed in paragraphs 105, 121, and 178.
The program proposed by Halifax would serve the same area now served by the program at Memorial, Volusia and Flagler Counties. See paragraph 78. Three, concern that a lower than expected utilization of Memorial's program by persons
with low incomes is indicative of an access problem, which would be ameliorated by Halifax's proposal.
The lack of numeric need is based on the rule mandate that each provider in the district achieve an annual volume of 350 open heart surgeries before a new program will be approved based on numeric need. Because of the shape of the elongated district and historical utilization patterns the under-utilized programs in Jacksonville would not be adversely affected by a second program in Volusia. This is a "not normal" circumstance.
The ALJ's concern about Memorial's ability to meet anticipated demand for open heart services is supported by competent, substantial evidence and is a "not normal" circumstance. 2/
Regarding the statistics on utilization by low income patients, this does not constitute a "not normal" circumstance in light of Memorial's policy to treat any patient without regard to the patient's ability to pay and the fact that Halifax's proposal would serve the same area as Memorial now serves.
The Respondents except to the tracking of the rule language in paragraphs
36 and 140 regarding geographic access. The Respondents express concern that citing the 90 percent, two hour standard of Rule 59C-1.033(4)(a) implies that 10 percent of the residents of the district do not live within two hours of an open heart surgery provider. I see no negative implication in citing the rule standard. The exception is denied.
The Respondents except in whole or in part to findings of fact in paragraphs 67, 102, 125, 145, 154, 155, and 175. The challenged findings are supported by competent, substantial evidence; therefore, the exceptions are denied.
The Respondents except to the finding in paragraph 75 that a new open heart surgery program would have no impact on the providers in Jacksonville.
Elsewhere, the ALJ noted that a small number of residents of Flagler and Volusia do go to the Jacksonville hospitals for open heart surgery. The finding is modified to find a very small impact based on the utilization noted by the ALJ. See footnote number one.
The Respondents except to the ALJ's conclusion (paragraphs 76-94) that the fall in utilization of Memorial's program, should Halifax's proposal be approved, would not significantly affect the quality of care at Memorial and would not threaten the financial viability of Memorial. As previously noted a new program at Halifax would serve the same Flagler, Volusia area now served by Memorial. Nevertheless, the challenged findings are supported by competent, substantial evidence; therefore, the exceptions are denied.
The Respondents express concern that the ALJ's finding in paragraph 103 of two distinct markets in district four constitutes a non-rule subdistrict analysis. The ALJ elsewhere noted the small utilization of the Jacksonville programs by residents of Flagler and Volusia. This paragraph is only a reiteration of the previously noted utilization pattern. The exception is denied.
The Respondents except to findings in paragraphs 129 and 132 that occasionally an emergency room patient may not survive transfer from Halifax to Memorial and that if open heart surgery were immediately available at Halifax such a patient might survive the medical emergency. The legislature has made the
policy decision that a tertiary program such as open heart surgery cannot be placed in every hospital. It must be presumed that the legislature weighed the competing concerns, including the risk involved in transfer of emergency patients. Very importantly and correctly, the ALJ did not find the issue of transfer survival to be a "not normal" circumstance. The challenged findings are supported by competent, substantial evidence; therefore, the exceptions are denied.
The Respondents except to the ultimate conclusion of need for the Halifax proposal found in paragraphs 180 and 181. This is a conclusion of law left to the sound discretion of the agency.
Regarding the exceptions to the ALJ's rulings on proposed findings by the parties, the ALJ's rulings are accepted except where inconsistent with this Final Order. Life Care vs. Sawgrass, 21 Fla. Law Weekly D2487 (Fla. 1st DCA 1996).
FINDINGS OF FACT
The agency hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order excepts to the extent that conclusions of law are designated as findings of fact and are inconsistent with this Final Order.
CONCLUSIONS OF LAW
The agency hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except where inconsistent with this Final Order. Where there is no numeric need for the planning horizon at issue, as in the present case, 3/ a proposal may be nevertheless approved if there are "not normal" circumstance sufficient to justify approval. The agency's determination whether considerations other than numeric need constitute sufficient "not normal" circumstances to justify approval despite a lack of numeric need is a conclusion of law and a matter left to the sound discretion of the agency.
Humana vs Department of Health and Rehabilitative Services, 492 So2d 3 (Fla. 4th DCA 1986), Federal Property Management vs. Department of Health and Rehabilitative Services, 482 So2d 475 (Fla. 1st DCA 1986). This record does support the conclusion that "not normal" circumstances exist which justify approval despite lack of numeric need.
