Findings Of Fact The initial application for a CON to operate an adult cardiac catheterization laboratory by Metropolitan General Hospital was denied by DHRS in the State Agency Action Report dated June 28, 1983 (Exhibit 2). This denial was based upon a projected use of 2,704 cardiac catheterization procedures in 1985 and four cardiac catheterization facilities in operation in District V, the service area which comprises Pinellas and Pasco Counties. The need methodology rule provides that an additional cardiac catheterization laboratory will not be approved if it reduces the average volume of procedures per lab performed in the district below 600 adult procedures based on the projected need in the service area. With a projected need of 2,704, an additional cardiac catheterization lab would reduce the average below the 600 figure. The four hospitals which have approved cardiac catheterization facilities in this district are: All Children's, Medical Center, Morton F. Plant, and St. Anthony's. All Children's is a pediatric hospital adjacent to Bayfront Medical Center Hospital. All Children's is authorized a pediatric cath lab in which adult patients are treated. Most of these patients come from Bayfront and the cardiac cath procedures are done on an out-patient basis. The number of cardiac cath procedures being performed at All Children's Hospital has increased every year since 1980 and the increase has been due primarily to the increase in the number of adult cardiac cath procedures performed. Adult procedures at this lab outnumber children's cardiac cath procedures by approximately three to one. In 1983, 536 adult cardiac cath procedures were performed at All Children' s Hospital. St. Anthony's Hospital has a cardiac cath lab in which 301, 327, and 300 adult cardiac caths were performed in the years 1981, 1982, and 1983, respectively. In Medical Center Hospital's cardiac cath unit more than 900 cardiac caths were performed in 1984 and the number has increased annually since the lab was installed. In disapproving Metropolitan General's application DHRS counted All Children's cardiac cath lab as an adult cardiac cath lab. When it was pointed out that All Children's cardiac cath lab is approved as a pediatric cardiac cath lab and that is the only cardiac cath lab at All Children's Hospital, DHRS recounted the number of existing cardiac cath labs in the district, did not include the cardiac cath lab at All Children's, found that a need for a total of four units exists in this district, and approved the CON for Metropolitan General. Medical Center protested and this hearing followed. Prior to the granting of this CON to Metropolitan General for a cardiac cath lab, correspondence between DHRS and Morton F. Plant Hospital culminated in DHRS advising Morton F. Plant that it could establish a second cardiac cath lab without going through the CON process if the total cost of the project did not exceed $695,285 (Exhibit 20). Pursuant to this "authorization" Morton F. Plant is proceeding to equip and operate a second cardiac cath lab. In awarding the CON to Metropolitan General, this "second" cardiac cath lab at Morton F. Plant was not counted by DHRS. Counting two labs at Morton F. Plant and not counting All Children's lab' leaves four adult cardiac cath labs in the district. DHRS' witnesses testified that an inspection of the facility at All Children's Hospital revealed only one cardiac cath lab. Because this hospital is a pediatric hospital, because the cardiac cath lab was "grandfathered in" without having to go through the CON process, and because the hospital administrators stated that priority would be given to children over adults in the cardiac cath lab, DHRS concluded not to count All Children's as having an adult cardiac cath lab. Metropolitan General Hospital is an osteopathic hospital. David Dietrick, D.O., is a cardiologist on the staff of Metropolitan General and of Medical Center. He presently performs 125-150 cardiac cath procedures per year and all are now performed at Medical Center Hospital. If a CON to operate a cardiac cath lab is granted to Metropolitan General, Dietrick will move all of the cardiac cath procedures he now does at Medical Center to Metropolitan General. The procedures performed by Dr. Dietrick at Medical Center represent about four percent of the hospital's 350 million gross revenues per year. Medical Center recently completed renovation of its cardiac cath lab and the installation of the latest state of the art equipment. This lab is located in the vicinity of the radiology department in which equipment is provided to do angiographic procedures. These procedures are similar to cardiac cath procedures but are done in the arms, legs, abdomen, etc., rather than in the heart. Because of the similarity of equipment and procedures and the heavy demand for cardiac cath procedures at Medical Center Hospital, the early appointments in the radiology lab are reserved for cardiac cath procedures and on average one such procedure per day is performed in the radiology lab. A total of 926 cardiac cath procedures were performed at Medical Center in 1984. If the current rate for 1985 of 90 per month continues throughout the year, a total of almost 1,100 cardiac cath procedures will be performed at Medical Center Hospital in calendar 1985.
The Issue Should the Board of Medicine (the Board) discipline Respondent's license to practice medicine in Florida, based upon allegations that he violated Sections 456.072(1)(bb), and 458.331(1)(t), Florida Statutes (2003), in the care and treatment of Patient H.J.?
