Findings Of Fact Procedural background: Petitioner, COMMUNITY DIALYSIS CENTERS, INC., d/b/a COMMUNITY DIALYSIS SERVICES OF LAKELAND (CDC), owns and operates a 16- station outpatient kidney dialysis facility in Lakeland, Florida. On February 14, 1984, Respondent, WATSON CLINIC (WATSON), received a certificate of need to operate a four-station outpatient kidney dialysis center in Lakeland, Florida, CON No. 2916, from the DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES (HRS). Petitioner contests the grant of this certificate of need as an existing provider. Timely notice of the final hearing was issued June 26, 1984, and the final hearing was held as stated above. WATSON presented the testimony of Spero Moutsatos, Dudley Towne, Franklin L. Smith, Carter Fitzgerald, Joy Harrison, Nell Boutwell, Eugene DeBerry (by deposition), Sandra Biller, Dr. James Whitfield, John Dowless, Robert L. Mayer, Don Morris, Marilyn Neff, and Dr. Henry M. Haire. HRS presented the testimony of Ed Carter. CDC presented the testimony of Elaine Feegel, Jan Graff, and Michael Sullivan. CDC presented seven exhibits which were received into evidence, HRS had one exhibit, and WATSON presented into evidence 27 exhibits. The parties stipulated that subparagraphs 6, 7, 10, and 11 of Section 381.494(6)(c), Fla.Stat., are not applicable to this case, but that subparagraphs 1 through 5, 8, 9, 12, and 13 are in dispute in this proceeding. WATSON seeks a certificate of need to provide kidney dialysis for end- state renal disease (ESRD) patients in the western portion of Polk County, District 8, and particularly in the vicinity of Lakeland, Florida. WATSON's proposal would also include training for home hemodialysis and chronic ambulatory peritoneal dialysis (CAPD). WATSON originally applied for ten dialysis stations, HRS Exhibit 1, but amended its application at the hearing to four stations. WATSON Exhibit 14, hereinafter W. Exhibit 14. The area in which WATSON seeks to provide services is now served primarily by the 16 dialysis stations operated by CDC. ESRD patients must either successfully dialyze, obtain a successful kidney transplant, or they will die. Evidence as to need was provided by Spero Moutsatos, Executive Director of the Florida End-Stage Renal Disease Network 19. Network 19 was established in August 1977 as a part of a national network established by Congress, administered by the Health Care Financing Administration. Network 19 gathers data in Florida regarding End-Stage Renal Disease (ESRD) patients, provides data and projections of ESRD dialysis need to the Department of Health and Rehabilitative Services (HRS), assists patients and professionals with information, serves as an ombudsman for patient complaints, and monitors and evaluates the quality of care delivered in dialysis facilities. Network 19 did two evaluations of need with respect to the WATSON proposal, WATSON Exhibits 1 and 2. In the last three years, following the growth in availability generally of renal dialysis facilities in Florida, Network 19 has considered need on the basis of sub-areas within a District in about 75 percent of the cases considered. As of September 1, 1984, most of the ESRD patients residing in Polk County were dialyzing at CDC in Lakeland. CDC Lakeland provided services for 51 patients and one home patient, while the remainder (10 in-clinic patients and 16 home dialysis patients) were treated at Lakeland Regional Medical Center, CDC Winter Haven, CDC Tampa, and BMA of Orlando (one patient). WATSON Exhibit 2. Dialysis often leaves a patient feeling very weak at the end of the dialysis session. Dialysis in-clinic is required at least three times each week and takes about four hours. Emergency services are needed nearby since on occasion a dialysis patient will become unconscious and need immediate attention and hospitalization. Patients needing dialysis frequently are not employed or underemployed and do not have money for extensive travel for dialysis. Based upon the zip code analysis in WATSON Exhibit 2 and the testimony of patients, the appropriate service area for consideration of the need for dialysis facilities in this case is at a minimum in Polk County, and more appropriately, the vicinity of Lakeland. While some Lakeland area patients in the past drove all the way to Tampa for in-center dialysis, this is not a suitable alternative. Only CDC Lakeland and CDC Winter Haven adequately provide in-center dialysis to persons living in the Polk County and Lakeland areas. Lakeland Regional Memorial Center does not provide in-center dialysis, but only provides services for chronic ambulatory peritoneal dialysis (CAPD) Rule 10-5.11(18), F.A.C., establishes the methodology applicable in this case for determining need for chronic renal dialysis facilities. This rule sets forth the method to project the number of patients who will need dialysis one year from the date the application is deemed complete. The number of dialysis stations needed is then computed by using an 80 percent use rate for each station. The rule provides that each station at 100 percent use can dialyze four patients, assuming two shifts, six days each week. (Each patient dialyzes three times during the week.) Evening or third shifts are not counted as a part of capacity. The 80 percent use rate results in a capacity of 3.2 patients per station. The record evidence reflects that 80 percent is a reasonable level of use to set as a maximum justifying additional stations. The 20 percent additional capacity is needed for transient patient dialysis during the winter season, to account for repairs and maintenance on machines, and to provide some leeway when there are staffing problems. The net number of new stations needed is then computed by dividing the number of projected patients by 3.2 stations and subtracting from this the number of existing stations. The use rates for the two in-center dialysis facilities in the Lakeland area for the most recent quarter prior to the hearing show that facilities in the area are over the threshold for expansion: Utilization Month Rate (percent) CDC Lakeland July 1984 78 August 1984 81 September 1984 81 CDC Winter Haven July 1984 85 August 1984 87 September 1984 88 The evidence indicates that the above rates are not unusual, but reflect an upward trend in the area. In 1983, CDC Lakeland operated at an average of 76.5 percent, and CDC Winter Haven operated at 77 percent of its capacity. Network 19 projects a need by September 1, 1985, for six additional in-center dialysis stations for Polk County, and seven additional stations for the Lakeland sub-area. These calculations are explained in WATSON Exhibit 2 and the testimony of Mr. Moutsatos, transcript pages 68-72. The methodology for these projections is to take the ESRD patient census from Net work 19 records as of September 1, 1984, for the particular area, subtract the number of actual home dialysis patients on that date, add the number of patients projected for the area as new patients by September 1, 1985, calculated using 116 new patients per one million of projected population, subtract the number of these new patients expected to go on home dialysis, subtract the projected number of kidney transplants for the coming year, add back 25 percent of these transplant patients as transplant failures, subtract projected deaths of patients, and add back the number of patients on home dialysis which must return for in center dialysis. The final number is the number of patients expected to need in-center dialysis by September 1, 1985. Then, using 3.2 patients as the optimum per station, the number of stations projected as needed by that date, less the existing number, yields the projected net need. These projections of need followed the formula set forth in the rule. Moreover, there was no evidence that the assumptions or data underlying the above methodology was unreasonable, inaccurate, and for any other reason unreliable. Based upon the evidence, there is in fact a need for six in-center kidney dialysis stations for Polk County by September 1, 1985, and a need for seven stations by the same time for the Lakeland sub-area. Polk County is the only county in Florida where all in center dialysis facilities are owned by one owner. That owner is Community Dialysis Centers, Inc., CDC. CDC also owns the only other somewhat near facility in Plant City. Of the 97 patients using in-center dialysis in Polk County on September 1, 1984, 54 percent of these (52 patients) were using CDC in Lakeland. Home dialysis and CAPD are two alternatives to dialysis in-center. These alternatives for certain patients are more desirable due to the greater freedom afforded by these methods. Training and continued assistance, however, is needed to allow use of these methods. CDC Lakeland has not in the last few years provided adequately in this area. CDC's current home training nurse, unit administrator Elaine Feegel, lives in Tampa and must commute to Lakeland each day, thus making it more difficult for her to provide home training. Ms. Feegel further has not been able to provide home training because she has been so busy trying to correct problems at the CDC Lakeland facility. In addition to the lack of home training, the evidence showed that for significant periods of time in the past few years the ESRD patients who have had to use the CDC Lakeland facility as their only reasonable source of dialysis have been subjected to seriously inadequate, and at times, dangerous health care. Several patients who now dialyze at CDC Lakeland, and who have used that facility for several years, testified to the quality of care received. The facility was initially named Kidneycare, and was not opened or operated by CDC. In late 1980 or sometime in 1981, CDC bought Kidneycare and took over the management of the facility. (The precise date was not established by competent non-hearsay evidence, but is irrelevant.) At some time after patients became aware that CDC was managing the Lakeland unit, the quality of care began to decline. The quality of care when the unit was operated as Kidneycare was adequate. Joy Harrison is a resident of Lakeland, Florida, and has depended upon kidney dialysis since 1978 to stay alive. She moved to Lakeland, Florida, in 1981. She is 41 years old and has two children, 12 and 8 years of age. Ms. Harrison dialyzed at CDC from March 29, 1981, until June 1984 when she went on CAPD. Dr. Haire has been her physician since 1981. Her testimony concerned the quality of health care at CDC from 1981 until June 1984. Ms. Harrison testified to the following regarding the quality of care at CDC, all of which were unrebutted and is found to be true: Another patient was dialyzing at the station immediately next to Ms. Harrison. Ms. Harrison, who was then being disconnected from her dialyzer at the end of her session, noticed that the other patient was getting sick. She told the CDC employee on duty. Ms. Harrison had to tell the employee three times, and still the employee failed to respond, continuing to work on disconnecting Ms. Harrison from her dialyzer. By this time, the adjacent patient had passed out and began vomiting. When CDC staff finally responded, it took 20 minutes to revive her. CDC staff failed to turn on the air bubble detector on another occasion when Mrs. Harrison as dialyzing. Air got into the lines. The air bubble came within three inches of entering Ms. Harrison's body when CDC staff stopped it. (The distance is the estimate of the Hearing Officer observing the witness indicate the distance.) Had the air bubble entered her blood stream, it may have killed her. CDC staff failed to observe or record the correct number of bags of saline solution that is normally to be given to a patient at the end of the dialyzing session to restore the correct balance of fluid and weight, and ended up giving her two bags too many. Ms. Harrison got very sick as a result. On another occasion, there was only one nurse on the floor. Ms. Harrison was dialyzing, and her feet began to cramp. Saline solution at times must be injected when cramps occur to prevent cramping. Ms. Harrison called out to the nurse, who was talking on the telephone, to tell her she was cramping and needed saline solution. The nurse continued to talk. A few minutes went by and the pain of the cramps got worse. Again, Ms. Harrison called to the nurse for help. The nurse continued to talk on the telephone. The cramps worsened, and Ms. Harrison's hands started to cramp, and she was in much pain. She then told the nurse that if she did not get off the phone and help, she (Ms. Harrison) was going to pull the dialyzing lines out by herself. The dialyzing lines are inserted into Ms. Harrison's arms with two 16-gauge needles. The nurse finally came to assist her. Ms. Harrison could hear the nurse's conversation on the telephone as she was cramping, and the nurse was "laughing and joking on the phone to somebody." (This testimony is not hearsay, but is admissible as proof of what Ms. Harrison heard, not for the truth of what the nurse said on the phone.) During the dialyzing process, nurses each hour are supposed to take blood pressure, weight, and temperature to insure that the patient's system remains stabilized during the otherwise rather intrusive and disruptive process of having all of their blood circulating outside their body to be cleansed. Nurses at CDC frequently failed to check these vital signs when Ms. Harrison was dialyzing for two and three hours at a stretch. Ms. Harrison later checked her medical record and discovered that weights and blood pressures would be recorded at hourly intervals when in fact no one at CDC had actually observed and taken these readings at these times. On other occasions she was given 5 percent extra saline solution, but CDC staff failed to record this in the record. Someone else came along and read the chart and tried to give her another dose of 5 percent saline solution. Ms. Harrison stopped her. When Ms. Harrison first dialyzed at the Lakeland facility, it was in good location near the hospital. Shortly thereafter, while under the ownership of CDC, it was moved to a small shopping center. The location, as will be discussed in additional findings ahead, was undesirable for two reasons: the outside was trashy, and alcoholics and transients hung around the parking lot and rear of the facility. ESRD patients who must dialyze to remain alive depend upon the continued health of special grafts that are placed in their arms or legs which provide access for the dialyzing needles three times each week. Ms. Harrison lost her arm graft apparently due to the negligence of CDC staff in the insertion of the needle or use of a needle with a burr on it. (Additional findings have been made ahead as to the substantial likelihood that the injury was caused by a needle with a burr on it.) On the day of the injury, Ms. Harrison felt unusual pain during the entire dialyzing process. When CDC staff took the needle out at the end of the dialyzing session, an aneurysm (a sac formed by enlargement of the wall of an artery, caused by disease or injury, Webster's New World Dictionary) had formed in her arm. That night the aneurysm broke and a blood clot came out. Ms. Harrison had to go to the hospital. Her graft was destroyed, and surgeons next created a Bentley button for further dialyzing. A Bentley button is another method of allowing access to the blood stream of an ESRD patient. Ms. Harrison still had some infection in her system from the failed arm graft. It was very important that the Bentley button be kept antiseptic and clean because it is a direct open hole providing access to the patient's blood steam. Ms. Harrison's infection was doing well, responding to antibiotics given to her by her physician. But as she was dialyzing at the CDC facility, the attending nurse failed to use the antiseptic procedure of wearing a mask and using gloves. At the end of the session, the button must be carefully cleaned and Betadine placed in the two holes. The nurse said she was in a hurry and did not carefully clean the Bentley button or put any Betadine in the button. She simply replaced the cap and wrapped gauze around it. By the next treatment several days later, Ms. Harrison's infection was worse, and she had to start again on antibiotics. For the next two months Ms. Harrison could not use the Bentley button. Finally, it failed entirely as a method of dialysis, and it was removed. Ms. Harrison now is on CAPD, but testified it is not working very well, and she does not know what alternative for dialysis she may have if it too fails. CAPD (chronic ambulatory peritoneal dialysis) is a method of dialysis that involves the implantation of a tube into the interior of the peritoneum. A bag of fluid is placed above the point of insertion so that the fluid will slowly drain into the peritoneal area. Blood slowly exchanges its impurities with this fluid. After a few hours, when the bag has drained fully, the process is reversed. The bag is lowered, and the fluid drains out. When the bag is again full, it is discarded, a new bag is attached, and the process begins again. On another occasion, the dialyzing machine was not working properly. A line collapsed, the red light was flashing, and when the line collapses, it hurts the patient. The nurses failed to respond. A technician, who is not supposed to do any work in connection with treatment of a patient, tried to come over and get the machine working again. During the time CDC owned the facility at Lakeland, there was a significant continuing turnover of nurses, thus subjecting patients to new nurses who were not very experienced in dialysis. Some stayed only a few months; others, longer. Ms. Harrison dreaded getting a new nurse because an untrained nurse often took three or four attempts to implant the needle and it hurt. Also, as described above, ESRD patients depend upon the life of their access point for their own life. An untrained nurse who is likely to cause injury to an ESRD patient's access is particularly hazardous to the health of that patient. Ms. Harrison served for a time as a patient representative for patients on her shift. Of the complaints made by patients, CDC only responded to the request that curtains be installed on the back windows to prevent vagrants from looking in at the patients. (A man was seen at the window on one occasion.) Another request, that a particular nurse not pump the blood pressure cuff up so high as to be painful, was not corrected. Nell Boutwell is an ESRD patient who has dialyzed for about seven years. She began her dialysis at Tampa General Hospital, then dialyzed at Tampa BMA. In about August 1978, she began to dialyze at Kidneycare in Lakeland. She had no complaints about the quality of care at the Kidneycare unit. There then came a time, which the witness was unable to establish precisely, when it became generally known among patients and staff that Kidneycare had been purchased by Community Dialysis Centers, Inc. The purchase by CDC occurred before Ms. Boutwell wrote a certain letter dated August 25, 1981. Ms. Boutwell testified to a number of matters concerning the quality of health care at the CDC Lakeland facility. Her testimony was unrebutted and is found to be true: Under Kidneycare, the Lakeland facility was typically staffed at about two nurses for four patients, or six nurses for a shift of 12 patients. When CDC took over, the number of nurses declined until there were only two or three nurses for 11 or 12 patients, about one nurse for four patients, which is approximately 50 percent fewer nurses. One result of having fewer nurses was that patients had to stay on the dialyzer machine longer because a nurse is needed to disconnect that patient, thus causing patient discomfort. The replacement nurses were not well trained. On one occasion, air got into the lines of Ms. Boutwell's machine. The available nurses were busy and failed to respond to her calls for help. A technician came over, and he finally was directed by another patient to turn off the machine. Then a nurse appeared and fixed the machine. Air in the machine is a life-threatening condition, as described above. CDC was short on tape and frequently had no Band Aids to cover the place where the needles are removed at the end of the session. When Kidneycare ran the Lakeland facility, it was clean. When CDC took over, the new location was dirty on the outside: there were bottles, dirt, and Pampers in the parking lot. A streak of blood was on the wall of the reception room a week before the hearing. Blood is sometimes left on the dialysis chairs from the last patient