Based upon the foregoing, it is
ADJUDGED, that the application of Halifax Hospital Medical Center for CON 7851 be APPROVED subject to the conditions recommended by the ALJ in the paragraph entitled "Recommendation" on page 74 of the Recommended Order.
DONE and ORDERED this 14th day of January, 1997, Tallahassee, Florida.
STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION
Douglas M. Cook, Director
ENDNOTES
1/ For the year ended June 30, 1994, only 1.07 percent of Volusia and Flagler County residents receiving open heart surgery services were served by the five providers in the Jacksonville area. See paragraph 140 of the Recommended Order.
2/ Memorial's motion for official recognition of the approval of CON 8450 is granted.
3/ The ALJ's conclusion in paragraph 177 that there is a "net numeric need" in this case is inconsistent with paragraph 176 and is rejected as an incorrect conclusion of law.
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.
COPIES FURNISHED:
Patricia Hart Malono Robert A. Weiss, Esquire Administrative Law Judge Karen A. Putnal, Esquire
DOAH, The DeSoto Building Parker, Hudson, Rainer & Dobbs 1230 Apalachee Parkway The Perkins House, Suite 200 Tallahassee, Florida 118 North Gadsden Street
32399-3060 Tallahassee, Florida 32301
William B. Wiley, Esquire Senior Attorney, Agency for Darrell White, Esquire Health Care Administration McFarlain, Wiley, Cassedy & 2727 Mahan Drive, Suite 3431
Jones, P. A. Fort Knox Building III
215 South Monroe Street, 600 Tallahassee, Florida 32308-5403 Tallahassee, Florida 32301
Elizabeth Dudek (AHCA/CON)
Armando L. Basarrate, Esquire Parker, Hudson, Rainer & Dobbs 1500 Marquis Two Tower
285 Peachtree Ctr Ave. Northeast Atlanta, GA 30303
Richard Patterson, Esquire
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to the above named addresses by U.S. Mail this 14th day of January, 1997.
R. S. Power, Agency Clerk State of Florida, Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Fort Knox Building III
Tallahassee, Florida 32308-5403
(904) 922-3808
| Issue Date | Proceedings |
|---|---|
| Jan. 15, 1997 | Final Order filed. |
| Sep. 30, 1996 | Recommended Order sent out. CASE CLOSED. Hearing held 05/02-05/95, 08-11 & 25-26/95. |
| Oct. 02, 1995 | (Intervenor) Closing Argument of Memorial Health Systems, Inc., d/b/a Memorial Hospital-Ormond Beach filed. |
| Oct. 02, 1995 | Halifax`s Proposed Recommended Order; Halifax`s Closing Argument; Joint Proposed Recommended Order of Memorial Hospital-Orlando Beach and The Agency for Health Care Administration filed. |
| Sep. 22, 1995 | Letter to Robert Weiss from Charles A. Stampelos (cc: HO) Re: Proposed Recommended Orders filed. |
| Sep. 08, 1995 | Letter to William Wiley from Robert Weiss (cc: HO) Re: Proposed recommended orders filed. |
| Aug. 04, 1995 | The videotaped deposition of David A. Henderson, M.D. w/cover letter filed. |
| Aug. 03, 1995 | Volume XIX of XXI; Final Hearing Volume XVIII of XXI; Final Hearing Volume XVII of XXI; Volume XX of XXI; Volume XXi of XXI Transcript filed. |
| Jul. 27, 1995 | Transcripts (Volumes 13, 14, 15, 16, tagged) filed. |
| Jul. 24, 1995 | Volume I of XXI; Final Hearing Volume II of XXI; Final Hearing VolumeIII of XXI; Volume IV of XXI; Volume V of XXI; Final Hearing Volume VI of XXI; Volume VII of XXI; Final Hearing Volume VIII of XXI; Final Hearing Volume IX of XX I; Final Hearing Volume |
| Jul. 21, 1995 | The videotaped deposition of Rick D. Mace ; (2) Tape Log of Objections; Deposition of David Henderson, M.D. (Videotaped) ; Deposition of Rick Mace (Videotaped) ; Affidavit of Rick D. Mace; Errata Sheet w/cover letter filed. |
| Jun. 21, 1995 | Letter to HO from Darrell White Re: Memorial Exhibits 8, 13 & 14 filed. |
| Jun. 07, 1995 | (Intervenor) Amended Notice of Taking Video Depositions filed. |
| May 24, 1995 | (Intervenor) Motion for Official Recognition filed. |
| May 18, 1995 | (Intervenor) Notice of Taking Video Deposition filed. |
| May 18, 1995 | Transcript filed. |