Findings Of Fact Stipulated Facts Respondent is and has been at all times material hereto a licensed physician in the State of Florida, having been issued license number ME: 65565. Petitioner is the state agency charged with regulating the practice of medicine pursuant to Section 20.42, Florida Statutes. On or about July 21, 2003, the Respondent performed peritoneal dialysis catheter removal on Patient H.J. at Bay Medical Center (Bay Medical). Peritoneal dialysis is a technique that uses the patient's own body tissues inside of the abdominal cavity to act as a filter. On or about August 25, 2003, Patient H.J. presented with erythema (a redness of the skin resulting from inflammation) and induration (localized hardening of soft tissue of the body) in the area where the peritoneal dialysis catheter had been removed. On or about December 3, 2003, the Respondent performed exploratory surgery of Patient H.J.'s wound. Additional Facts Patient H.J. suffers from end-stage kidney failure, diabetes and heart disease. Dr. Ahmad Oussama Refai treated Patient H.J. for his kidney failure. Dr. Refai is a board- certified Nephrologist. Dr. Refai referred Patient H.J. for placement of a peritoneal dialysis catheter (catheter) to address the end-stage kidney failure. The catheter, as Dr. Refai describes it, was intended to remove the poisonous material in the blood of Patient H.J. By using the catheter clean fluid is introduced into the abdomen where it remains for a period of about four hours. The fluid introduced contains electrolytes put in the patient's blood stream. After the residence time for the fluid expires, the fluid is withdrawn through the catheter removing the harmful material. The patient, once instructed, is capable of performing the procedures described. The other option in performing this method of dialysis is to use a device that is employed at nighttime called a cycler, used while the patient is asleep and without the need for the patient to conduct the process. The patient's use of the catheter for dialysis is referred to as "home dialysis." Before Dr. Refai referred the patient to Respondent to place the catheter, the patient had been treated for his end- stage renal disease through a forearm AV graph to provide hemodialysis. That technique allows access to the patient's blood through a shunt, with the blood being run through a machine and cleansed and returned back to the patient. This procedure is done several times a week at out-patient centers, whereas the peritoneal dialysis is done daily by the patient or at night. On June 30, 2000, Respondent saw Patient H.J. and determined that the patient was a good candidate for the surgery necessary to place the catheter to perform peritoneal dialysis. On July 19, 2000, Respondent placed the catheter and peritoneal dialysis treatment was commenced. Following the placement the catheter was used by the patient as overseen by the Dr. Refai. As Dr. Refai describes it, the catheter is a silestic tube that has two cuffs. The cuff at the lower level sits on the fascia where it is secured and the other cuff is just under the skin or in the subcutaneous tissue. Dr. Refai describes the cuffs as fuzzy. The cuffs are expected to induce an inflammatory process promoting scarring so that the body forms tissue to hold the catheter in place. Dr. Refai calls this a bond. Dr. Refai explains that the other parts of the catheter are "slippery." It is the fuzzy part that holds the catheter in place. Petitioner's Exhibit No. 5 is an unused catheter similar in design to that placed in Patient H.J. On July 7, 2003, Respondent, Dr. Refai, and a Dr. Dean discussed Patient H.J. and the plan to remove the catheter that was no longer adequately performing the dialysis. On July 21, 2003, Respondent did surgery to remove the catheter from Patient H.J. On July 17, 2003, before Respondent did the surgery to remove the catheter, an explanation was made to Patient H.J. of the risks associated with the surgery as to bleeding, infection, MI stroke, death, and allergic reaction following removal of the catheter. Following the surgery Dr. Refai as the treating physician was aware that the wound associated with the surgery was not healing well and Dr. Refai sent Patient H.J. back to Respondent. Dr. Refai is familiar with the course of antibiotics prescribed for Patient H.J. to respond to the condition and the surgical exploration done by Respondent where a piece of cuff, as Dr. Refai describes it, was removed and the wound healed. December 3, 2003, was the date of the exploratory surgery. At that time, Patient H.J. was on hemo-dialysis and was being seen by Dr. Refai once a week. In Dr. Refai's opinion Patient H.J. was doing remarkably well, making allowances for his underlying condition (illnesses). At present Dr. Refai is aware that the patient is on the list to receive a kidney transplant. On August 1, 2003, Respondent saw Patient H.J. In his notes Respondent stated: His wounds look good. There is no evidence of infection. No fever or chills. He looks well. He is not taking any pain medicine. I am going to see him back in a month for a final visit. On August 25, 2003, Respondent saw Patient H.J. again. The Respondent's notes stated: His p.d. catheter removal site which was removed 4 weeks ago has some erythema and induration around it. I ultrasounded it here in the office and it looked like there was a little fluid. I anesthetized the area and opened it. There was no gross pus. I am going ahead and treat [sic] him with some Keflex