to dialyze, including the arm rest. Ms. Boutwell was concerned about cleanliness due to the risk of infection. A patient with a heart monitor attached during dialysis was left unattended as all nurses left the floor, and the monitor began to "act up", although Ms. Boutwell is not trained in reading such a monitor and could not say what it meant. The needle came out of the arm of one patient and he became unconscious as his blood drained onto the floor. This accident was not discovered by CDC staff, but was first discovered by another patient. The restrooms had no paper towels so that patients who wished to wash their hands had nothing sanitary to dry them on. A CDC nurse by mistake put Clorox into Ms. Boutwell's machine as she was dialyzing. The Clorox was intended for another machine which was being cleaned. Ms. Boutwell caught the error before it harmed her. Ms. Boutwell dialyzes early in the morning now, and in the winter it is dark when she arrives. Having vagrants hanging around the shopping center causes her fear. As will be discussed ahead, the artificial kidney in a dialysis machine is a relatively small tubular filter. After appropriate cleaning, an artificial kidney under some circumstances can be reused. Ms. Boutwell did not want to dialyze with an artificial kidney that had been used before. She had had experience with reused kidneys, and they did not clear her blood as well as new kidneys. Ms. Boutwell's insurance pays for a new kidney for each dialysis. CDC staff brought a consent form for Ms. Boutwell to sign agreeing to reuse. She refused to sign. CDC told her she either had to sign or she would not be allowed to dialyze at CDC Lakeland. Her only other choices involved unreasonable travel (Tampa, Orlando) or facilities owned by CDC (Winter Haven, Plant City) After continuing to refuse to sign the consent form, CDC allowed her to have a new artificial kidney for each dialysis. CDC Lakeland periodically was inspected by outside agencies. For the week or so prior to inspections, Ms. Boutwell observed CDC staff making unusual efforts to clean the facility and bring patient records up-to-date. For four years, Ms. Boutwell worked during the day, and thus had to dialyze at night. The administrator of CDC Lakeland told Ms. Boutwell that CDC was going to discontinue the evening shift. She told Ms. Boutwell that she could come early in the morning to dialyze, drive to Tampa in the evenings after work, or quit work. There were four patients using the evening shift. As a result of the proposal to stop the evening shift, Ms. Boutwell wrote a letter dated August 25, 1981, to Dr. Michael Pickering. Dr. Pickering had been one of the physicians associated with the clinic when it was Kidneycare and knew of the needs of those patients. In the letter, Ms. Boutwell asked for his help to prevent the cessation of the evening shift. She explained that dialysis left her in a weak condition, and that travel home from Tampa at 10:00 p.m. would not be safe, that dialysis at 6:00 a.m. at CDC Lakeland would require too many hours away from her job, that she did not have help for home dialysis, and that CAPD was not suited for her due to her work. Her letter is WATSON Exhibit 17. CDC sent a representative to investigate as a result of her letter. The representative told Ms. Boutwell that CDC was only "talking" about discontinuing the evening shift, but that they were not actually going to do it. This contradicted what the administrator had told Ms. Boutwell initially, leading to the conclusion that either on the first occasion or the second occasion, and more probably the second occasion, the CDC administrative staff was untruthful to one of their patients. On each occasion mentioned above when CDC staff told Ms. Boutwell that she could go somewhere else to dialyze if she did not like the new CDC policy, there was no adequate alternative for Ms. Boutwell to turn to. The suggestion that she could go somewhere else when no reasonable alternative existed was evidence of a callous indifference to her needs as a patient, and was harmful to the trust needed for a healthy clinical patient relationship. Ms. Boutwell had experienced dialysis at CDC since January 1984 when Elaine Feegel became unit administrator. Ms. Boutwell was of the opinion that Ms. Feegel was doing a good job as the new administrator, trying to clean the place up, trying to hire good nurses, and personally on the floor more often than her predecessor checking on the operation of the unit. She felt that she was personally getting good treatment at CDC Lakeland at the time of the hearing, November 6, 1984. The deposition of Eugene DeBerry, another patient who dialyzes at CDC Lakeland, was received into evidence as WATSON Exhibit 18. Petitioner's objections to certain portions of that deposition have been ruled upon in the conclusions of law. Mr. DeBerry began dialysis in January 1977 at Tampa General Hospital. Mr. DeBerry has dialyzed at seven other clinics and CDC Lakeland since he began at Tampa General Hospital. Mr. DeBerry's testimony has not been rebutted and is found to be true with respect to the following matters concerning the quality of care at CDC Lakeland: Of all of the units in which Mr. DeBerry dialyzed, the Lakeland unit operated by Kidneycare was the best, in his opinion. Mr. DeBerry was one of the six initial patients at Kidneycare when it opened on June 22, 1977. Kidneycare operated the clinic for two or three years before CDC purchased it. The original locations of the Kidneycare facilities (there were two) were about a block from the Lakeland General Hospital. The second facility that was used by Kidneycare had a central nurses station that permitted observation of all kidney dialysis stations at one time. About a year after CDC bought the Kidneycare facility, CDC moved it to its present shopping center location. Mr. DeBerry described the same problem with vagrants and trash on the outside of the CDC facility as described by other witnesses. There have been occasions when these vagrants have entered the clinic to use the restrooms, sit in patient chairs, or steal. Mr. DeBerry requires a wheelchair for movement. The restroom at the CDC unit is too small to allow him to use the toilet, that is, it is not accessible to a wheelchairbound person. Similarly, the waiting room for patients is not suitable for wheelchair patients, and Mr. DeBerry has to wait in his wheelchair in the hall. Kidney dialysis patients are restricted on intake of fluids, so being able to have coffee or a soft drink is a special treat. At the beginning of dialysis in the first hour there is an opportunity to drink a liquid. Kidneycare used to provide this treat; CDC cut it out, stating that it was expensive. When CDC took over the unit, the attitude of the nurses changed. The nurses said that CDC was very cost-conscious, and were cutting back on expenses, including nursing staff, that CDC wanted to get rid of four nurses. (This hearsay evidence was corroborative of direct testimony that the staffing under CDC was decreased by about 50 percent compared to Kidneycare staffing.) When CDC took over the unit, it attempted to require all patients to use only one type of artificial kidney, or to stock only a few. ESRD patients, however, have different needs. Some still have a portion of their natural kidneys intact and operative, and need less dialysis, and especially cannot tolerate large losses of fluid during dialysis because this causes painful cramps. Others, like Dr. DeBerry, have no kidneys, and need an artificial kidney that dialyzes more completely. The CDC effort to cut this cost ultimately was blocked by the orders of individual physicians requiring specific artificial kidneys for their patients. Within six months of the CDC takeover, CDC circulated a consent to reuse form among all patients. The form relieved CDC from responsibility for harm that might be caused by reuse of artificial kidneys. Darlene, the CDC unit administrator told Mr. DeBerry that he could either reuse the artificial kidneys or he could dialyze someplace else. Mr. DeBerry did not want to reuse due to the possibility of infection. He had already lost not only his kidneys, but his bladder, prostate, and both legs due to infection. But Mr. DeBerry could not go on home dialysis because it caused him severe hypertension, and travel to Tampa was unacceptable, so he signed the consent form. After about a year of reuse, Mr. DeBerry again discussed his options with the unit administrator, then Pat Segien. Ms. Segien said that the CDC units at Plant City and Winter Haven also required reuse. The CDC unit was often short on important supplies. Mr. DeBerry had to dialyze with the wrong needle and the wrong kidney on occasion. The unit was out of Band Aids, tape, blood lines, and saline solution on a regular basis, and Mr. DeBerry complained about this several times. The CDC facility was not clean inside. Blood would remain on dialysis chairs, the floor, and on walls for a week or more. As a result of these problems with the quality of care at the CDC unit, Mr. DeBerry complained to Senator Lawton Chiles' office. Thereafter, Network 19 came in to inspect and the unit was cleaned up. When CDC took over Kidneycare, they began using a cheaper grade dialysis needle, and Mr. DeBerry began to experience a tearing of the place where the needle was inserted, resulting in bleeding around the needle throughout the four hours of dialysis. Mr. DeBerry complained to his physician. His physician then ordered CDC to provide him with the needle he had formerly used. CDC complied. Mr. DeBerry encouraged other patients who were experiencing the same bleeding to contact their own physicians. Now CDC seems to use the good needles generally throughout the unit. Pat Segien, the unit administrator, told Mr. DeBerry that CDC used the new, inferior, needles because they were cheaper. CDC cut the nurse/patient ratio to 1:4. It had been 1:3 or less under Kidneycare. The problem with having only one nurse for four patients is that nurses routinely during dialysis have to respond to special needs, including sick patients. Mr. DeBerry described the following example of why three nurses cannot adequately handle 12 patients: one patient passed out; two nurses responded. Another patient started vomiting, Mr. DeBarry's line got air in it, and another patient was nearly unconscious due to low blood pressure. The nurses were unable to handle all of this and continue to do the routine work of checking blood pressure of other patients. Mr. Deberry was home trained, and therefore knew to clamp off the incoming air bubble and turn off his blood pump, which he did himself. Mr. DeBerry had seen air enter the lines of other patients on a number of other occasions because CDC staff allowed saline or blood bags to be pumped dry without properly attending to them. Many of the patients sleep during the four hours of dialysis, and thus the attentiveness of CDC staff is very important to their health. Since CDC took over, there has been so much turnover of nurses that many of the nurses are not experienced. Under CDC management, technicians who were not trained as nurses were allowed to do blood pressures, put heparin in the dialysis machine, and mix the formula for the bicarbonate bath. These practices have now been discontinued by CDC. CDC suffered from a frequent lack of soap, towels, and toilet paper in the restrooms, and a lack of soap at the sink at the exit to the isolation room. Nurses had no soap to wash their hands after leaving the isolation room when that room was in use dialyzing a patient that required isolation from the other patients. It took six to eight months for CDC to buy curtains to stop vagrants from looking into the back windows at the patients at night. In May 1984, Mr. DeBerry was mistakenly given a double dose of Desferal, and went into such shock that he could not talk so as to tell the nurses the mistake they had made. CDC has been constantly out of blankets, and once recently was out of sheets. Mr. DeBerry's wife had to buy a sheet to enable him to dialyze on schedule that day. CDC nurses are supposed to keep patient medical records current. On several occasions, Mr. DeBerry was asked to go over and sign his records for as many as four months earlier, which had-not been kept up-to-date. This happened before inspections in particular. Prior to inspections, CDC staff makes a number of improvements, including updating records and cleaning the facility. The front door of the CDC facility is not adequately constructed to allow a wheelchair to enter unless the patient has one person to push him up the ramp and another person to hold the door. Since Elaine Feegel became unit administrator at CDC, the quality of care has improved, but the nurses still need to improve in implementation of sterile procedures. Mr. DeBerry felt that he had received good quality care in the last few months. Sandra Biller is a registered nurse specializing in hemodialysis. She is currently employed by the Lakeland Regional Medical Center. She has specialized in hemodialysis for six and one-half years. She was accepted as an expert witness in ESRD nursing. She has worked in hemodialysis nursing at the Kidneycare facility beginning in 1979 and remained employed there under CDC until October 1982. During the time that the facility was managed as Kidneycare, the quality of care was good. Then CDC purchased the facility and began management thereof. Ms. Biller testified to the following aspects of health care at CDC when she was employed by CDC. The testimony was not rebutted, and is found to be true: When CDC took over the facility, it changed the type of needle used. The new needles had burrs on them that tore the access points in the patients' bodies and prolonged bleeding. Trauma to the access ultimately decreases the life of the access. As was seen by the medical history of Joy Harrison, an ESRD patient depends upon the life of the access for her own continued life. When all accesses and dialysis methods have been exhausted, and dialysis becomes impossible, the patient dies. Moreover, burrs on the needles caused unnecessary pain to the patients. Kidneycare did not have these problems because they used Terumo needles. CDC "frowned" upon use of these needles, and required a special order by the physician to use these needles. The new needles used by CDC were cheaper and were used to save money. Patients and nurses complains about the use of the cheaper needles, but nothing was done about it. A policy was instituted by CDC requiring reuse of artificial kidneys by all patients. Patients were told to dialyze elsewhere if they refused to reuse. Some patients who objected to reuse long enough were allowed not to reuse, but CDC told nurses to keep that fact quiet among other patients, and did not tell other patients about the exceptions. Jerry Bryant, the area administrator for CDC, told Ms. Biller that the reuse policy was premised upon the size of the facility and a goal of having a certain percentage of patients reusing. CDC's reuse policy was initially limited by a standard that the reused kidney function at 80 percent of its initial capacity. This was then changed to 75 percent of initial capacity. At one point reuse was also limited to 12 reuses, but later some artificial kidneys were reused 25 or 30 times. Patients and nurses complained about reuse without success. The primary harm to patients caused by reuse was that Ms. Biller's patients did not feel well at the end of dialysis on a reused kidney. Reused artificial kidneys frequently still had dark brown clots of fibrin in them. CDC reused the parallel plate type of dialyzer, and this type of dialyzer was inappropriate for reuse because it was impossible to inspect between the parallel plates to see if the dialyzer was clean. One patient became septic reusing a parallel plate kidney. Reuse caused an additional health problem or potential health problem for CDC patients because a reused kidney is cleaned with formaldehyde which is toxic to humans and must not be ingested in excessive quantities. Cleaning the dialyzers with formaldehyde released fumes into the air. Although CDC had an instrument to measure the quantities of formaldehyde fumes in the air to insure safety to patients, it did not use it to test the air as required on a regular basis. There are several types of artificial kidneys, and some are more suitable than others for the needs of specific patients. CDC would not provide the type of dialyzers specifically needed by individual patients. Dialyzing machines were not maintained according to the 100- and 500- hour schedules for maintenance that they were supposed to have. Staffing at Kidneycare was two patients per nurse. Under CDC, the staffing ratio ultimately became four patients per nurse, a loss of 50 percent of the nursing staff. It was a dangerous condition for the patients sometimes. Many of the patients were unstable. The nurses did not have enough time to care for sick patients and monitor the equipment properly due to the staffing shortages. When CDC took over, the pay and benefits for nurses was regulated more strictly. All nurses were paid on an hourly basis. Sick leave went from an informal system to a strict accounting policy. CDC refused to carry over certain forms of sick leave earned as employees of Kidneycare. New nurses were placed in charge of direct care of patients without sufficient training. Nurses require four to six weeks not only to learn how to operate the machines, but more importantly, to learn what to look for as trouble signs in a dialyzing patient. Jerry Bryant stated it should not take more than two weeks to train a CDC nurse, and CDC nurses were put onto the floor with less than four weeks' training. One nurse was found to be doing dangerous things, and when Ms. Biller reported this, she was ignored and told to "watch her closely." The nurse was failing to turn on the air bubble detector and failed to close the saline line to prevent an overdose of saline solution. On one occasion a patient was negligently given three liters of saline solution, and this mistake was never documented on the patient's record. This sort of mistake happened more than once. One liter was the normal amount, and probably was not proper for this patient, who usually needed fluid taken off during dialysis. CDC staff generally did not show a professional attitude toward their work. They came in late without correction by the administrator. One nurse, who did the reuse job, wore dirty clothes, and she was handling the dialyzers. Sometimes a nurse would see that a patient was sick and vomiting and would walk right by, failing to stop and care for the patient. All of the nurses who originally worked for Kidneycare have left CDC and most work for Lakeland Regional Medical Center now. Typically, within a period of four years nurses do not leave a good dialysis center. Ms. Biller left CDC due to her dissatisfaction with the quality of health care provided at CDC. Patient charts were supposed to be done at least every two weeks. Sometimes the CDC staff would fail to complete these records for six or eight months, but would do so for an inspection. Charts were not kept current due to the shortage of nursing staff. Dr. de Quesada was the Medical Director of CDC when Ms. Biller was a nurse employed by CDC. He lived in Tampa where he had his practice, and she saw him at the CDC Lakeland facility about once a month. During emergencies, it was sometimes difficult to reach the Tampa physicians until two or three hours later. The Watson Clinic physicians were always available. Watson Clinic nephrologists were seen at the CDC clinic at least every week or so. James Whitfield is a physician specializing in internal medicine and kidney diseases. He practices nephrology with Dr. Haire and has treated ESRD patients who dialyze at the CDC Lakeland facility since July 1983. Dr. Whitfield observed the following matters with respect to the quality of medical care at CDC Lakeland which were not adequately rebutted and are found to be true: The most frequent problem at CDC was failure to achieve the proper weight at the end of the dialysis session. CDC staff is supposed to monitor the process so as to achieve the correct weight at the end. Leaving a patient with either too much fluid or too little fluid is hazardous to the patient. One patient on two successive occasions had too much fluid taken off, causing the patient to go into shock and necessitating emergency procedures to revive the patient. The problem was that the CDC dialysis machine had a part stuck in an open