| May 18, 1995 | Excerpt of Proceedings (Volume I) ; Excerpt of Proceedings (Volume II) Transcript filed. |
| May 15, 1995 | Order Continuing Hearing sent out. (hearing rescheduled for May 25-26, 1995; 9:00am; Talla) |
| May 15, 1995 | Excerpt of Proceedings (Transcript) rec`d |
| May 05, 1995 | Excerpt of Proceedings Transcript filed. |
| May 04, 1995 | (Intervenor) Notice of Taking Video Deposition filed. |
| May 01, 1995 | Joint Prehearing Stipulation; Memorial Hospital Ormond Beach`s Final Witness List; Memorial Hospital Ormond Beach Final Exhibit List filed. |
| May 01, 1995 | (Intervenor) Trial Brief filed. |
| Apr. 24, 1995 | (Petitioner) Amended Notice of Taking Deposition Duces Tecum filed. |
| Apr. 20, 1995 | Order Enlarging Time for Filing Prehearing Stipulation sent out. (motion granted) |
| Apr. 18, 1995 | (Petitioner) Motion to Enlarge the Time for Filing Prehearing Stipulation filed. |
| Apr. 07, 1995 | (Petitioner) Notice of Taking Deposition filed. |
| Apr. 05, 1995 | (Petitioner) Notice of Taking Deposition Duces Tecum filed. |
| Apr. 04, 1995 | Halifax Hospital Medical Center, d/b/a Halifax Medical Center`s Response to Memorial Health Systems, Inc. d/b/a Memorial Hospital-Ormond Beach First Request for Production of Documents filed. |
| Apr. 04, 1995 | Halifax Hospital Medical Center, d/b/a Halifax Medical Center`s Response to Memorial Health Systems, Inc., d/b/a Memorial Hospital-Ormond Beach`s Second Request for Production of Documents filed. |
| Apr. 04, 1995 | Halifax Hospital Medical Center, d/b/a Halifax Medical Center`s Notice of Service of Answers to Memorial Health Systems, Inc., d/b/a Memorial Hospital-Ormond Beach`s First Set of Interrogatories filed. |
| Apr. 04, 1995 | Memorial Health Systems, Inc., d/b/a Memorial Hospital-Ormond Beach`s Notice of Service of Answers to Halifax Hospital Medical Center, d/b/a Halifax Medical Center`s First Interrogatories filed. |
| Apr. 04, 1995 | Memorial Health Systems, Inc., d/b/a Memorial Hospital-Ormond Beach`s Response to Halifax Hospital Medical Center, d/b/a Halifax Medical Center`s First Request for Production of Documents filed. |
| Mar. 27, 1995 | Halifax Hospital Medical Center d/b/a Halifax Medical Center`s Second Request for Production of Documents to Memorial Health Systems, Inc.,d/b/a Memorial Hospital-Ormond Beach filed. |
| Mar. 24, 1995 | Memorial Health Systems, Inc. d/b/a Memorial Hospital-Ormond Beach`s Second Request for Production of Documents to Halifax Hospital Medical Center, d/b/a Halifax Medical Center filed. |
| Mar. 21, 1995 | Order Rescheduling Hearing sent out. (hearing rescheduled for May 2-12, 1995; 9:00am; Talla) |
| Mar. 17, 1995 | Halifax Hospital Medical Center, d/b/a Halifax Medical Center`s First Request for Production of Documents to Memorial Health Systems, Inc.,d/b/a Memorial Hospital-Ormond Beach; Notice of Service of Interrogatories filed. |
| Mar. 14, 1995 | Memorial Health Systems, Inc. d/b/a Memorial Hospital-Ormond Beach's Notice of Service of First Interrogatories to Halifax Hospital MedicalCenter, d/b/a Halifax Medical Center; Memorial Health Systems, Inc. d/b/a Memorial Hospital -Ormond Beach's First Re |
| Mar. 14, 1995 | Letter to PHM from W. Wiley (RE: Request for Subpoenas) filed. |
| Mar. 10, 1995 | Order Granting Intervention sent out. (by: Memorial Health Systems) |
| Mar. 10, 1995 | Notice of Hearing sent out. (hearing set for 4/20/95; 9:00am; Talla) |
| Mar. 08, 1995 | (Petitioner) Response to Prehearing Order filed. |
| Mar. 02, 1995 | Prehearing Order sent out. |
| Feb. 28, 1995 | Petition to intervene (Memorial Health systems) filed. |
| Feb. 22, 1995 | Notification card sent out. |
| Feb. 20, 1995 | Notice; Petition for Formal Administrative Proceeding filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Jan. 14, 1997 | Agency Final Order | |
| Sep. 30, 1996 | Recommended Order | Need for additional open heart surgery program shown by not normal circumstances and application for Certificate Of Need should be granted based on statutory and rule criteria. |