and have him see Dr. Beaver on Friday as I am going to be out of town. This may come to a head and become an abscess. It may just be some cellulitis. I am not real sure why he would have cellulites as it certainly did not look like a hernia. I am going to have him see Dr. Beaver on Friday and make sure it is improving. On August 29, 2003, a note was made by Dr. Beaver concerning his visit with Patient H.J. In that note Dr. Beaver said: Patient of Dr. Kinsey. He was seen back for re-check. Apparently he was having some questionable cellulites around his p.d. cath today. He states that he is feeling much better. On examination, I see no redness at all and per the office assistance it has much improved. There is really not tender [sic]. It looks to me like it is improving. We will plan for him to see Dr. Kinsey back next week. On September 12, 2003, Respondent saw Patient H.J. and in the office note stated: The area in his left lower quadrant is completely healed. He is doing well. I am going to see him back in one month for a final visit. On September 16, 2003, Respondent saw Patient H.J. again and in the office note stated: He had some drainage from his previous p.d. catheter site. It does not appear to be infected. I am going to follow this area and see him in the office in a month. On September 30, 2003, Respondent saw Patient H.J. again and in the office note it states: He still has some drainage from the p.d. catheter exit site [sic] it was done about eight weeks ago. I told him that I would like to leave that along [sic] for at least three months and follow that. If it does not improve after three to four months then we may need to explore the wound but it may be a piece of suture that it [sic] trying to spit. We will see him back in the office in about 6 to 8 weeks. On November 11, 2003, Respondent saw Patient H.J. and noted: He is still draining from his p.d. catheter exit site. This has been 5 months. It is time to explore the wound. We will proceed to the operating room for exploration in the sinus tract. I suspect that there will be a piece of the catheter in the bottom of the wound. On December 1, 2003 Respondent saw Patient H.J. for the pre-operative visit. At that time he noted: He is here for a pre-op for a wound exploration for his p.d. catheter removal site. He still has some granulation tissue there. I am going to plan to probe the area and evaluate where the sinus goes. On December 3, 2003, the surgery was conducted on Patient H.J. and Respondent noted: He underwent a left lower quadrant wound exploration. The p.d. catheter cuff was within the subcutaneous tissue and that is why his wound [sic] not close. This was removed and then the would [sic] was closed. He tolerated the procedure well. The various surgeries that have been discussed which were performed by Respondent took place at Bay Medical in Panama City, Florida. In the operative procedure report at the hospital related to the December 3, 2003 exploratory operation Respondent described a pre-operative diagnosis as: Non-healing wound, left lower quadrant of the abdomen. The post-operative diagnosis stated: Non-healing wound, left lower quadrant of the abdomen. Foreign body (peritoneal dialysis catheter cuff), left lower quadrant abdominal wound. The procedure performed was described as: Wound exploration and foreign body removal. The intra-operative findings related to the operation were: He was found to have a cuff of the catheter within the tissue. He had a small piece of p.d. catheter attached to it. The cuff had obviously broken. The catheter was broken with a cuff remaining in the subcu tissue. There was no intra-abdominal portion. In comparison, on July 21, 2003, in the operative/procedure report at Bay Medical through the description of the procedure to remove the catheter Respondent stated: . . . The previous incision in the left hypogastric area was anesthetized with local anesthetic and sharply incised. This was carried into the subcutaneous tissue and p.d.-catheter dissected and divided. The catheter was then pulled from the subcutaneous tissue at the exit site. The catheter was then delivered into the wound and abdominal wall cuff sharply incised and the catheter removed. The fascial edges were then reapproximated with 2 figure-of-eight0- vicryl sutures. On July 21, 2003, when Respondent removed the catheter from Patient H.J. no pathology was ordered. On December 3, 2003, following the exploratory surgery and retrieval of the catheter pathology was ordered. Daniel G. Dena was the pathologist at Bay Medical who addressed the specimen which was described by the pathologist as: "Tissue-p.d. catheter cuff" The anatomic diagnosis referred stated: "p.d. catheter cuff: plastic catheter, with attached fibro-fatty tissue at one end, showing acute and chronic inflammation." The macroscopic examination in the pathology report stated: "The specimen is labeled 'pd catheter cuff'. Received is a portion of plastic tubing measuring approximately 5 cm in length and up to 0.5 cm in diameter, with a cuff of soft tissue at one end measuring 2.5 cm in length and 1.2 cm in diameter." On July 26, 2004, in responding to the investigation that led to this prosecution Respondent stated in writing in relation to Patient H.J.: The original peritoneal dialysis catheter removal had gone uneventfully and I felt that both cuffs of the catheter had been removed in their entirety. But this was found not to be the case. I have placed a number of these catheters and removed a number as well and have not had this type of