position, thus operating to remove excessive amounts of fluid. Patient records were not maintained in a current condition. Orders were given to CDC to take a blood count at the end of each dialysis because the patient had recurrent internal bleeding. CDC failed to take the blood count. The patient suffered a substantial drop in blood count, and had to be hospitalized for anemia. On another occasion, an order to use a particular type of artificial kidney was not followed by CDC. CDC delayed a long time in providing a bicarbonate dialysis machine, which was needed for several patients. Four or five weeks before the hearing, Dr. Whitfield had a patient that for a two-week period needed to be dialyzed daily. CDC refused to do this, stating that they would only get recompensed for routine dialysis and would not be paid for the extra dialysis. Medicare will pay for non-routine dialysis in certain cases, but in this case, CDC did not apply. In the summer of 1983, Dr. Whitfield performed a rectal examination of a patient, taking a small amount of fecal matter to test for blood. A week later he used the same examination room at CDC Lake land. He found the feces and towel he had used the week before in the same place he left it. CDC had not cleaned it up for a week. CDC has a goal of requiring all patients to reuse artificial kidneys. Formaldehyde is used to clean the kidney for reuse. The long-range toxic effects of formaldehyde are unknown. Many of the leaders in the field of dialysis feel it is inappropriate for ESRD patients to constantly be exposed to formaldehyde. Formaldehyde use also creates a heard of fumes in the air. Moreover, a reused dialyzer is not as efficient as a new one, and results in fluid not being removed properly from the patient, causing the patient to come back the next day for dialysis. On one occasion, a dialyzer that had been reused 15 times was supposed to have removed 10 pounds from a patient, but removed only two pounds, resulting in the discomfort of another dialysis session the next day. Reuse can, for some patients, be beneficial because the reused kidney does not cause a mild allergic reaction suffered by some patients. But the safe level of reuse cannot be established administratively at a single standard or level because the medical needs of patients vary greatly. Supervision of nursing staff at CDC has improved considerably since Elaine Feegel became unit administrator. John Dowless is a hospital consultant/supervisor, Office of Licensure and Certification, Department of Health and Rehabilitative Services. He is a team leader on an interdisciplinary survey of health care team. The team determines if health care facilities in Florida meet federal and state requirements. He has 40 years of experience in health care, and has worked in the above capacity for eight years. He was accepted as an expert in health care surveying. In late March 1983 his office received a request from the Health Care Financing Administration that Mr. Dowless' office conduct an investigation of the CDC Lakeland facility with respect to complaints received about the quality of health care at that facility. Mr. Dowless and Maryanne Judkins, R.N., constituted the survey team that conducted the investigation on or about April 8, 1983. The investigation was an unannounced visit. (Annual routine surveys conducted by HRS are announced in advance.) The purpose of the April investigation was to determine if the CDC Lakeland clinic was in compliance with Medicare regulations. WATSON Exhibit 4 contains the HCFA forms used by Mr. Dowless in conducting this survey. Mr. Dowless found more patient care deficiencies at the CDC Lakeland facility than he had previously found at any other renal dialysis facility. The survey team found three Medicare "conditions" not met by CDC Lakeland. Failure to meet a condition results in disqualification for Medicare participation by the facility. Mr. Dowless at that time was considering decertifying the CDC Lakeland facility as a Medicare provider. CDC then sent a representative from its Atlanta office, and CDC promised to make corrections. On June 20, 1983, a reinspection was made. Mr. Dowless found that the facility had made quite a bit of improvement. The facility did not lose its Medicare certification, and sufficient progress was made toward correcting the deficiencies. The April 1983 survey of CDC Lakeland by HRS found the following substantial deficiencies: One member of the nursing staff did not have a current Florida license. This was a violation of a condition to obtain Medicare participation. The governing body failed to effectively manage. It has no written policy on reuse of dialyzers. Patients were scheduled without an adequate time between treatments. The facility failed to adequately insure that physicians made rounds when the patients were in the facility. Records did not have physician signatures for orders. Patient copies of the grievance procedure did not inform them they could complaint to Network 19. The above cumulatively was a violation of a Medicare condition. There were no written policies regarding patients' rights available to relatives. This was a violation of a Medicare condition. The patient environment was found to be unsafe and unsanitary. A bloody reused kidney was placed on top of a disinfected dialysis machine. Two chairs used by patients for dialysis were soiled with blood. The nursing station had 21 items marked sterile with an expiration date 12 months earlier. Other dusty, dirty, and cluttered items were noted. The floor of the dialyzing area had soiled gauze, cotton, rubber gloves, and paper. A soiled mop and dirty water were stored in the supply room, and the floor of the supply room was dirty and cluttered. The acetate hemodialysis concentrate solution was contaminated. The emergency tray was not fully stocked. The facility had been directed by a written memorandum to discharge patients who refused to reuse dialyzers, in violation of the written discharge policy. CDC failed to recognize individual needs concerning reuse, forcing patients to choose between reuse and traveling 60 miles to Orlando to dialyze, and refusing to allow one patient to reuse who offered to pay for the new kidney. A year later, on April 5, 1984, HRS conducted its annual survey for Medicare certification. Annual surveys are announced beforehand, and as prior testimony indicated, CDC would make a special effort to clean up and correct deficiencies before such surveys. This annual survey found no discernible deficiencies. As a result of complaints about the quality of care at CDC Lakeland, Network 19 also conducted an investigation of the facility on May 2, 1983. The report of that investigation is contained in WATSON Exhibit 4. The report was acted upon by the executive committee of Network 19 and transmitted to HCFA for its information and action. The site visit was announced ahead of time to CDC. Network 19 concludes in the report that the problems existed at CDC due to lack of leadership at all management levels and poor communication. It also concluded that the physician director appeared to have no direct or deciding input into unit operations, and the new unit administrator was following corporate policy changes. It was reported to Network 19 that CDC had instituted changes to correct these deficiencies. Finally, after recommending that the physician director become more involved in directing the unit, the report concluded with the finding that there was no direct evidence that the health and safety of the patients were then being compromised. It is evident from the findings above that between the unannounced inspection by HRS on April 8, 1983, and the announced inspection by Network 19 on May 2, 1983, CDC made improvements. Dr. Alejandro de Quesada is the Medical Director of CDC Lakeland and CDC Winter Haven. He originally became involved with the Lakeland unit as an owner and investor, as well as a physician having ESRD patients treated three. He is responsible for delivery of medical care, but is not directly responsible for machine maintenance, purchasing of supplies, or personnel matters, including hiring and firing. In these areas, he becomes only involved to the extent that the Lakeland staff tells him about problems they have identified. Dr. de Quesada lives and works in Tampa and is an Associate Professor of Medicine at the University of South Florida as well. Dr. Tapia is Associate Director of the unit and he is located in Lakeland. Dr. de Quesada has been Medical Director at the Lakeland facility either in the fall of 1983 or 1982; he could not state precisely when. Neither Dr. de Quesada or Dr. Tapia attended the hearing, and Dr. de Quesada's testimony was made a part of the record by deposition. Dr. de Quesada admitted in general terms many of the problems found above (loss of experienced nurses, reuse of dialyzers, problems with needles) but did not have any detailed knowledge of these problems, did not state whether he felt the problems were serious or minor, did not elaborate on the cause of the problems, and asserted that each one had been corrected. He admitted that at about the time he became Medical director, there was a large turnover of nurses and medical care was not "optimum." The location and external condition of the CDC facility in Lakeland is very unpleasant. WATSON Exhibits 19, 20, and 21 are photographs taken during the work week (October 19, 22, and 26, 1984) and very close to the date of the hearing. The CDC facility is located in a small strip shopping center. Immediately next door is a grocery store. Drunks and vagrants hang around the shopping center. Thus, CDC dialysis patients must come three times every week to a place not associated with health care, but with vagrants and groceries. For two years CDC has received complaints about unsightly trash outside the CDC facility. Yet, one week before the final hearing these photographs show a dishearteningly filthy collection of debris in the gutter immediately in front of the door into the CDC facility. For patients who are so critically vulnerable to infection, this array of trash at the entrance to the place they depend upon for cleansing of their blood directly erodes their confidence in the CDC facility and is demeaning to them. Dr. Henry M. Haire lives in Lakeland and is a nephrologist. Since early in 1980, he has both been on the staff of Watson Clinic and a member of the treating staff at Kidneycare and CDC. He was accepted as an expert in nephrology. Dr. Haire wrote the original certificate of need application for WATSON. The original application for a certificate of need was the result of Dr. Haire's assessment in January or February of 1983 that it was unsafe for his patients to dialyze at CDC Lakeland due to the quality of care at that facility. Dr. Haire testified to the following matters concerning the quality of health care at the CDC Lakeland clinic. These matters were not adequately rebutted by the Petitioner and are found to be true: The quality of health care at CDC Lakeland has been like a roller coaster for the last four years, with poor care followed by improvement and then another decline in care. Care improved after the HRS and Network 19 investigation in April-May 1983, and then declined again. Since July 1984 the quality of care has again improved. There have been occasions when the Tampa treating physicians could not be located in emergencies, and Dr. Haire had to respond for their patients at CDC. Some patients need a bicarbonate dialysis machine to reduce acid levels. Dr. Haire waited 18 months after he requested CDC to obtain one of these machines before they did so. CDC on two occasions transferred patients of Dr. Haire without prior notification to him. One patient was transferred to Tampa when the night shift was discontinued. Two other patients were transferred to Winter Haven one month before the hearing. One of these patients was very unstable and needed to be dialyzed near Dr. Haire. Dr. Haire had her transferred to a physician in Winter Haven. As recently as July 1984, Dr. Haire had found that CDC staff had failed to take weights and record other data in the charts. On one occasion, Dr. Tapia, the Associate Medical Director at CDC who lives in Lakeland, was not available to handle an emergency involving evacuation of patients due to formaldehyde fumes in the room, and Dr. Haire had to fill in for him. Based upon the foregoing findings, the following additional findings are made: End-State Renal Disease (ESRD) patients are captive consumers. Without continuing adequate renal dialysis they will die. ESRD patients are particularly vulnerable in a variety of ways. Loss of the use of one's kidneys demands a major psychological readjustment for the patient. Confidence in the quality of health care is critical to the readjustment. Some ESRD patients are frail, confused, disabled in other ways, elderly, and cannot adequately protect themselves from inadequate health care during dialysis. Further, ESRD patients have a well justified fear of infection, since loss of dialysis access may mean loss of ability to dialyze and death. Dialysis is uncomfortable and painful under the best circumstances, and is easily made more uncomfortable and more painful if treating staff is overworked, untrained, or indifferent. The quality of health care at the Lakeland facility since 1980 when CDC purchased it and began to manage it has been inadequate in a number of ways. From 1980 until 1984, despite repeated complaints from patients, physicians, and nursing staff, the quality of care at CDC for substantial periods of time was inadequate. Improvements have been made in 1984. The current administrator, who took that job in July 1904, is doing an excellent job. She is well- qualified for the job and has shown a genuine interest in improving CDC Lakeland. The current regional administrator is equally well-qualified, and has also demonstrated a sincere desire to improve the Lakeland facility. But problems persist. A few instances of questionable care occurred within a few months of the November 1984 hearing. The outside of the facility remains trashy as of ten days before the hearing and the location of the facility continues to suffer from proximity to vagrants. From 1980 to 1984, the health care at CDC Lakeland has been erratic and unstable, improving only in response to an investigation under threat of loss of Medicare money, annual inspections, or the potential of competition that may occur as a result of this certificate of need proceeding. Health care which is erratic and unstable is unreliable and, for that reason, inadequate, and the health care provided by CDC Lakeland for this additional reason has not been adequate. The Watson Clinic was started in 1926. Today, it is a large specialty hospital providing a wide range of services, from primary care to open-heart surgery. It has 22 departments and specialty services. The Clinic has 75 affiliated physicians, all of whom, with the exception of two, are specialists. Of these, 67 physicians are partners in the partnership which owns and manages the Clinic. The organization of the Clinic as a multispecialty group practice was derived from the Mayo Clinic example. Major decisions are made by the full partnership. Day to-day management is committed to an Executive Committee and to the Clinic Manager, Dudley Towne. The Clinic is located in Lakeland, Florida, in Polk County. The Watson Clinic currently has approximately 265,000 outpatient visits annually. As of January 31, 1984, Watson Clinic had current assets of $3,084,200.36, of which more than 50 percent was in cash deposits. For the year ended January 31, 1984, the Watson Clinic collected over $27 million in fees and distributed more than $12 million to its 67 partners. The Watson Clinic partnership, through its Executive Committee and by vote of the partnership, approved the plan to seek a certificate of need for a kidney dialysis center. Watson Clinic's amended application for a certificate of need seeks a four-station unit. The Watson Clinic partnership will pay for the purchase of equipment of the proposed dialysis center, will pay all start-up costs, and will continue to absorb all losses until the dialysis center becomes profitable. The dialysis center would be managed as another one of the entities of the Watson Clinic. Watson Clinic does not necessarily plan to do more than break even in its operation of the dialysis center. From a fiscal perspective, the Watson Clinic frequently undertakes to provide a new service to its patients that itself may only be marginally profitable but that furthers the goal of the Clinic to be a full-service multi-specialty clinic. WATSON Exhibit 14 is WATSON's amended certificate of need application. The amendments were primarily to conform the application to the number of dialysis stations initially approved by HRS. WATSON originally requested ten stations, but HRS approved only four. The projected staffing for the dialysis center is one head nurse who would administer the unit, two staff registered nurses, one licensed practical nurse, and part-time assistance from a dietician, a social worker, and a secretary/receptionist. Watson Clinic is currently aware of six registered nurses with some background in nephrology who might fill one of the three nursing positions, and four licensed practical nurses. Of these, only one (one LPN) is currently on the staff of CDC Lakeland. There was no rebuttal evidence on these facts, and it thus appears that the new center could be staffed reasonably soon, and without causing a loss of staff to CDC. The projected salaries for staff were reasonable and sufficiently high to attract reasonably qualified staff. The total cost of the project is projected to be $81,500, and the underlying costs which make up this figure are reasonable. Two additional costs not included in the above figure were identified. Legal fees have been incurred in the amount of about $25,000, and this is paid by the Watson Clinic partnership, and future fees will be paid in a like manner. Most renovation costs will be of minimal expense. The dialysis center will be in a building owned by the Watson Clinic partnership directly across the street from the Clinic. The only cost not identified in the application that may be substantial is the cost of putting in plumbing. This, however, does not affect the financial feasibility of the project since the Watson Clinic clearly has sufficient assets to absorb the costs of plumbing renovation. The projected utilization of the new dialysis center is reasonable based upon the projected need data discussed above. It is projected that the new center will have ten patients the first month and will grow to a maximum of 16 patients by the seventh month, October 1985. Thereafter, the center is projected to operate at full capacity of 16 patients. WATSON Exhibit 2, page 3, shows a predicted 75 ESRD patients needing dialysis in the Lakeland sub-area by September 1, 1905. If 16 of these dialyzed at the WATSON dialysis unit, the remaining 59 would dialyze at CDC Lakeland, which would be seven or eight more patients at CDC than are currently using that facility. The data of projected ESRD patients from Network 19 were corroborated by evidence provided by Dr. Haire. Dr. Haire and his partners are currently following 12 patients with renal problems and expect six of these will need dialysis in the next four or five months. Dr. Haire estimated that initially four of his 22 patients now using CDC would immediately transfer to the new unit, and that later in the year another one or two would transfer. Dr. Haire finally estimated that the remaining six patients of the 12 mentioned above as having renal problems would need dialysis by the end of the year. Thus, the majority of the projected patients were in fact known to Dr. Haire by name and their projected needs currently identified. The projected operating revenues were based upon reasonable assumptions from experience in reimbursement and payment in dialysis centers in the industry and actual reimbursement experience at Watson Clinic. The operating expenses were likewise based upon experience in the industry and are found to be reasonable projections. Attached to WATSON Exhibit 14 are computer-generated pro forma financial statements. These statements project net income and operating profit for the new facility for a two-year period, and are premised upon the patient utilization rates discussed above, as well as projected revenues and expenses, including the expense of amortizing the initial project cost. The first year