problem before. Visual inspection of the catheter on removal is routinely undertaken to ensure that the cuffs are removed and I felt that this had been completely removed but I was obviously mistaken. I am not sure if this was a defect in the catheter. Evaluation of the catheter and assurance of complete cuff removal would have probably prevented this process. I am certainly more cognizant of this being a problem in subsequent catheters that I have removed. At the original time of catheter removal the operative site appeared appropriate. At hearing Respondent offered additional explanation concerning the July 21, 2003 operation to remove the catheter from Patient H.J. and the exploratory surgery on December 3, 2003. As Respondent explained, in the July 21, 2003 surgery Respondent made a 3-to-4 cm incision about the belly button towards the middle of the abdomen through the skin, subcutaneous tissue, the fascial layer and muscle and peritoneal layer. The peritoneal layer is a semi-permeable membrane that waste products removed in the dialysis will cross. The catheter is placed into the abdomen. The catheter is 12 to 14 inches in length with a curlicue tail and holes in the end of the catheter that allows the fluids to be introduced and withdrawn from the abdomen. As Respondent explained the catheter has two cuffs, the smaller of which is designed for placement in the rectus muscle located along the inset part of the abdomen. The smaller cuff sits inside that muscle. Tissue attaches to that cuff to keep fluid from leaking out, to keep the catheter in place and to prevent bacteria from going down the outside of the catheter. There is a segment of the catheter between that cuff and a larger cuff which sits underneath the skin in the subcutaneous tissue. The tissue in that area attaches to the cuff and serves to hold the catheter in place. When removing the catheter on July 21, 2003, Respondent used an incision of about 3 cm and encountered the mid-portion of the catheter located between the two cuffs which was dissected down through the fascia and taken out with the portion in the abdomen being removed first. Before making the incision to remove the catheter, Respondent cut the portion of the catheter outside the body of Patient H.J. off, including the metal and plastic valves and other paraphernalia hanging out of the patient. The purpose of removing the catheter outside the patient's body was in the interest of protecting the surgical field from contamination to avoid wound infection. The part removed inside the patient initially was the intra-abdominal portion. The intra-abdominal portion of the catheter, including the cuff in that area was sharply removed. The cuff was 2 or 3 times the size that it would have been when first placed and the part around the cuff was cut to allow the catheter to be extracted. The area of the fascia was closed. Next Respondent addressed the subcutaneous portion of the catheter by following it out and sharply cutting the tissue around the catheter and the subcutaneous cuff with scissors to remove that portion which also had an ingrowth of scar and fibroblastic tissue. Once the portions of the catheter with the cuffs, had been removed Respondent looked to determine if he had both cuffs which appeared at that time as a wad of scar and tissue. Respondent then closed the wound. Respondent believed that he had removed the whole catheter, to include the cuffs. In fact the subcutaneous cuff was not entirely removed and another portion of the catheter remained in the patient following the July 21, 2003 surgery. Respondent's estimate of what had been left in the patient and removed on December 3, 2003, was about 2 cm of the subcutaneous cuff and then a portion of the balance of the catheter. In commenting on the difference between the pathology report and his visual assessment on December 3, 2003, Respondent remarked about "all the stuff" grown onto the cuff and catheter. He also said it had a lot of specimen, taken to mean the "stuff" attached to the cuff and catheter. Although in the operative notes from December 3, 2003, Respondent says the catheter broke, at hearing he stated that he did not know whether the catheter had been cut or broke during the July 21, 2003 procedure to remove the catheter. No independent tests were conducted to determine whether the catheter broke during the July 21, 2003 surgery or was cut by Respondent. Respondent does not precisely remember the appearance of the catheter, to include the cuffs, when examining it on July 21, 2003. But he believed that he had successfully removed the entire catheter. In his testimony Respondent describes the office visits subsequent to the July 21, 2003 surgery. When he saw Patient H.J. he observed cellulitis around the area of the incision which was treated with oral antibiotics and resolved. Respondent used ultrasound to determine whether fluid had collected in the area where he observed the cellulitis. No fluid collection was seen. Drainage was noticed around the exit site where the catheter came out of the skin, which ordinarily takes a month to six weeks to heal. Concerning the drainage around this exit site, Respondent expected the drainage to resolve within around five weeks unless there were a piece of suture or other kind of event keeping the site opened and draining. The wound site where the incision was made healed without incident. The exit site continued to drain. After a time Respondent concluded that the reason for the drainage was either an epithelilized sinus tract, a piece of suture, a piece of catheter, a piece of cuff, or a piece of dressing for the wound. Respondent waited a time before doing the exploratory surgery in view of the use of an absorbable suture in the July 21, 2003 surgery which would have dissolved over time, precluding the need to do the exploration. Respondent, given the problem with the drainage from Patient H.J. following the July 21, 2003 surgery to remove the catheter, does not believe that the failure to remove this fragment would have killed the patient or have caused a lot of problems, but it was bothersome enough that it was worth the effort to try and find it and get the patient healed. Respondent in dictating his post-operative note on December 3, 2003, thinks that the catheter had broken and continues to hold to that belief, although he recognizes that it may have been cut in the prior surgery. Concerning his practice at Bay Medical, Respondent did not routinely have an X-ray done for patients undergoing surgery without a more specific reason for ordering it. Nor did he order a pathology examination following surgery absent the need for specific information. Patient H.J. in his testimony described the level of pain following the July 21, 2003 surgery to remove the catheter as "a little pain." Expert Opinion Dr. Stanley P. Kococki is a general surgeon licensed in Florida. He is board-certified in general surgery. He has had experience placing and removing peritoneal dialysis catheters. He was qualified to offer expert opinion testimony concerning Respondent's treatment of Patient H.J., in particular, the surgery performed July 21, 2003. Dr. Kococki expressed the opinion that the Respondent fell below the standard of care in treating Patient H.J., in that Respondent failed to recognize that he had left a portion of the catheter in the patient, which Dr. Kococki describes as a retained foreign body and that this caused the patient to undergo a second unnecessary procedure, meaning that the second procedure would not have been necessary if the catheter had been removed completely in the first surgery. The failure to remove could possibly have caused serious problems for the patient, to include septicemia and death, according to Dr. Kococki. Dr. Kococki refers to the Respondent's obligation in removing the catheter, to make certain that the whole catheter was removed and that the wound properly healed beyond that point so that the patient would not experience problems. While recognizing that there are different techniques for removing the catheter from Patient H.J., Dr. Kococki took issue with the method employed by the Respondent. Dr. Kococki believes that there are other methods for avoiding the problem with infection than to cut the catheter outside the body. There was no description of the use of a hemostat or clamps to hold the retained part of the catheter once the outside segment had been cut, so that the remaining portion of the catheter would not be lost under the skin. In addition, by cutting the catheter in two places there was a chance of leaving a piece of the catheter in the patient. Dr. Kococki expressed the opinion that when you cut the catheter in several places you have to remember where the pieces of the catheter are left in the patient. Given other circumstances during the surgery that occupy the surgeon's mind, it can lead to leaving a piece of catheter behind. Dr. Kococki expressed the opinion that leaving the catheter behind was not in the best interest of the patient because it led to subsequent surgery and had the sinus tract closed over the foreign body would have caused a localized infection and abscess formation around that area and possibly allowed for the bacteria from the abscess to enter the patient's bloodstream causing sepsis, and abscess formation in other organs, possibly the abdominal cavity, with a possible rupture intra-abdominally causing the patient to have generalized peritonitis. That can be life threatening and ultimately lethal. It is more of a problem with the person that has end-stage renal failure, in that the patient has a weakened immune system and lessened prospects to fight off infection. Dr. Kococki relied upon the pathology report made after the December 3, 2003 surgery to accurately describe the size of the segment that was left in the patient. In order to ascertain what actually happened with the catheter Dr. Kococki believes that the company or an independent examining body would have to determine if the catheter was defective. Even in the instance where the catheter may have broken in the initial surgery to remove it on July 21, 2003, the onus is still on the surgeon removing the catheter to examine it to make certain it was removed intact. Dr. Kococki characterizes the catheter as commonly present and utilized in surgical procedures to place and remove peritoneal dialysis catheters. Dr. Kococki describes the catheter as a medical device, unlike a sponge, forceps, clamp or surgical needle. Dr. Kococki recognizes that the purpose of the catheter is to perform dialysis but the retained portion left after the initial surgery to remove the catheter does not have a medical purpose, in his judgment. Dr. Kococki describes the cuff in the field related to the abdominal wall as providing a seal to avoid bacteria. The cuff as he understands it has an antibiotic coating that will help fight off infection. The cuff reacts with the patient's body tissue to act as a sealant. To have avoided the problem of failing to account for a portion of the catheter during the initial surgery to