operating profit is projected to be $19,809, with a pretax profit of $428. The second year has a projected operating profit of $20,790 and a pretax profit of $13,126. The financial statements erroneously show a corporate income tax, which does not exist since the Clinic is a partnership, so the pretax profit is the same as the net income. The financial statements are conservative in that they presume that all patient revenue will come from patients who dialyze in the unit. Medicare pays for home dialysis as well, to encourage that form of dialysis, but since operating expenses are less for home dialysis, the new center will enjoy greater net revenue (approximately $6,000 more per patient per year) for each patient on home dialysis. Dr. Haire and his partners in their practice have historically placed great emphasis on home dialysis, and it is reasonably certain that the center will have greater net revenue as a result of their efforts to train new patients on home dialysis. The projected revenues are conservative for another reason: they are based on patient visits at a 90 percent rate during the year, rather than 100 percent of the available dialysis days. The 10 percent shortfall was used to account for missed appointments or hospitalization. For example, there are three dialysis days per week, or 156 dialysis days per year for 52 weeks. Thus, at 100 percent 16 patients would generate 2,496 revenue visits. WATSON's second year projection of revenue, however, is based upon 2,254 visits, or 90 percent of 2,496. Elaine Feegel, CDC's current administrator, however, testified that "very few" patients ever miss a dialysis visit. The willingness of the Watson Clinic, with its clearly ample resources, to absorb all losses from the new dialysis unit in order to provide a full range of services, means that the unit will always have a resource to turn to during the start-up phase and during lean periods. The evidence in the record also shows that the facility will be self-supporting in a reasonable period of time and therefore is financially feasible. The facility will break even in the first year based upon an average of 14.25 patients per month. While this utilization rate is somewhat high, it is supported by the evidence. First, Network 19 projects 75 patients needing dialysis in the Lakeland area by September 1, 1985. If 14 of these patients use the Watson unit, the remaining 61 can use the CDC unit, putting CDC at 95 percent of its capacity of 64 patients. Given the record of inadequate care at CDC and the fact that the Watson unit will be brand new, coupled with the association of the Watson unit with the adjacent Watson Clinic, it is very likely that the Watson unit will have from 14 to 16 patients regularly using the facility by the end of the first year. CDC's expert on accounting, Michael Sullivan, sought to discredit the financial feasibility of the proposed four station dialysis center, but his testimony was not persuasive. The portion of his testimony based upon the original CON application data was not relevant because the data was altered by the amended application. Mr. Sullivan also excluded pharmacy and EKG revenue from his calculations of revenue. The main Watson Clinic has both a pharmacy and EKG that will be used by the dialysis center. It is unclear on this record whether the revenues from these activities will, for accounting purposes, be treated as separate revenues of the dialysis center, or revenue of the Watson Clinic. The point is irrelevant, however, since the Watson Clinic will cover all losses that may occur at the dialysis center, and can use these center generated revenues to do so. Moreover, the amounts in question are relatively small. The annual projected EKG revenue is only about $600, and the annual projected pharmacy revenue is only about $7,000. If Watson Clinic successfully has three patients on home dialysis, it will enjoy $18,000 in additional revenue annually, which will more than cover any overstatement of pharmacy or EKG revenue. Mr. Sullivan's criticism that there was no expense indicated for fees of the medical director was not relevant since Dr. Haire will provide those services without charge until the center becomes financially self-sustaining. Mr. Sullivan's further criticism that administrative costs were not accounted for was similarly not correct. A portion of the rental fee will cover administrative services to be provided by the Watson Clinic. Further, the current plan is to computerize much of the billing, and the cost of the computer equipment is included in the financial statements. In summary, the evidence shows that the proposed dialysis center will be financially feasible. The quality of care that will be delivered by the proposed four- station center will with a reasonable probability be adequate. There was a substantial amount of evidence as to the qualifications of persons who will be involved in delivery of that health care, and no rebuttal of any consequence from CDC. WATSON intends to offer complete dialysis services consistent with the current state of the art, with new equipment, properly trained staff, professional operating and management procedures. a patients' bill of rights, adequate professional supervision, and adequate staffing. Dr. Haire, who will be the Medical Director, is well-qualified for the job. Initial planning and consultation will be provided by a professional consulting firm. The medical staff will be open staff. The proposed center will place great emphasis on self care and home dialysis since Dr. Haire and other nephrologists at the Watson Clinic actively encourage these techniques. Additionally, the Watson Clinic plans to offer a full range of support services, including dietary counseling, rehabilitation services, social services, and the like. When the new Watson facility opens, CDC Lakeland should experience some loss of patients, but will not suffer harm in the long run. Dr. Haire will continue to use CDC Lakeland for some of his 24 patients, since the new facility can only handle 16 patients at its maximum capacity. By September 1, 1985, there will be enough new patients in the Lakeland area that even if WATSON served 16 of these, CDC Lakeland still would be needed to serve the remaining 51 patients and would at that time be operating at 92 percent of its capacity. The new clinic will, over the long run, compete with CDC Lakeland for staff, but as discussed ahead, competition will be beneficial to patients and should result in better health care in dialysis in the area. Initially, however, as found above, the Watson facility could be staffed without "raiding" the staff at CDC since there is an adequate, identified pool of potential staff other than current CDC staff. Since CDC Lakeland has enjoyed a virtual monopoly over dialysis services in the Lakeland area for the last few years, and the quality of health care provided by CDC has been so unreliable, there is a great need for the Watson Clinic facility to provide CDC Lakeland with competition. Patients at CDC tried to persuade the management of CDC to improve, but when these patients objected to CDC policies and sought change, they were told to dialyze elsewhere if they were dissatisfied. Having the Watson Clinic facility available will enable CDC patients to make that choice, which should then result in sustained and real improvement at CDC. In sum, the need is such that the new facility will not really be duplicative of services provided by CDC, but to the extent it may be duplicative, the competition that will result will be beneficial, not detrimental, to ESRD patients. The parties may have proposed other findings of fact which have not been considered in the paragraphs above. Many of these are subordinate to findings stated above, are cumulative, or are irrelevant to the above findings and this case. Those of marginal relevance are considered in the following paragraphs: WATSON proposes that a finding be made as to the accidental infusion of formaldehyde and bleach into two patients on two separate occasions. This proposed finding was based solely upon hearsay, and therefore cannot be made on this record. WATSON proposes that a finding be made that formaldehyde causes cancer. There is no evidence in the record to support this finding. CDC Lakeland proposes a finding that the fluctuations in health care occurred as a natural consequence of change in management. This finding is contrary to the evidence and has no evidence to support it. CDC Lakeland proposes a finding that the absence of any projected cost for accounting or legal fees shows the project to be financially not feasible. The evidence does show that Watson Clinic has incurred about $25,000 to date in legal fees, and that it intends to pay these costs without attribution to the dialysis center. The issue, however, is basically irrelevant, since the Watson Clinic, which has sufficient funds to underwrite this project, intends to fund all costs until the project is self-sustaining. CDC Lakeland proposes a finding that Watson Clinic might expand to three shifts. There is no evidence to support this finding, and the only evidence on the evidence on the point is to the contrary.
The Issue The issues for determination in this case are whether the following statement was made by Respondent, AGENCY FOR HEALTH CARE ADMINISTRATION; whether the statement violates the provisions of Section 120.535, Florida Statutes; whether the statement constitutes a declaratory statement under Section 120.565, Florida Statutes; whether Petitioner, ALL CHILDREN'S HOSPITAL, INC., has standing to maintain this action; and whether Petitioner is entitled to attorney's fees and costs. The alleged agency statement which is at issue in this case is: The Agency for Health Care Administration takes the position that a shared service agreement may be modified, without prior approval of the Agency, as long as each party continues to contribute something to the program, and the shared service contract remains consistent with the provisions of Rule 59C-1.0085(4), Florida Administrative Code. In addition, the Agency takes the position that modifications to a shared service agreement do not require prior review and approval by the Agency.
Findings Of Fact Petitioner, ALL CHILDREN'S HOSPITAL, INC. (hereinafter ALL CHILDREN'S), is a medical facility located in St. Petersburg, Florida, which provides pediatric hospital care. Respondent, AGENCY FOR HEALTH CARE ADMINISTRATION (AHCA), is the agency of the State of Florida vested with statutory authority to issue, revoke or deny certificates of need in accordance with the statewide and district health plans. Intervenor, BAYFRONT MEDICAL CENTER (BAYFRONT), is an acute care hospital located in St. Petersburg, Florida. ALL CHILDREN'S and BAYFRONT are located adjacent to each other and are connected by a thirty-yard tunnel. In 1969, ALL CHILDREN'S began operation of a pediatric cardiac catheterization program. ALL CHILDREN'S pediatric cardiac catheterization program existed prior to the statutory requirement for a certificate of need to provide such service. Neither AHCA, nor its predecessor agency, Florida Department of Health and Rehabilitative Services, issued a certificate of need for ALL CHILDREN'S cardiac catheterization program. Since 1969, ALL CHILDREN'S has expended at least $500,000 on upgrading the cardiac catheterization program. Since 1970, ALL CHILDREN'S has operated a pediatric open heart surgery program. ALL CHILDREN'S open heart surgery program existed prior to the statutory requirement for issuance of a certificate of need to perform such service. Neither AHCA, nor its predecessor agency, Florida Department of Health and Rehabilitative Services (HRS), issued a certificate of need for ALL CHILDREN'S open heart surgery program. By letter dated May 13, 1974, HRS specifically advised ALL CHILDREN'S that modifications to the ALL CHILDREN'S open heart surgery program were not subject to agency approval. In May of 1973, ALL CHILDREN'S and BAYFRONT entered into a shared service agreement to provide adult cardiac catheterization services. In accordance with the shared service agreement, the actual catheterizations are performed in the physical plant of ALL CHILDREN'S and with equipment located on the ALL CHILDREN'S campus. BAYFRONT contributed to the adult cardiac catheterization shared service program by providing, inter alia, patients, management, medical personnel, and pre- and postoperative care. Beginning in 1975, BAYFRONT has also provided adult open heart surgery services through a joint program with ALL CHILDREN'S with the actual surgeries being performed at the physical plant on ALL CHILDREN'S campus. BAYFRONT contributed to the adult open heart surgery shared service by providing, inter alia, patients, management, medical personnel, and pre- and postoperative care. The shared service agreement between ALL CHILDREN'S and BAYFRONT to provide adult cardiac catheterization and open heart surgical services was in existence prior to the statutory requirement for a certificate of need to perform such services. Neither AHCA, nor its predecessor agency, Florida Department of health and Rehabilitative Services, issued a certificate of need to provide such services. The cardiac catheterization and open heart surgery program operated by ALL CHILDREN'S and BAYFRONT was "grandfathered" in because the program existed prior to the certificate of need requirement. Because no certificate of need was issued to ALL CHILDREN'S and BAYFRONT for its shared adult cardiac service program, no conditions have been imposed by AHCA on the operation of the program. "Conditions" placed on certificates of need are important predicates to agency approval and typically regulate specific issues relating to the operation of the program and the provision of the service such as access, location, and provision of the service to Medicaid recipients. The ALL CHILDREN'S and BAYFRONT cardiac shared services program is the only "grandfathered in" shared service arrangement in Florida, and is the only shared service arrangement operating without a certificate of need in Florida. An open heart surgery program is shared by Marion Community Hospital and Munroe Regional Medical Center in Ocala, Florida. The Marion/Munroe program operates pursuant to a certificate of need issued by AHCA. On December 22, 1995, AHCA published a notice of its intent to approve a certificate of need for a shared pediatric cardiac catheterization program between Baptist Hospital and University Medical Center in Duval County, Florida. BAYFRONT has applied for, but has not yet been issued, a certificate of need to perform cardiac catheterization services independent of the shared services arrangement with ALL CHILDREN'S. The agency receives hundreds of inquiries each year requesting information and guidance from health care providers regarding the certificate of need application process and other requirements of the certificate of need program. On more than one occasion ALL CHILDREN'S and BAYFRONT have inquired either orally or in letters to the agency regarding whether certain changes in their adult cardiac shared services program would require agency approval through a certificate of need application. In response to a 1990 written inquiry from ALL CHILDREN'S and BAYFRONT regarding modifications to the shared services agreement, the agency (then HRS) by letter dated September 18, 1990, stated in pertinent part that "the alterations you propose still constitute shared services." The agency response went on to state that it is therefore "...determined that they (the proposed changes) have not altered the original intent." On January 31, 1991, Rule 59C-1.0085(4), Florida Administrative Code, governing shared service arrangements in project-specific certificate of need applications was promulgated. The rule provides: Shared service arrangement: Any application for a project involving a shared service arrangement is subject to a batched review where the health service being proposed is not currently provided by any of the applicants or an expedited review where the health service being proposed is currently provided by one of the applicants. The following factors are considered when reviewing applications for shared services where none of the applicants are currently authorized to provide the service: Each applicant jointly applying for a new health service must be a party to a formal written legal agreement. Certificate of Need approval for the shared service will authorize the applicants to provide the new health service as specified in the original application. Certificate of Need approval for the shared service shall not be construed as entitling each applicant to independently offer the new health service. Authority for any party to offer the service exists only as long as the parties participate in the provision of the shared service. Any of the parties providing a shared service may seek to dissolve the arrangement. This action is subject to review as a termina- tion of service. If termination is approved by the agency, all parties to the original shared service give up their rights to provide the service. Parties seeking to provide the service independently in the future must submit applications in the next applicable review cycle and compete for the service with all other applicants. All applicable statutory and rule criteria are met. The following factors are considered when reviewing applications for shared services when one of the applicants has the service: A shared services contract occurs when two or more providers enter into a contractual arrangement to jointly offer an existing or approved health care service. A shared services contract must be written and legal in nature. These include legal partnerships, contractual agreements, recognition of the provision of a shared service by a governmental payor, or a similar documented arrangement. Each of the parties to the shared services contract must contribute something to the agreement including but not limited to facilities, equipment, patients, management or funding. For the duration of a shared services contract, none of the entities involved has the right or authority to offer the service in the absence of the contractual arrangement except the entity which originally was authorized to provide the service. A shared services contract is not transferable. New parties to the original agreement constitute a new contract and require a new Certificate of Need. A shared services contract may encom- pass any existing or approved health care service. The following items will be evaluated in reviewing shared services contracts: The demonstrated savings in capital equipment and related expenditures; The health system impact of sharing services, including effects on access and availability, continuity and quality of care; and, Other applicable statutory review criteria. Dissolution of a shared services contract is subject to review as a termination of service. If termination is approved, the entity(ies) authorized to provide the service prior to the contract retains the right to continue the service. All other parties to the contract who seek to provide the service in their own right must request the service as a new health service and are subject to full Certificate of Need review as a new health service. All statutory and rule criteria are met. By letter dated October 22, 1993, ALL CHILDREN'S and BAYFRONT inquired again of the agency regarding modifications of the adult inpatient cardiac shared service program. AHCA did not respond to the 1993 inquiry, and AHCA ultimately considered the inquiry withdrawn. By letter dated February 24, 1995, BAYFRONT made further inquiry of the agency, and requested agency confirmation of the following statement: The purpose of this letter is to confirm our understanding that the Agency for Health Care Administration ("Agency") takes the position that the shared services agreement between Bayfront and All Children's may be modified, without prior approval of the Agency, as long as each party continues to contribute something to the program, and that the shared services contract remains consistent with the provisions of Rule 59C-1.0085(4) F.A.C. By letter dated March 16, 1995, the agency made the following reply to BAYFRONT from which this proceeding arose: The purpose of this letter is to confirm your understanding of this agency's position with reference to the reviewability of a modifica- tion of the shared services agreement between Bayfront Medical Center and All Children's Hospital set forth in your February 24, 1995 letter.