remove it from Patient H.J., Dr. Kococki believes that the easiest thing to have done was while the patient was in the operating room send the catheter to a pathologist and have it measured for comparison against the known size of the catheter when first placed. A second safe-guard would be to use a portable X-ray of the abdominal cavity to make sure that there was no radiopaque material in the abdomen or subcutaneous tissue. The catheter has radiopaque material allowing this identification in Dr. Kococki's understanding. Dr. Kococki was not familiar with the procedures at Bay Medical where the catheter removal from Patient H.J. was performed. The bylaws of the institution do not require that the catheter be sent to pathology following removal. Dr. Thomas A. Gadacz testified in the interest of Respondent. He is licensed in several states. He is not licensed in Florida. He is an expert in the field of general surgery. He has placed and removed peritoneal dialysis catheters. Dr. Gadacz describes the catheter as a medical device. It has nothing in common with a sponge, forceps, clamp or surgical needle, in his opinion. As a surgeon Dr. Gadacz refers to sponges, forceps, clamps and surgical needles as items whose sole purpose is to assist during an operation, not intended to be left in the body. They are to facilitate an operation to provide exposure, to conduct the operation but they are not a therapeutic modality. By contrast the peritoneal dialysis catheter is used primarily for therapy by remaining in the patient for specified periods of time to treat the patient. Other aids in performing an operation are cotton balls called kitners, metal retractors and cannulas. Dr. Gadacz explains that the purpose of the cuffs related to the catheter is to react to the body so that tissue grows around them. The other part of the catheter made of Teflon is designed to be non-reactive. Dr. Gadacz is aware that catheters of the type under discussion have fractured or broken. Dr. Gadacz explained that the fracture of a cuff is not common. In his experience, in the instance where a segment broke in a catheter, Dr. Gadacz removed it. On the other hand the failure to remove the piece is not necessarily below the standard of care as Dr. Gadacz explains, "because some times this happens, and its, you don't know that that has happened." The possibility of knowing that the segment broke off is difficult. As Dr. Gadacz describes, it was impossible given the tract involved with the surgery here. The gross inspection of the catheter once removed from the patient is a process in which it is difficult to make certain that both cuffs are there because of the encrusting fibrous tissue found after removing the cuffs, causing the cuffs to no longer have the same appearance as when first placed. The visual inspection made of the catheter after removal would not necessarily reveal whether it was removed in its entirety, according to Dr. Gadacz. Dr. Gadacz is unfamiliar with surgeons who would use an X-ray after removal of the catheter to confirm that the entire catheter had been removed. Instead he defers to Respondent's operative note on December 3, 2003, where the Respondent says that the catheter had obviously broken to explain the failure to retrieve the catheter. Dr. Gadacz does not believe sending the catheter to pathology after it was removed on July 21, 2003, would necessarily have been useful because it would take familiarity on the part of the pathologist with that form of catheter to recognize that a part was missing. Dr. Gadacz recognizes that the fragment from the catheter left in Patient H.J. at the end of the initial surgery to remove the catheter is medically considered a foreign body because it was not part of the human body. Dr. Gadacz found nothing in the care provided by Respondent by to Patient H.J. after the July 21, 2003 surgery that was questionable. Dr. Gadacz did not find the technique Respondent used in removing the catheter on July 21, 2003, from the Patient H.J. to be below the standard of care. Generally Dr. Gadacz did not express the opinion that Respondent practiced below the standard of care. Dr. Gadacz explained that had the segment continued to be present in the patient there would have been a major risk of continuing infection and ultimately the patient could have developed a serious abscess in the subcutaneous tissue that could become life-threatening or nothing may have happened, and the segment may have been walled off by the patient's body. In determining the comparability of what is described in Section 456.072(1)(bb), Florida Statutes (2003), as "other paraphernalia," to those items listed within that section, "such as a sponge, clamp, forceps, surgical needle," that are "used in surgical examination, or other diagnostic procedures," reliance is made upon testimony from Dr. Gadacz. As a surgeon, the opinion by Dr. Kococki is rejected for reasons that will be explained in the conclusions of law. When considering whether Respondent failed to practice medicine with that level of care, skill and treatment which is recognized by a reasonable prudent similar physician as being acceptable under similar conditions and circumstances, as envisioned by Section 458.331(1)(t), Florida Statutes (2003), with the specificity called for in that provision, Dr. Kococki is more compelling in his opinion that the fragment left in Patient H.J. should have been removed in the earlier operation whether it broke or was cut by Respondent. The notion that there are times when some portion of the catheter may have been left in the patient, as was the case here, with no consequences to the practitioner, as expressed by Dr. Gadacz is not persuasive. Disciplinary History The Respondent has no prior disciplinary history.