Findings Of Fact Petitioner, Mease Health Care, Inc. (Mease), is a private, not-for- profit acute care community hospital in Dunedin, Florida. It is located in District V, a health planning district established by respondent, Department of Health and Rehabilitative Services (HRS). Intervenors, Morton F. Plant Hospital, Inc. (Plant) and Bayfront Medical Center, Inc. (Bayfront), are acute care hospitals also located within District V. Mease has pending in Case Nos. 89-1652 and 89-4888 a challenge to HRS's fixed need pool determination for new cardiac catherization services and an application for a certificate of need (CON) authorizing it to establish a new inpatient cardiac catherization program in Dunedin, Florida. In the instant case, Mease has challenged an HRS policy as being an illicit rule. Respondent is the state agency responsible for the administration of the Health Facility and Services Development Act. For the purpose of assisting it in administering the act, HRS has promulgated Rule 10-5.011(1)(e), Florida administrative Code (1989), which pertains to inpatient cardiac catherization services and defines the requirements for the establishment of such services. Paragraph 8.c. of the rule contains the formula used for calculating fixed need pools for new inpatient cardiac catherization programs. The formula is: NN PCCPV - ACCPV - APP, where NN is the annual net program volume need, PCCPV is the projected adult cardiac catherization program volume, ACCPV is the actual adult cardiac catherization volume, and APP is the projected program volume for approved programs. This formula was applied by HRS to the September 1988 batching cycle, which was the first batching cycle after the rule became effective. For that cycle, HRS calculated NN to be -53 for District V. NN was therefore less than 300. Paragraph 8.d. of the rule provides the following relevant instructions on how the formula should be applied to batching cycles subsequent to September 1988: If NN is less than 300 in the first batching cycle after the rule becomes effective, the ACCPV value which is subtracted from the PCCPV will be the same value as ACCPV in the first batching cycle until the projected net need in a future batching cycle reaches a program volume of 300 or more. . . For the March and September 1989 batching cycles, which were the two batching cycles immediately subsequent to the first batching cycle after the rule became effective, HRS did not keep the ACCPV value constant, "or the same . . . as in the first batching cycle", even though NN was "less than 300 in the first batching cycle." Put another way, in all batching cycles after September 1988 HRS has recalculated ACCPV even though in the first batching cycle NN was a negative number and therefore was less than 300. HRS's affidavit confirms that this is the manner in which ACCPV has been calculated in all cases since the adoption of the rule. Since the policy has been consistently used in the above manner in all cases, creates rights and requires compliance, and is not apparent from a literal reading of the rule, the policy necessarily constitutes a rule. There is no dispute that the policy has not been formally adopted as a rule.
The Issue The issue for determination is whether Petitioner should be awarded a certificate of need authorizing the establishment of cardiac catheterization laboratory services at its facility in Port Charlotte, Florida. As a result of stipulations of the parties presented at hearing, matters for consideration were limited to whether Petitioner meets the criteria of availability of funds for capital expenditures for the project in accordance with Section 381.705(1)(h), Florida Statutes; and whether Petitioner has shown the existence of need for additional services by any existing medically underserved groups in the service area.
Findings Of Fact The parties have stipulated that Petitioner does not meet the criteria of Section 381.705(1)(a), Florida Statutes, because there is no numeric need for the program established by any agency rule formula and that no emergency or other not normal circumstances exist, including problems of geographic, financial or programmatic access, justifying the program in the absence of such enumerated need. Petitioner's agreement to this stipulation was conditioned upon an assumption that previous Certificates of Need, formerly granted by final orders of Respondent to other entities in previous batching cycles and now the subject of legal appeals by Petitioner in the appellate court, will eventually be confirmed by that court to have been properly issued. The parties have stipulated that Petitioner, as the result of nonexistence of numeric or nonnumeric need, has not met criteria regarding its ability to provide quality care, a requirement of subparagraph (c) of Section 381.705(1), Florida Statutes; has not met criteria regarding availability and adequacy of other health care facilities in the applicant's service district, a review component set forth in Section 381.705(1)(d), Florida Statutes; has not met criteria regarding immediate and long term financial feasibility of Petitioner's proposal, a requirement of Section 381.705(1)(i), Florida Statutes; has not met criteria regarding the impact of the proposed project on the costs of providing such health services, a requirement of Section 381.705(1)(l), Florida Statutes; and has not met criteria, as required by Section 381.705(2)(a)-(d), Florida Statutes, regarding alternative services, efficiency of existing services, alternatives to new construction or the likelihood of patients obtaining the proposed service in the absence of Petitioner's proposal. The parties have stipulated that review requirements of subparagraphs (e), (f), (g), (j), and (k) of Section 381.705(1), Florida Statutes, are found not to be applicable to this proceeding. Those subparagraphs relate, respectively, to economics of shared services, need for special services, need for research and educational facilities, special needs of health maintenance organizations and needs of entities serving residents outside the service area. The parties have stipulated that the criteria ofSection 381.705(1)(b), Florida Statutes, has not been met because they were not addressed or challenged by Petitioner. However, Petitioner does contest the accessibility by medically underserved groups of existing and approved providers in the service district. With the exception of the availability of funds for capital and operating expenditures related to the project in Petitioner's application and the extent to which the proposed services will be accessible to all residents of the service district, further stipulation between the parties also establishes that the review criteria contained in Section 381.705(1)(h), Florida Statutes, does not apply to this proceeding. Portions of Rule 10-5.011(b), Florida Administrative Code, relating to accessibility of services to residents of the service district are also excepted from consideration in this proceeding by the parties' stipulation. By stipulation of the parties, it is established that the review requirement of Section 381.705(1)(l), Florida Statutes, relating to the probable impact of the proposed project on the cost of providing services proposed by Petitioner, is met. The parties' stipulation further establishes that requirements of Section 381.705(1)(m) and Section 381.705(1)(n), Florida Statutes, have been met. These statutory subparagraphs relate, respectively, to methods and costs of proposed construction, and Petitioner's past and proposed provision of health care services to medicaid and medically indigent patients. Petitioner is a separate, albeit subsidiary,corporation from its parent, Bon Secours Health Systems, Inc., (Bon Secours) a "not for profit" corporation based in Marriottsville, Maryland. Approximately 80 percent of the total project cost of $1,450,000 cost is expected to come from the parent organization and not Petitioner's corporation. The project has been approved by Petitioner's corporation and management approval has been granted by Bon Secours, subject only to final board approval and reevaluation by the parent corporation on an annual basis until the actual capital expenditure is incurred. Petitioner's parent corporation uses either a line of credit or goes to the tax exempt bond market to meet capital expenditure needs. The bond market is utilized when capital needs exceed $15 million for the year. Whether the funding source for Petitioner's project would come from a line of credit or bond financing would not be known until the actual year in which the expenditure is incurred. Bon Secours includes Petitioner in its obligated group which consists of a system-wide master trust indenture established in 1985. The group consists of eight hospitals and three long term care facilities. Weaker entities in the group have the benefit of the credit strength of the group's entire system. In this regard, Bon Secours enjoys a Standard & Poors and Moodys' bond rating of A+ and A-1, respectively. The corporation is a good credit risk with a strong financial position and good earnings record. Over the next five years, Bon Secours has the ability to raise in excess of $100,000,000 in the bond market for funding purposes, inclusive of the project which is the subject of theseproceedings. Although final approval of Petitioner's project by Bon Secours' board of directors is expected shortly, that approval had not occurred at the time of final hearing. As a result, the proof fails to establish that Bon Secours is committed to provide financing for Petitioner's project. Petitioner presented expert testimony regarding accessibility by medically underserved groups to Petitioner's and other cardiac catheterization programs. Petitioner's expert placed the size of the medically indigent population, a subcategory of the medically underserved group, at six to seven percent of the total population of the service area. Due to the lack of specificity of the methodology used in arriving at the cited percentage figure, no credibility can be ascribed to that population percentage. However, both Respondent and Petitioner concede the existence of this group in the district service area sought to be served by Petitioner's project. Petitioner has not established whether the medically indigent population is denied access to cardiac catheterization programs within the district service area. While Petitioner's hospital is a medicaid provider with a proactive policy of aiding the medically indigent, the availability of cardiac catheterization services exist for this group at Intervenor's medical center facilities, located only five miles from Petitioner's hospital. Intervenor is also a medicaid provider. The proof fails to establish that medicaid patients or medically indigentpatients are presently denied or turned away from Intervenor's facility. Further, the duplication of such services at Petitioner's hospital could effectively reduce the number of cardiac catheterization procedures required for the medical staff of Intervenor's laboratory to maintain proficiency. In point of fact, there is unused cardiac catheterization capacity at Intervenor's facility. As established by Intervenor's exhibit number one, there were 562 cardiac catheterization procedures performed at Intervenor's facility in 1988. The State Health Plan recites a minimum goal of 600 such procedures a year as a proficiency measurement; the Local Health Plan maintains that a minimum of 300 procedures should be performed to insure proficiency.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered denying Petitioner's application for approval of a cardiac catheterization Certificate of Need. DONE AND ENTERED this 29th day of June, 1989, in Tallahassee, Leon County, Florida. DON W.DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Fl 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of June, 1989. APPENDIX The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's Proposed Findings. 1.-3. Adopted in substance, except that part (l) of proposed finding 3 was met by Petitioner. 4.-5. Addressed in part. To the extent that the last sentence of proposed finding 5 suggests the establishment of final approval by the parent corporation, it is rejected. 6. Accepted with the exception of approval by the parent corporation. The record supports a finding of approval by management of that corporation, but not the board of directors. 7.-8. Adopted in substance. Adopted in part, remainder rejected due to witness's inability to support her calculations as to percentages of the population within the service district classified as medically indigent. Addressed in part, remainder unnecessary to conclusion. Addressed in part, remainder rejected on basis of relevancy. Addressed. Rejected on basis of relevancy. Addressed in part, remainder rejected as argumentative and speculative. Respondent's Proposed Findings. 1.-2. Rejected. Treated in preliminary discussion. 3.-21. Adopted in substance. 22.-23. Adopted by reference. 24.-25. Addressed in substance. 26.-30. Adopted by reference. 31.-33. Adopted by reference. Intervenor's Proposed Findings. 1.-3. Adopted in substance. 4. Rejected as unnecessary. 5.-9. Adopted in substance. 10. Adopted by reference. 11.-12. Adopted in substance. COPIES FURNISHED: Joseph R. Buchanan, Esq. Suite 900, Sun Bank Building 777 Brickell Avenue Miami, FL 33131 Edgar Lee Elzie, Jr., Esq. 215 South Monroe Street, Suite 804 Tallahassee, FL 32301 E. G. Boone, Esq. 1001 Avenida del Circo Venice, FL 34284 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Sam Power Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Miller, Esq. General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700
The Issue The issue for determination in this proceeding is whether the Respondent, the Department of Professional Regulation, should pay the Petitioner, Kirk A. Woodson, M.D., attorney fees and costs under Section 57.011, Fla. Stat. (1989), the Florida Equal Access to Justice Act. As reflected in the Preliminary Statement, the parties stipulate that the Petitioner is a "prevailing small business party" and that reasonable fees and costs exceed $15,000, the statutory cap. The only remaining issue under the statute is whether the Respondent was "substantially justified" in filing the Administrative Complaint in Case No. 90- 5986 against the Petitioner. 1/
Findings Of Fact On or about June 7, 1988, a complaint was filed against the license of the Petitioner, Kirk A. Woodson, M.D., subsequent to closure of a professional malpractice liability claim against him without payment of indemnity. The substance of the complaint was that, on January 1, 1986, Woodson saw and performed a hysterectomy on a patient who had presented at the emergency room at University Community Hospital in Tampa, Florida, with heavy and continuous vaginal bleeding. The complaint stated that post-surgery the patient developed Adult Respiratory Distress Syndrome (ARDS) and died. The complaint questioned whether Woodson failed to practice medicine with that level of care, skill and treatment which a reasonably prudent similar physician recognizes as being acceptable under similar conditions and circumstances. By letter dated June 30, 1988, the Department of Professional Regulation (the Department or DPR) notified Woodson that it had received the complaint and that it was initiating an investigation. DPR subpoenaed the hospital records which revealed that the patient arrived at the UCH emergency room at 5:28 a.m. on January 1, 1986, with at least a three-day history of vaginal hemorraging. An emergency room physician saw the patient, gave her two units of packed blood cells, and admitted her to Woodson's service. Woodson was called at approximately 8:30 a.m. and saw the patient later that morning. The patient's admission to surgery to determine the cause of the bleeding and perform necessary procedures was delayed until at least approximately 2:00 p.m. because the patient refused to consent to a dilation and curettage (D and C); she was insisting on a hysterectomy only. She finally consented to a D and C to be followed by a hysterectomy if Woodson found it to be medically necessary. During this delay, the patient continued to bleed and was transfused with two more units of packed blood cells at approximately 1:45 p.m. After the consent was given, there was a further delay, not explained by the records, until approximately 6:00 p.m. in getting the patient to surgery. The patient continued to bleed. Surgery took almost five hours. During surgery, the patient's bleeding got worse, and she was transfused with four more units of whole blood during the surgery. The DPR investigator was unable to ascertain from the hospital records the reason for the length of the surgery. The DPR investigator attempted to arrange an interview with Dr. Woodson and his attorney on or about February 28, 1989. The appointment was cancelled. When the DPR investigator contacted Woodson to reschedule the interview, Dr. Woodson questioned why DPR was pursuing the complaint when the malpractice claim was closed without payment of indemnity. Dr. Woodson agreed to be interviewed but expressed his preference that the investigator first review the "extensive depositions" taken in the malpractice litigation. 4/ Having already determined to request an expert evaluation of the case, the investigator decided to postpone the interview with Dr. Woodson. On July 10, 1989, the DPR asked a probable cause panel of the Board of Medicine to authorize the retention of an expert in gynecology to review the information obtained through investigation to that point in time to assist in the determination whether Woodson's treatment of the patient fell below that level of care, skill and treatment which a reasonably prudent similar physician recognizes as being acceptable under similar conditions and circumstances. On July 22, 1989, the probable cause met and authorized the expert review. On or about November 2, 1989, the DPR requested an expert review by Doris N. Carson, M.D., a Board-certified gynecologist with extensive surgical experience, including emergency room experience. Dr. Carson reviewed the hospital records supplied by DPR, some of which were difficult to read. By letter dated November 20, 1989, Dr. Carson reported her impressions. Dr. Carson believed the records supported Dr. Woodson's diagnosis and ultimate course of treatment. In the patient's condition, the proper course of treatment was to attempt to stop the vaginal bleeding by doing a D and C; a hysterectomy only should have been attempted if the D and C did not stop the bleeding. However, Dr. Carson perceived other problems that were not explained to her satisfaction by the hospital records. First, Dr. Carson did not see anything in the records to justify the length of the surgical procedures performed by Dr. Woodson. She reported: Careful review indicated that the subject attempted to remove the fibroids vaginally, and when this only increased the bleeding, then decided to do a laparotomy. The uterus, although enlarged, was not huge and the procedure as described seemed to move along without difficulty. When, however, the time is reviewed five hours would indicate very serious problems of technique or what seems more likely a lot if indecision about how to proceed. Evidently there was no physician surgical assistant, and the subject proceeded alone. In retrospect better operationg room help should have been available. Second, Dr. Carson felt that the patient received too much whole blood replacement during the course of the day and the surgery. Her reading of the hospital records indicated to her that five units of whole blood were given to the patient in addition to four units of packed cells. She felt: "Packed cells altogether would have been a better choice in light of the volume given to the patient." Her concern was that "volume overload," rather than ARDS, may have resulted ultimately in the death of the patient. However, she disclaimed the necessary expertise to render a conclusive opinion on the question and recommended that, if the DPR wanted a conclusive opinion on the cause of death, it should have a specialist in intensive care or a respiratory expert review the records. Dr. Carson had some difficulty with the delay in getting the patient to the operating room. The records indicated that at least some of the delay was caused by the patient's unwillingness to give consent to the recommended D and C. But Dr. Carson nonetheless had concerns that the delay added to the amount of blood transfused. Dr. Carson closed her letter with this remark: "In conclusion: A poorly done sugical proceeding below the recognized normal level of care." For reasons not apparent from the evidence presented, DPR did not interview Dr. Woodson before asking the probable cause panel to find probable cause and file a draft Administrative Complaint against Dr. Woodson based on Dr. Carson's expert review and the rest of the investigative report, including the hospital records. The draft Administrative Complaint, drawn in two counts, sought to discipline Dr. Woodson under Count I for failure to practice medicine with that level of care, skill and treatment which a reasonably prudent similar physician recognizes as being acceptable under similar conditions and circumstances, in two respects: first, for allegedly causing volume overload in the patient by ordering units of whole blood, instead of packed blood, to replace the patient's blood loss; and, second, for allegedly taking too long, without justification, to perform the necessary surgery. Count II alleged that Woodson failed to keep written medical records justifying the course of treatment of the patient, specifically with respect to ordering whole blood instead of packed units and with respect to the length of the surgical procedures. The probable cause panel considered the matter at its meeting on June 22, 1990. Counsel for the panel pointed out that the "extensive depositions" Woodson had indicated he wanted the DPR investigator to read before Woodson was interviewed were not in the packet of materials reviewed by the panel. 5/ But members of the panel indicated that they had reviewed the material that was in the packet and that they thought the information contained in it was adequate to make a probable cause determination. One of the doctors on the panel called it a "horrendous case." She felt that Woodson had "swamped out the patient" and had performed "inappropriate types of fluid therapy and blood therapy." The other member mentioned the "five-hour operating time . . . without any real explanation." The panel's attorney pointed out the part of the report of investigation that referenced the patient's refusal to consent to Dr. Woodson's proposed surgery and asked whether it constituted "any semblance of an explanation for a delay?" It is not clear from the transcript of the probable cause proceeding how the panel resolved the attorney's question, but the panel voted to find probable cause notwithstanding the question. 6/ There is information in the materials reviewed by Dr. Carson, and by the probable cause panel, which tends to explain some of the time it took for Dr. Woodson to perform surgery on the patient. Some of this partially exculpatory information was difficult to read and decipher in the records. Some of the partially exculpatory information was acknowledged by Dr. Carson and may also have been taken into account independently by the panel. Notwithstanding this partially exculpatory information in the record, the finding of probable cause was substantially justified.
The Issue The issue for determination in this case is whether Respondent violated certain provisions of Chapter 458, Florida Statutes, as alleged in the Administrative Complaint, and if so, whether Respondent’s license to practice medicine in the State of Florida should be revoked or otherwise disciplined.
Findings Of Fact Petitioner, AGENCY FOR HEALTH CARE ADMINISTRATION, BOARD OF MEDICINE, is the agency of the State of Florida vested with the statutory authority to administer the provisions of Chapter 458, Florida Statutes, governing the practice of medicine. Respondent, RAMESCHANDRA BHAGWANDAS SHAH, M.D., is now, and at all material times hereto was, licensed to practice medicine in the State of Florida holding license number ME 0050099. Respondent was first licensed to practice medicine in the State of Florida in 1987. At all material times hereto, Respondent was employed as an emergency room physician at Polk General Hospital in Bartow, Florida. Prior to being employed at Polk General Hospital, Respondent was employed with E.P.I., an Emergency Physician’s Group. Dr. Jay Edelberg, who testified in this proceeding as an expert witness for Petitioner, is the President and CEO of E.P.I. Respondent’s primary duties with E.P.I. related to emergency treatment for prisoners at various institutions under contract with E.P.I. Respondent became employed at Polk General Hospital in November of 1993. Polk General Hospital treats a majority of indigent patients. Polk General does not employ a cardiologist, nor does the hospital have a cardiac laboratory. Nurse Elsie Samuels has been a registered nurse for eighteen years, and has worked for more than nine years in emergency rooms. Nurse Samuels is certified in advanced cardiac life support. Dr. Jay Edelberg and Dr. Henry Smoak, III, were qualified in this proceeding as expert witnesses in the field of emergency room medical practice and are both highly qualified by experience and education. Hospitalization of November 29-December 1, 1994 The allegations of the Administrative Complaint relate to the care and treatment of Patient L.G.T., a 59-year old male. Patient L.G.T. first presented to the emergency room of Polk General Hospital at approximately 9:00 a.m. on November 29, 1994 complaining of chest pain, a very common complaint in emergency room medical practice. Like many of the patients at Polk General Hospital, Patient L.G.T. was indigent and without medical insurance. At this time, Patient L.G.T. was initially evaluated by Dr. C. B. Clark, the emergency room physician on call at the time. Patient L.G.T. reported an episode of chest pain that had recently occurred at approximately 3:00 a.m. that morning. Upon presentation Patient L.G.T. did not exhibit or report shortness of breath, other respiratory distress, nausea, or a family history of cardiac problems. Patient L.G.T. reported that his primary symptom was a feeling of “gas” moving around. Patient L.G.T.’s cardiac risk factors included his age, gender, and a history of hypertension. After the initial emergency room examination, Patient L.G.T. was referred by Dr. Clark to Dr. Thieu Nguyen, an internist at Polk General Hospital for further evaluation. As set forth above, there was no cardiologist on staff at Polk General Hospital. Patient L.G.T. was admitted to Polk General Hospital on November 29, 1994, and discharged by Dr. Nguyen on December 1, 1994. During this three-day hospitalization, Patient L.G.T. underwent a thorough cardiac evaluation, including three electrocardiograms (EKGs), an echocardiogram, cardiac enzymes test, and a complete blood work-up. The results of the cardiac work-up as evaluated by Dr. Ngyuen were inconclusive. The EKGs were abnormal, but non- diagnostic. In this respect, the EKGs indicated questionable anterolateral ischemia; however, Patient L.G.T. was not experiencing chest pain during the hospitalization. The EKG results showed some depressions in the ST changes at V5-V6. This result, however, was not diagnostic of myocardial infarction because if Patient L.G.T. was experiencing a myocardial infarction a rise in ST elevation would be expected. The results of the AST and LDH blood studies indicated a normal range. The results of the cardiac enzyme test revealed some levels were elevated. Dr. Nguyen, however, concluded that the cardiac enzyme elevation was due to non-cardiac causes. This conclusion appears contradictory in these circumstances, and there is no indication in the record upon what basis Dr. Nguyen arrived at this conclusion. Dr. Nguyen also noted that the patient’s chest pain was not typical, and might be due to gastrointestinal problems. Patient L.G.T. had a history of hypertension, and a cholesterol reading of 302, which was high. The normal range is 100 to 200. On December 1, 1994, Patient L.G.T. was discharged from Polk General Hospital by Dr. Nguyen, with follow-up treatment ordered in three days including EKGs, blood work-up, and further cardiac enzymes. At the time of Patient L.G.T.’s discharge, Dr. Nguyen made no specific diagnosis of cardiac disease. Emergency Room Admission of December 2, 1994 Patient L.G.T. returned to the emergency room of Polk General Hospital at 12:55 a.m. on December 2, 1994, approximately twelve hours after his discharge by Dr. Nguyen. Respondent was the physician on duty at this time. Nurse Samuels was also on duty in the emergency room. An initial intake evaluation was performed by the triage nurse which indicated that Patient L.G.T. reported he began experiencing chest pain at approximately 2:00 p.m. on December 1, 1994, with the pain primarily located in his chest and under his left arm. Patient L.G.T. did not at this time appear in acute distress, and denied any radiating pain. Patient L.G.T.’s vital signs were normal. Patient L.G.T. was then referred to Respondent who performed a physical examination which specifically evaluated the patient for signs typical of myocardial ischemia including: constricting chest pain, perspiration, respiratory disorders, vomiting or nausea, paleness, elevated temperature, and elevated pulse rate. Respondent’s physical examination of Patient L.G.T. showed no findings indicative of myocardial ischemia. Nurse Samuels was present during the physical examination by Respondent. At this time Patient L.G.T. expressed generalized complaints of discomfort, and did not indicate specific complaints which were cardiac in origin. Upon completion of the physical examination, Respondent ordered a cardiac enzyme test for Patient L.G.T. The results of the cardiac enzyme test indicated that at 1:25 a.m. on December 2, 1994, that the CPK, ASTs, and LDs were in the normal range. Respondent also ordered an EKG for Patient L.G.T. The computerized results of the EKG as of 1:23 a.m. on December 2, 1994 indicated that there were non-specific ST and T-wave abnormalities. These computerized results were identical to the results of the EKG performed on L.G.T. on December 1, 1994 at 7:19 a.m. during his previous hospitalization and evaluation by Dr. Nguyen. Both expert witnesses, Dr. Edelberg and Dr. Smoak, agreed that these computerized EKG results were common for a man of L.G.T.’s age. Both experts also agreed that there was no acute change between the EKG results of December 1, 1994 and December 2, 1994. Chest pain alone is not diagnostic of myocardial infarction, and may be the result of several causes including gastrointestinal problems, as indicated in this case by Dr. Nguyen during L.G.T.’s previous hospitalization. At 1:05 a.m. and 1:15 a.m. on December 2, 1994, Patient L.G.T. was given nitroglycerin for relief from angina, and gastroesophageal pain. At 2:15 a.m. Patient L.G.T. reported that he was not experiencing chest pain which was reported to Respondent by the emergency room nurse. At 2:45 a.m. Respondent, after evaluating the results of Patient L.G.T..’s physical examination, EKG, cardiac enzymes, and blood work-up, decided to discharge Patient L.G.T. from the emergency room. At this time Patient L.G.T.’s vital signs were normal, and he was not experiencing any chest pain. After being informed that he would be discharged, Patient L.G.T. informed Nurse Samuels that he was experiencing chest and back pain, and that he also was experiencing nausea. Nurse Samuels informed Respondent of the patient’s reported condition. Patient L.G.T. also told Nurse Samuels that he had eaten spicy fish earlier that day while at home. Respondent then prescribed for Patient L.G.T. a “G.I. cocktail,” consisting of a combination of medications given to relieve gastrointestinal discomfort, which was administered at 2:50 a.m. on December 2, 1994. At 3:10 a.m. Patient L.G.T. stated, “I can’t go home, I am sick.” Patient L.G.T. requested that Respondent admit him to Polk General Hospital. Respondent reviewed with Patient L.G.T. the results of his EKG, cardiac enzyme tests and physical examination, and informed him that there was no basis for admission. Patient L.G.T. kept telling Respondent to send him upstairs and admit him. At this time, Respondent did not consult with Dr. Nguyen or any other internist on staff at Polk General Hospital regarding Patient L.G.T. on December 2, 1994. Respondent had reviewed Dr. Nguyen’s records regarding Patient L.G.T. and was aware of the apparent contradictory conclusion that elevated cardiac enzymes were due to non-cardiac causes, but did not question this conclusion. At 3:15 a.m. on December 2, 1994, Patient L.G.T. was discharged by Respondent from the emergency room at Polk General Hospital. At this time Patient L.G.T. appeared to be in stable condition, and stated to Nurse Samuels that he would call his family to take him home. Post Discharge Incident At approximately 4:20 a.m. Nurse Samuels had gone to her car and was returning to the emergency room when she was informed that someone had collapsed in the emergency room lobby. Nurse Samuels went to investigate and found Patient L.G.T. unresponsive, with face down in vomit, with no pulse, no respiration, and urine incontinent. Both pupils were fixed and dilated. A code was instituted, and Patient L.G.T. was taken back to the emergency room. All efforts to resuscitate him were unsuccessful. Patient L.G.T. was pronounced dead at approximately 5:00 a.m. on December 2, 1994. The stated diagnosis was probable aspiration/asphyxia. Respondent requested that the medical examiner perform an autopsy on Patient L.G.T.. It is stipulated by the parties that an autopsy should have been performed on Patient L.G.T., but was not performed and that there was only a visual examination of Patient L.G.T. by the medical examiner before rendering cause of death.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: On September 14, 1977, respondent received petitioner's (BMA) application for approval of a capital expenditure proposal to establish a new twenty-station chronic renal dialysis facility in Clearwater, Florida. Petitioner is a subsidiary of National Medical Care, Inc., which is the largest provider of chronic dialysis services, operating some sixty facilities nationwide. BMA currently operates two facilities in the Florida Gulf Health Systems Agency (FGHSA) region -- a twenty-five station facility in Tampa and a twenty station facility in St. Petersburg. BMA also operates facilities in Sarasota, Gainesville and Orlando, Florida. The present application proposes to spend $470,000.00 for leasehold improvements and $140,000.00 for equipment for a total capital expenditure of $610,000.00. The proposed facility is designed to provide outpatient hemodialysis treatments to medically stable, ambulatory patients suffering from end state renal disease (ESRD). Such patients suffer negligible kidney functions and require either regular chronic dialysis treatment or transplantation. Those patients who undergo hemodialysis generally have three treatments per week, each treatment lasting from four to six hours. By letter dated December 12, 1977, the respondent's administrator notified petitioner that its capital expenditure proposal was not favorably considered for two reasons, both relating to the need for such services within the applicable service area. The first reason cited by the respondent was the finding by the FGHSA that only five additional stations would be needed in the year 1978. Due to the fact that the FGHSA failed to provide respondent with its recommendation within sixty days, respondent was required, pursuant to F.S. Section 381.494(5)(e), to deem that the proposal was recommended for approval by the FGHSA. The second reason for disapproval listed by the respondent was its own determination that a surplus of eleven stations would exist in the service area of 1978. This figure of eleven was amended at the hearing to four. Subsequent to the time that petitioner's application was considered at the local and state levels, respondent approved the application of Kidneycare of Florida, Inc. for the establishment of a ten station chronic renal dialysis facility in Clearwater, Florida. This action occurred on February 15, 1978, after an administrative hearing was held in which petitioner BMA was an intervenor. That case (Case No. 77-2203) is presently on appeal in the District Court of Appeal, Second District. Apparently, the BMA and the Kidneycare applications were submitted to and considered by the local and state reviewing authorities during the same period of time. The generally accepted formula for arriving at a projected need for additional dialysis stations is not in dispute. The starting point is the actual number of persons who are ESRD patients within the service area. To this number is added the number of patients expected to develop ESRD during the planning period. This sum is then reduced by the number of successful kidney transplants expected to occur and by the number of patients expected to die within the planning period. For planning purposes, veteran administration patients and dialysis machines are not to be included in the projections. In order to arrive at a valid project patient population figure for the planning period, it should be appropriate to add the number of transient patients or winter visitors to the area and subtract the number of patients trained for home dialysis. To arrive at the number of stations (machines) required to serve the project patient population at the end