Recommendation Based upon the findings of fact, and conclusions of law, and the guidance set forth in Florida Administrative Code Rule 64B8- 8.001, it is RECOMMENDED: That a final order be entered finding that Respondent did not violate Section 456.072(1)(bb), Florida Statutes (2003); that Respondent did violate Section 458.331(1)(t), Florida Statutes (2003); placing Respondent on probation for two years; imposing an administrative fine in the amount of $2,500.00; requiring Respondent to perform 50 hours of community service; requiring the completion of 5 hours of continuing medical education on "risk management" and requiring him to present a one-hour lecture to a group of peers discussing retention of foreign bodies in surgeries and techniques to avoid the retention. DONE AND ENTERED this 14th day of February, 2006, in Tallahassee, Leon County, Florida. S CHARLES C. ADAMS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of February, 2006. COPIES FURNISHED: William F. Miller Ephraim D. Livingston Assistants General Counsel Department of Health 4052 Bald Cypress Way, Bin C-65 Tallahassee, Florida 32399-3265 Albert Peacock, Esquire 8554 Congressional Drive Tallahassee, Florida 32312 Larry McPherson, Executive Director Board of Medicine Department of Health 4052 Bald Cypress Way Tallahassee, Florida 32399-1701 R. S. Power, Agency Clerk Department of Health 4052 Bald Cypress Way Tallahassee, Florida 32399-1701
Findings Of Fact Parkway Regional Medical Center, Inc. (formerly Parkway General Hospital, Inc.) is a Florida corporation, wholly-owned by American Medical international, Inc., of Beverly Hills, California. Parkway is located at 160 Northwest 170th Street, North Miami Beach, Florida. Biscayne Medical Center is wholly-owned by Humana, Inc. of Louisville, Kentucky. Biscayne is located at 2801 Northeast 209th Street, Miami, Florida. Both Parkway and Biscayne are located in DHRS District XI, and both propose to establish adult cardiac catheterization capabilities in DHRS District XI. The Local Health Council for District XI has not formally adopted its district plan. Both the Parkway and Biscayne applications are consistent with the State Health Plan. (Stipulated). In March, 1983, DHRS sent a letter to hospitals throughout Florida requesting information concerning the number of cardiac catheterization procedures performed in their laboratories during the calendar year 1981 and the number of cardiac catheterization laboratories now in use. Based upon information received in response to this letter, DHRS prepared an inventory which contains the following for District XI: FACILITY NUMBER OF ADULT CATHS. NUMBER OF ADULT LABS. American Hospital of Miami 531 1 Baptist Hospital of Miami 416 1 Cedars of Lebanon Hospital 367 1 Jackson Memorial Hospital 905 1 Mercy Hospital 494 1 Miami Heart Institute 1,268 1 Mount Sinai Medical Center 872 2 South Miami Hospital 485 1 St. Francis Hospital 535 1 University of Miami Hospital & Clinics 71 0 5,942 10 Although the DHRS survey letter requested information regarding number of catheterization "procedures," some of the hospitals responded on the number of patients catheterized rather than the number of procedures. This resulted in an understatement of procedures, since some patients receive multiple procedures. Rule 10-5.11(15)(d), F.A.C., defines "procedure" as follows: Procedure means an angiographic study, a physiologic study or a therapeutic activity within a cardiac catheterization laboratory which utilizes the equipment customarily used in cardiac catheterization. DHRS plans for cardiac catheterization on a two-year planning horizon. Therefore, the need for Parkway's and Biscayne's proposals should be determined based on projected procedures and population in the year 1986, since the decision is to be made in 1984. The DHRS 1986 population projection for District XI (persons 15 years and older) is 1,529,144. The DHRS inventory reflects 5,942 adult catheterization procedures performed in District XI hospitals in 1981. Rule 10-5.11(15)(1), F.A.C., contains a formula for determining need for additional cardiac catheterization laboratories. One step in the need determination methodology is calculation of the 1981 use rate. Utilizing the 5,942 procedures contained in the DHRS inventory, the 1981 use rate for District XI is 424.73 procedures per 100,000 population. Applying the need determination methodology in Rule 10-5.11(15)(1), F.A.C., to the 1981 use rate and projected population for District XI, the number of adult cardiac catheterization procedures projected for District XI from 1981 through 1986 is as follows: YEAR POPULATION 15 AND OVER 1981 USE RATE NUMBER PROJ. PROCEDURES 1981 1,399,299 424.73 5,942* 1982 1,427,404 424.73 6,061 1983 1,455,477 424.73 6,180 1984 1,483,615 424.73 6,302 1985 1,511,721 424.73 6,422 1986 1,529,144 424.73 6,494 * Actual number of procedures reported in DHRS inventory. Current information from each of the District XI hospitals with adult cardiac catheterization laboratories shows that application of the need methodology formula in Rule 10-5.11(15)(1) understates the number of adult cardiac catheterizations actually performed in District XI in 1982 and 1983, as follows: ACTUAL PROCEDURES ACTUAL YTD PROJECTED 1982 1983 1983 Mercy 441 317 543 Cedars 401 333 571 Miami Heart 833 486 833 St. Francis 