of the planning period, the projected patient pool is divided by the station utilization factor (a ratio of number of patients per station). The number of existing stations in the area is then subtracted from this figure, thus yielding the number of additional stations needed. Thus the ideal formula reads as follows: current patient pool + new patients successful transplants mortality factor home trainees + winter visitors V.A. patients = projected patient pool divided by station utilization factor number of existing non V.A. stations + additional stations needed This formula necessarily employs certain conjectural components and the dispute in this proceeding concerns the derivation and propriety of the statistics used to supply these conjectural components. It appears from the testimony and documentary evidence that the respondent relied exclusively on the data supplied by the FGHSA, with the exception of the station utilization factor. Therefore, it is presumed that the figures utilized by the FGHSA in its analysis were also utilized by respondent. In arriving at the projected patient pool, the petitioner and the HSA were in agreement with the number of new patients and the number of successful transplants. They were not in agreement with the projected morality figure or with the projected number of veterans administration patients. The HSA utilized the actual morality figure (21.8 percent) for the 1975-76 year. The petitioner utilized the figure of 15 percent. The actual morality rate for the 1976-77 year was 14.1 percent. Had the HSA had this more recent statistic available to it at the time, it would have utilized it. A more appropriate method would have been to average the two figures. This would have increased the number of deaths projected by the petitioner and decreased the number projected by the HSA. The evidence with respect to the patient cap at the V.A. hospital was based upon hearsay and thus is not sufficient to refute the HSA's projections in that area. Neither the HSA nor the petitioner took into account the number of transient patients or the number of existing patients who would undergo home dialysis training within the planning period. Each of these factors was deemed too speculative or conjectural for a meaningful computation of projected needs. Testimony was adduced to the effect that the intervenor Kidneycare had received a nine-year grant to establish home dialysis training in the subject service area, and that once this program was underway, it was expected that from 30 to 50 patients would be trained in home dialysis. The utilization factor per station or machine was also in dispute. In making their projections, both the petitioner and the HSA used a factor of 3.2. This result is obtained by assuming that each machine has a capacity for dialyzing two patients per day, and that each patient must be dialyzed three times per week. Assuming a capacity rate of 80 percent, the utilization factor is 3.2 patients per station. Using a capacity rate of 90 percent, the utilization factor is 3.6 patients per station. The respondent utilized the 3.6 factor in projecting future need. This 3.6 utilization standard has consistently been used by respondent in its review of other free-standing chronic renal dialysis facilities, and petitioner has failed to demonstrate that such a standard is unreasonable. The remaining area of the formula in dispute is the number of existing non-V.A. stations in the area to be served. The parties agreed that as of the end of 1977, there were 73 chronic renal dialysis stations in existence or authorized in the four county are covered by the FGHSA. The dispute arose over the actual utilization by Tampa General Hospital of its existing 14 stations. The assistant hospital administrator at Tampa General Hospital testified that it is the future intent of said hospital to reduce the number of stations available for stable chronic patients in order to make room for more unstable chronic and acute patients. This "future intent" is still in the recommendation stage and the testimony regarding this intent was not specific as to the actual number of stations to be withdrawn. The testimony established that a reasonable planning period for chronic renal dialysis equipment is one year. If one considers the one year period to commence at the time that the proposed facility can be operational, the testimony indicates that the one year period would run from the end of 1978 through the end of 1979. In applying the facts discussed above to the acceptable formula, it is found that the patient pool projected by the HSA must be increased by utilizing a lower mortality rate (18 percent in lieu of 21.8 percent) and that the petitioner's projected patient pool must be decreased by utilizing a higher number of deaths and a higher number of V.A. patients. The resulting figures must also be offset by applying a station utilization factor of 3.6 in lieu of 3.2 and by adding to the number of existing stations the ten stations for which the intervenor Kidneycare recently received approval from respondent. Applying these adjustments to the figures projected by the respondent, the projected patient pool for non-V.A. patients for the end of 1978 approximates 294, and the figure for the end of 1979 is somewhere close to 326. A utilization factor of 3.6 patients per station indicates an approximate need for 82 stations by the end of 1978 and 90 stations by the end of 1979.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that respondent's denial based upon the ground of lack of demonstrated need for additional dialysis stations in the service area be reversed. It is further recommended that, a need having been shown for an additional seven stations in the planning period, petitioner be permitted to submit a revised or amended application within twenty days for approval of a seven station facility. Respondent should then act upon said revised application within fifteen days from receipt of the same. Respectfully submitted and entered this 9th day of May, 1978, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 904/488-9675 COPIES FURNISHED: Art Forehand, Administrator Office of Community Medical Facilities 1323 Winewood Boulevard Tallahassee, Florida 32301 Harold W. Mullis, Jr. Trenam, Simmons, Kemker, Scharf, Barkin, Frye and O'Neill Post Office Box 1102 Tampa, Florida 33601 Eric J. Haugdahl Assistant General Counsel 1323 Winewood Boulevard Building 1, Room 406 Tallahassee, Florida 32304 John H. French, Jr. 630 Lewis State Bank Building Tallahassee, Florida 32304
The Issue The issue for consideration is whether Respondent, Sarasota County Public Hospital Board's, (Board), Motion To Dismiss HCA of Florida, Inc.'s (Doctors), Petition For Formal Administrative Proceedings should be granted.
Findings Of Fact On June 26, 1990, the Board filed CON application No. 6347, seeking approval to construct a comprehensive outpatient center and medical office complex on the campus of Sarasota Memorial Hospital. The new facility, anticipated to have a cost of slightly in excess of $18,000,000.00, was to house several outpatient functions including: outpatient registration outpatient diagnostic radiology outpatient laboratory services outpatient rehabilitative services outpatient cardiology diagnostic center outpatient dialysis Health resources center, and an office building located adjacent to the existing ambulatory surgical center. On or about July 13, 1990, the Department of Health and Rehabilitative Services, (Department), issued its State Agency Action Report, (SAAR), in which it indicated a preliminary decision to approve the subject application in its entirety, designating the project reviewable under Section 381.706(2)(d), Florida Statutes. Notice of this decision was published in the Florida Administrative Weekly on August 3, 1990. On August 14, 1990, Doctors filed a Petition For Formal Administrative Hearing challenging the preliminary approval, claiming that components of the project are reviewable under several subsections of Section 381.706(1), Florida Statutes. Specifically, Doctors claims that the operation of a home health agency from the complex renders it reviewable under subsection (f); that as the project constitutes a substantial change in the provision of inpatient services, or establishes new inpatient services, it is reviewable under subsection (h); and that it is an additional health care facility which is reviewable pursuant to subsection (b). Doctors also claims the new facility will hurt its ability to compete for patient referrals from physicians who will be housed in the new facility and will result in a reduction of Doctors' market share. Doctors is an existing hospital that provides a full range of acute care services to residents of Sarasota County. The Board's application contends that the development of this complex will free up capacity in key ancillary areas to better accommodate patients, and it is so found. The ambulatory diagnostic and treatment space proposed for the new facility represents what would have otherwise been less efficient additions to the existing departments. There will also be a bridge connecting the main hospital to the new center which will provide convenient access to any outpatient who may need to visit the hospital. It will also provide, "... direct linkage between the acute inpatient facility with the physicians' offices thereby enhancing pertinent access to a range of diagnostic and treatment services." Doctors contends in its Petition that it is the Board's clear intention and expectation to increase its service area and market share of Sarasota County patients as a result of this project. It asserts that if the Board's project is implemented, it will be serving different patients, and a different patient mix from a different geographical area than currently served. For the purpose of resolving the limited issues at this motion hearing, these assertions are accepted as fact. Accepting the assertions in paragraph 5 through 7, above, as fact, however, does not necessarily require the conclusions be reached that the accomplishment of the Board's project would result in any significant change to the level of its patient service since what is planned deals only with outpatient services. While Doctors disputes this, its claims that inpatient services would be effected is not supported.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore RECOMMENDED that the Secretary, Department of Health and Rehabilitative Services, enter a Final Order dismissing HCA of Florida, Inc.'s Petition in opposition to the grant of CON No. 6347 to the Sarasota County Public Hospital Board. RECOMMENDED this 15th day of October, 1990, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of October, 1990. COPIES FURNISHED: Robert A. Weiss, Esq. Parker, Hudson, Rainer & Dobbs The Perkins House 118 N. Gadsden Street Tallahassee, Florida 32301 John Radey, Esq. Elizabeth McArthur, Esq. Aurell, Radey, Hinkle & Thomas Suite 1000, 101 North Monroe Street Post Office Drawer 11307 Tallahassee, Florida 32302 Edward G. Labrador, Esq. Department of Health and Rehabilitative Services 2727 Mahan Drive, Suite 103 Tallahassee, Florida 32308
Findings Of Fact Lawnwood Regional Medical Center is a 225 bed community hospital in Ft. Pierce, Florida. It currently holds a CON to add an additional 50 beds. Lawnwood is owned and operated by Hospital Corporation of America, (HCA). On October 14, 1985, Lawnwood submitted a CON application for authorization to provide cardiac catheterization and open heart surgery programs at the facility. The project for both services would involve a total of approximately 10,000 sq. ft. of construction consisting of both new construction and renovation of the present facility, with a project cost of approximately $3.6 million. Lawnwood developed the project because it found a need therefor as a result of various visits to the administrator by physicians practicing in the area who indicated a growing demand for the services. The physicians in question indicated they were referring more and more patients to facilities out of the immediate area and the services in question were very much needed in this locality. The main service area for Lawnwood consists of the northern four counties of DHRS District IX, including St. Lucie, Martin, Okeechobee, and Indian River Counties. The majority of the cardiology practitioners in this service area find it necessary, because of the lack of cardiac catheterization and open heart surgery programs, to transfer patients to facilities either in Palm Beach County, which are from one to two hours away, or to facilities outside the District, primarily in Miami or the University of Florida area, which are even further. While many heart patients are not severely impacted by this, one specific class of patient, the streptokinase patient is. This procedure, involving the use of a chemical injected by catheter to dissolve a clot causing blockage must he done within a relatively short period of time after the onset of the blockage to be effective. However, this can he done outside a cardiac cath lab. A representative sampling of doctors testifying for Lawnwood indicated that during the year prior to the hearing, one doctor, Kahddus, sent 140 patients outside the district for catheterization procedures and 90 additional patients for open heart surgery. Other physicians referring outside District IX included Dr. Hayes - 4; Dr. Marjieh - 240; and Dr. Whittle - 12. Doctors indicated that the situation was so severe that some physicians practicing in the Palm Beach area, who have cardiac catheter and open heart surgery services available to them in the immediate locale are nonetheless referring patients outside the District for these procedures. No physician who does this testified, however. St. Mary's Hospital is a 358 bed not for profit hospital located in Palm Beach County. It has been issued a CON for a cardiac catheterization lab expected to come on line in April, 1987. Palm Beach Gardens Medical Center is a 204 bed acute care hospital which currently operates a cardiac catheterization laboratory and an open heart surgery program. It, too, is located in Palm Beach County. A second cardiac catheterization laboratory was scheduled to open at this facility in February, 1987. An additional cardiac catheterization laboratory is operating at Delray Community Hospital and this facility, as well as the currently existing facility at PBGMC are the only two currently operating cardiac catheterization laboratories within DHRS District IX. There are, however, other cardiac catheterization labs approved for District IX. These include the aforementioned second PBGMC lab, the aforementioned St. Mary's lab, one at JFK Hospital and one at Boca Raton Community Hospital. These latter four facilities are not yet operational. As to open heart surgery programs, only PBGMC and Delray Community Hospital have open heart surgery programs on line. JFK has been approved for an open heart surgery program. DHRS has promulgated rules for determining the need for cardiac catheterization and open heart surgery programs. These rules are found in Section 10-5.11(15) and (16), F.A.C. and establish methodologies based on use rates to determine need. The use rate for the applicable time period here, July, 1984 through June, 1985, is to be multiplied by the projected population for the District in the planning horizon, (July, 1987) which figure is then divided by 600 procedures per laboratory to determine the need for catheterization labs or 350 open heart procedures to determine the need for additional open heart surgery programs. The difficulty in applying this methodology to the current situation is in the calculation of the "use rate" used to measure the utilization of a service per unit of population. For the rule here, it is expressed as the number of procedures per 100,000 population. There is more than one way to calculate a use rate and the DHRS rules do not specify the method of calculation. An "actual use rate" is determined by applying the actual number of procedures performed within a particular geographical area in a particular time period. Data to determine an actual use rate for catheterization services or open heart surgery is not currently available in District IX, however. Applying the formula cited above to the existing figures, however, reflects a use rate of 62.3 procedures per 100,000 population in District IX. This is far below the 409.7 procedures per 100,000 population statewide. Lawnwood proposes to apply the statewide use rate rather than the District IX use rate because District IX is currently in a start up phase and does not have sufficient historical information available to provide an accurate use rate for the purpose of the need methodology. The lower the use rate, the lower the need will be shown to be. If the lower District IX rate is applied, in light of the numerous other laboratories coming on line approved already, there would clearly be no need for any additional services in either the catheterization or open heart surgery areas. Some experts offer as a potential substitute for the actual use rate a "facility based use rate" which involves determining the number of procedures performed in all hospitals within a particular geographic area for the applicable time period and dividing that number of procedures by the population of that area. DHRS evaluators employed this "facility based use rate" in their need calculations. At least one expert, however, contends that the "facility based use rate" is appropriate only when certain conditions exist. These include an adequate supply of facilities or providers in the area; historical, long-standing experience rather than start-up programs; and a lack of a high number of referrals outside of the particular area. Since these three conditions are not met here, it would seen that the "facility based use rate" would not be appropriate. In determining the statewide use rate of 409.07, Mr. Nelson, consultant testifying on behalf of Lawnwood, derived that figure by compiling utilization data for all hospitals in the state providing cardiac catheterization during the time period in question divided by the statewide population as of January 1, 1985. The resulting figure was thereafter converted into a rate per unit of population. A statewide figure such as this includes patients of all ages and it would appear that this is as it should be. Catheterization and open heart surgery services would be open to all segments of the state population and it would seem only right therefore that the entire population be considered when arriving at figures designed to assess the need for additional services. On the other hand, experts testifying on behalf of the intervenors utilized statistical manipulation which tended to indicated that the need, reflected as greater under Mr. Nelson's methodology, was in fact not accurate and was flawed. He that as it may, it is difficult to conclude which of the different experts testifying is accurate and the chances are great that none is 100 percent on track. More likely, and it is so found, the appropriate figure would be one more extensive than the population figures and resultant use rate for District IX alone and closer to the statewide rate across a broad spectrum of the population. When the fact that the older population of the District IX counties, the age cohort more likely to utilize catheterization and open heart surgery services, is greater in the District IX counties than perhaps in other counties north of that area, the inescapable conclusion must be reached that a use rate significantly higher than 62.3 would be appropriate. This may not, however, require the use of a statewide rate of 409.7. Utilizing, arguendo, the statewide use rate of approximately 409 procedures per 100,000 population results in a projected number of procedures of 4,576 in District IX if the projected population figure of slightly more than 1.1 million holds true. When that 4,576 figure is divided by the minimum number of procedures required by rule prior to the addition of further cardiac catheterization labs, (600),a need for 7.63 labs in District IX is shown. With six labs existing or approved, a net need of two additional labs would appear to exist since DHRS rounds upward when the number is .5 or higher. A similar analysis applied to open heart surgery, using a statewide use rate of 120.94 per 100,000 population results in a procedure number of 1,353 for the same population. Utilizing the DHRS rule minimum of 350 procedures per lab for open heart surgery procedures, a net yield of 3.87 programs would be needed in District IX in January, 1988. Subtracting the three existing or approved programs now in the district, and rounding up, would show a need of one additional open heart surgery program. These are the figures relied upon by Lawnwood. Accepting them for the moment and going to the issue of financial feasibility, DHRS apparently has agreed that the project costs for this facility are reasonable. Lawnwood has shown itself to be a profitable hospital and HCA is a large, well run corporation not known for the establishment of non- profitable operations. If one accepts that the actual utilization will approximate the projected utilization figures, then the operation would clearly be financially feasible. Both intervenors challenged the Petitioner's pro forma statement of earnings, but their efforts were not particularly successful. If Lawnwood can perform a sufficient number of procedures, then it should be able to break even without difficulty. Turning to the question of the impact that the opening of Lawnwood's facilities would have on the other providers or prospective providers in the area, both PBGMC and St. Mary's contend that there would be a substantial adverse impact on their existing services as well as on the prospective units already approved. Lawnwood proposes to service a portion of the indigent population with its two new operations. Were this to be done, indeed an impact would be felt by St. Mary's which is currently a substantial provider of indigent and Medicaid treatment and St. Mary's will be particularly vulnerable since it is in the start-up phase of its cardiac catheterization lab. Currently, PBGMC draws patients in both services from Martin and St. Lucie counties as well as from Palm Beach County. The percentage of patients drawn from these more northern counties is, while not overwhelming, at least significant, being 14 percent from Martin County and 9 percent from St. Lucie. Taken together, this constitutes 23 percent of the activity in these areas. St. Mary's anticipates a loss of 25 percent of its potential catheterization cases and if this happens, it will lose approximately $719,000.00 of its gross revenue in catheterization cases alone. St. Mary's further predicts that if Lawnwood's facility is opened, it will have difficulty recruiting and maintaining qualified personnel. PBGMC, figuring it's loss to be approximately $492,000.00, estimates that a layoff of nursing and other staff personnel or the redirecting them into other areas of the hospital would be indicated. PBGMC also refers to the cumulative impact not only of Lawnwood's proposal but of the other cardiac programs in the District which have been approved but are not yet on line. If all come into operation, PBGMC estimates it could lose as much as 69 percent of its activity in these areas. These negative predictions are not, however, supported by any firm evidence and are prospective in nature. From a historic perspective, it is doubtful that any lasting significant negative impact would occur to either PBGMC or St. Mary's overall operation by the opening of Lawnwood's facility. Turning to the question of staffing and its relationship to the issue of quality of care, there is little doubt that Lawnwood could obtain appropriate staffing for both its services if approved. Of the physicians already on staff at the facility, many are now certified and the hospital and the medical community plans training programs for those who are not. As to nurses and other support personnel, Lawnwood is satisfied that it can recruit from other HCA facilities and will recruit from the open market. It has a full time recruiter on staff. Quality of care is of paramount concern to the administration of Lawnwood. It has a current three year accreditation from the Joint Commission on Hospital Accreditation. It also has a quality control committee made up of both physicians and other staff members and the laboratory is approved by appropriate accrediting agencies. These same types of quality control programs would be applied to both new requested services as well. The rules in question governing the approval of cardiac catheterization laboratories and open heart surgery programs set down certain criteria for the approval of additional services which, as to the question of cardiac catheters states at subparagraph 15(o)1a that there will be no additional adult cardiac catheterization laboratories established in a service area unless the average number of catheterizations performed per year by existing and approved laboratories performing adult procedures in the service area is greater than 600. Much the same qualification relates to open heart surgery programs except that in that latter case, the minimum number would be 350 open heart procedures annually for adults and 130 for pediatric heart procedures annually. Ms. Farr, consultant for DHRS, feels that Petitioner's application would be inconsistent with the minimum standards set forth in the rule because she does not believe the Petitioner would do enough procedures in either cardiac catheterization or open heart surgery to meet the 600/350 criteria. She also contends that the proposal is not consistent with the District Health Plan, because the District plan requires the rule which addresses need be followed. Since, in her opinion, the application of the rule shows no need, there would be a violation of the District Health Plan if these proposals were approved. In the area of cardiac catheterization laboratories, of the six licensed and approved labs in District IX, only that existing currently at PBGMC is presently performing more than 600 procedures per year. Substantial testimony tending to indicate that a well organized cardiac catheterization lab can handle between 1500 and 2000 procedures per year, the 600 figure would tend to be a minimum and was so recognized by the drafters of the rule. No evidence was introduced by any party to show the numbers of open heart surgery procedures currently being performed in the three existing or approved open heart surgery programs in the District. Again, however, it would appear that DHRS criteria of 350 would be a minimum rather than an optimum or maximum figure. The parties have stipulated that as to the travel time criteria set forth in the rule for both procedures, 90 percent of the population of District IX is within two hour automobile travel time from availability to either or both procedures. It would further appear from an evaluation of the evidence, that while difficulty is experienced in arranging treatment for indigent transfer patients outside the District, little if any difficulty is experienced in arranging transfer treatment for those who can pay for the service. Little difficulty is experienced in securing treatment for these individuals in either Miami, Orlando, or elsewhere, and aside from inconvenience, there was no showing that a real, substantial health risk existed as a result of the transfer process. All things taken together, then, though the numerical evaluation under the rule process, applying a statewide use rate, tends to indicate that there is a "need" for this additional service, the subparagraph "o" criteria of 600/350 procedures requirement prior to authorization of additional service is not met.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Lawnwood's application for a CON to add a cardiac catheterization laboratory and open heart surgery program at its facility in Ft. Pierce, Florida, be denied. RECOMMENDED this 16th day of March, 1987 at Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-1539 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. By Petitioner - Lawnwood 1 & 2. Accepted and incorporated. 3 & 4. Accepted and incorporated. 5. Accepted and incorporated. 6. Accepted and incorporated. 7. Accepted and incorporated. 8. Accepted and incorporated. 9. Accepted and incorporated. 10. Accepted and incorporated. 11. Accepted and incorporated. 12. Accepted and incorporated in substance. 13. Accepted and incorporated in substance. 14. Accepted and incorporated in substance. Rejected as indicating a need for 2 additional cath labs. Rejected as calling for determination of "not normal status for District IX. Accepted in general but rejected insofar as there is an implication that non-indigent patients experience "significant" difficulty securing treatment. Accepted. 19 & 20. Accepted as to the streptokinase patients specifically. Accepted but not considered to be of major significance. Accepted and incorporated. 23 & 24. Accepted and incorporated. 25 & 26. Accepted and incorporated. 27 & 28. Accepted and incorporated. 29. Accepted. 30 & 31. Accepted and incorporated in substance. 32. Rejected as not supported by the best evidence. 33-36. Accepted and incorporated. Rejected as contrary to the evidence. Accepted. 39-42. Accepted. By Intervenor - St. Mary's 1 - 4. Accepted and incorporated. 5 & 6. Accepted and incorporated. 7 - 9. Accepted and incorporated. 10. Rejected as not supported by the best evidence. 11 & 12. Accepted and incorporated. Accepted and incorporated. Accepted and incorporated. Rejected as not supported by the best evidence. Accepted. Accepted. Accepted. 19-21. Merely a summary of testimony. Not a Finding of Fact. 22-24. Summary of testimony. Not a Finding of Fact. Accepted as ultimate Finding of Fact. Rejected. Rejected as a summary of testimony. Not a Finding of Fact. Irrelevant. Accepted. Accepted. Subordinate. 32-36. Rejected as a recitation of testimony and not Finding of Facts. 37-40. Rejected as contrary to the weight of the evidence. 41 & 42. Accepted. 43-46. Accepted. Rejected. Irrelevant. Accepted. Rejected. By Intervenor - PBGMC 1 & 2. Accepted and incorporated. Accepted except for last sentence which is irrelevant. Accepted. Accepted and incorporated. 6 & 7. Accepted and incorporated. Accepted. 9. Accepted and Incorporated. 10 & 11. Accepted and incorporated. 12. Accepted. 13-16. Accepted and incorporated. Accepted. Accepted. Rejected ultimately as contrary to the weight of the evidence. Accepted. Rejected. Accepted. 23 & 24. Accepted. 25 & 26. Rejected as contrary to the weight of the evidence. 27. Accepted. COPIES FURNISHED: Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Thomas A. Sheehan, III, Esquire 9th Floor, Barnett Centre 625 North Flagler Drive West Palm Beach, Florida 33401 R. Bruce McKibben, Esquire 1323 Winewood Blvd. Building 1, Room 407 Tallahassee, Florida 32301 Eleanor A. Joseph, Esquire Harold F.X. Purnell, Esquire 2700 Blairstone Road, Suite C Tallahassee, Florida 32314 Robert S. Cohen, Esquire 306 North Monroe Street Post Office Box 10095 Tallahassee, Florida 32302
Findings Of Fact Based upon the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The petitioner's facility opened in January of 1976 as the Hubert Rutland Hospital. Its name was subsequently changed to Gateway Community Hospital and, after purchase by petitioner, it became Humana Hospital Northside. Dr. D. K. Mukherjee, Board-certified in internal medicine and cardiology, came to petitioner's facility in 1976 for the prime purpose of developing a cardiac catheterization laboratory, and assisted in preparing a list of equipment necessary to begin operation of such a laboratory. On December 31, 1976, petitioner's predecessor entered into a medical equipment service agreement for cardiac catheterization and monitoring equipment. That equipment, costing less than $100,000.00, was delivered to the hospital on or before June 17, 1977. Since that time, cardiac catheterization procedures, as defined in Rule 10-5.11(15), Florida Administrative Code, have been performed on a continuous and regular basis at petitioner's facility in Special Procedures Room No. 3. Over the past eight to nine years, the longest interval between the performance of such procedures has been approximately one or two weeks. Special Procedures Room No. 3, while also utilized for other purposes, has the equipment, staff and support services necessary for providing the studies and procedures associated with cardiac catheterization. The hospital itself is capable of providing the ancillary diagnostic services, such as hematology studies, electrocardiography, chest x-rays, blood-gas studies, pathology, blood chemistry analysis and nuclear studies pertaining to cardiology. Prior to July 1, 1977, Certificate of Need review was not required for the purchase of cardiac catheterization equipment by a hospital unless it involved a capital expenditure of more than $100,000.00. Commencing on July 1, 1977, Certificate of Need review was required when a health care facility sought to provide a substantial change in service, defined as a service which was not offered on a regular basis within the prior twelve-month period. Section 381.494(1)(c), Florida Statutes, and Rule 10-5.02(19), Florida Administrative Code. Because of technological and scientific advances, petitioner desired to replace and update the equipment purchased in 1976 for the performance of special procedures. Accordingly, in April of 1984, it submitted an application for a Certificate of Need to replace special procedures equipment at a project cost of $1,269,000.00. The application, in Section 3 stating the need and justification for the project, noted that: "Our existing equipment is totally inadequate to perform state-of-the-art cardiac catheter- ization and coronary angioplasty. When we began performing cardiac catheterization in 1977 this equipment was adequate, but today it is totally unacceptable. This proposed equipment will not only provide state-of-the- art equipment for these procedures, but will do so in a cost-effective manner since combined utilization of such high cost equip- ment contributes to the reduction of the cost of medical care." HRS issued petitioner Certificate of Need number 3261 for the replacement of special procedures equipment at a total project cost of $1,269,000.00, as requested. However, in a cover letter transmitting the issued Certificate of Need to the petitioner, HRS noted: "Please be advised that neither this office, the Office of Licensure and Certification nor the Local Health Council has documen- tation to support the performance of cardiac catheterization procedures at this hospital." Local Health Councils are private nonprofit corporations which contract with HRS to conduct local planning activities, including the collection of data, the publication of various utilization reports and the development of Local Health Plans. When HRS reviews proposed health care projects which require a Certificate of Need, it utilizes the data submitted to it by the various Local Health Councils, particularly in those instances where its rules contain a methodology or formula which includes as a factor an accounting of existing facilities or services. Application of the methodology contained in HRS's rule for determining the need for additional cardiac catheterization laboratories requires a knowledge of the number of procedures performed per year by existing and approved laboratories. Rule 10-5.11(15), Florida Administrative Code. The Health Council of Pasco/Pinellas, Inc. collects data from hospitals within Pasco and Pinellas Counties regarding bed utilization and service information. Hospitals in the district are requested to complete and submit certain information on a "Monthly Hospital Utilization Form." Among the items of information requested is the number of cardiac catheterization procedures performed during the reporting period. The Health Council also publishes and distributes annual and semi-annual utilization reports for the district. There is no provision in the statutes or rules which require hospitals to report utilization or service data to the various Local Health Councils, and HRS itself does not require that such information be reported to it. It is not unusual for hospitals to report inaccurate, incomplete or inconsistent data to Local Health Councils. Indeed, it is recognized in the "1984 Annual Hospital Utilization Report for District V Pasco/Pinellas Health Council, Inc." that, while all hospitals in the District submitted monthly hospital utilization information, "One limitation to this report involves those institutions who did not, for various reasons, submit data for beds by service categories and/or data pertaining to specialty services." HRS Exhibit F, p. 1. The form utilized by the Pasco/Pinellas Health Council contains no definition of cardiac catheterization procedures and no directions as to how to complete the form. While it has regularly submitted a monthly utilization form to the Local Health Council, petitioner has never reported the performance of cardiac catheterizations at its facility. The various reports published by the Local Health Council do not list petitioner as performing cardiac catheterization procedures. While a health care facility may obtain a written determination from HRS that a given service is exempt from Certificate of Need review due to its "grandfathered" status, there is no agency rule or policy which requires a facility to obtain such a written exemption. It has generally been the agency policy that equipment and services acquired by a facility prior to the date that such acquisition became reviewable under the Certificate of Need law are not reviewable on a retroactive basis.