917 495 990 JMH 986 580 994 American 576 321 550 Baptist 618 517 886 S. Miami 512 417 715 Mt. Sinai 983 647 1,109 6,267 4,113 7,191 Actual Use Rate 1982 - 439.17 Projected Use Rate 1983 - 494.23 For District XI, from 1980 through 1982, the use rate increased by 9 percent in 1980, 7 percent in 1981 and 3 percent in 1982. If the number of adult cardiac catheterization procedures actually performed in 1983 is projected for a full year, the District XI use rate would have increased by 12-1/2 percent in 1983. Rule 10-5.11(15)(o) provides that additional cardiac catheterization laboratories will not be approved where they would reduce the average volume of procedures performed by existing and approved laboratories in the service area below 600 adult procedures. Assuming an average of 600 procedures per lab, utilizing the projected number of procedures for 1986 and the use rates calculated for 1981, the number of adult cardiac catheterization laboratories required in District XI for 1986 would be 0.8. In accord with DHRS' policy, the 0.8 laboratory should be "rounded up" to 1.0. Therefore, under DHRS' interpretation of Rule 10-5.11(15), correct application of the need formula demonstrates a need for 1 additional adult cardiac catheterization laboratory in District XI. Initially, DHRS took the position that the 0.8 (0.7 for 1984) should be rounded down. However, this view was corrected by later testimony which established that the DHRS procedure is to "round up" such fractions. Parkway's emergency room is the third most active in Dade County and is the major emergency room between downtown Miami and the Broward County line. Parkway's proposed cardiac catheterization laboratory will be located on the same floor as and adjacent to the coronary care unit and the emergency room. Parkway's proposed cardiac catheterization laboratory will be dedicated solely to cardiac catheterization with the capability of mobilizing 24 hours a day, 7 days a week. Parkway's proposed cardiac catheterization laboratory will contain appropriate staffing and equipment. Based upon the number of patients referred by Parkway cardiologists to other institutions in the Miami area having cardiac catheterization facilities, Parkway projects utilization of its proposed cardiac catheterization laboratory in the first year of operation to be 250 to 300, increasing to 400 in the second year. Parkway does not intend to perform coronary angioplasty in its proposed cardiac catheterization laboratory but does intend to perform streptokinase procedures on an emergency basis on patients exhibiting acute chest pain and EKG abnormalities. Parkway has a written agreement with Cedars Medical Center pursuant under which Cedars will accept open-heart surgery patients from Parkway. Travel time from Parkway to Cedars under normal conditions is fifteen minutes. Biscayne's proposed adult catheterization equipment will be installed, and the procedures will be performed, in its "Special Procedures" Room, rather than a separate cardiac catheterization laboratory. If approved, Biscayne's cardiac catheterization laboratory would be available 24 hours a day and seven days a week on an "on call" basis. However, the anticipated regular hours for the laboratory will be 7:00 a.m. to 3:00 p.m., five days a week. Biscayne will staff its laboratory with a cardiopulmonary nurse, an x- ray technician, and a registered nurse. Biscayne proposes to perform only "diagnostic" cardiac catheterization procedures for the diagnosis of coronary artery disease. Biscayne takes the position that therapeutic procedures such as streptokinase and angioplasty are not medically safe without an in-house open heart surgery program. Biscayne has a written transfer agreement with Jackson Memorial Hospital in Miami whereby all Biscayne patients requiring open heart surgery will be transferred to, and accepted by, Jackson for such treatment. The driving time between Jackson and Biscayne is twenty minutes. Biscayne projects 300 cardiac catheterization procedures in its first year of operation and 400 procedures in the second year of operation. These projections are based on the number of patients Biscayne cardiologists currently transfer to other hospitals for cardiac catheterization and an assumed capture rate of 60 percent of all potential procedures generated in Biscayne's service area. Biscayne's "special procedures" room is a multipurpose facility which will be shared with the radiology department. The latter operates three radiographic/fluoroscopic rooms (R&F) and one "special procedures" room. All four rooms are equipped for doing routine radiographic studies and special procedures. "Special procedures" as used by Biscayne refers to investigational studies for the diagnosis of medical conditions through the use of special imaging equipment, such as x-ray and fluoroscopy. About 1400 special procedures were performed at Biscayne in 1982. These procedures were performed in various areas of the hospital, including the R&F rooms, the special procedures room, surgical suites and the critical care unit. Special procedures normally take about one hour to complete. However, the procedure known as angiography is only performed in Biscayne's special procedures room. An angiogram involves an investigation of blood vessels by means of x-rays of injected substances or dyes. Last year, about 400 of the 1400 special procedures performed at Biscayne were angiograms. Angiographic studies of all blood vessels except the coronary arteries are currently performed in the special procedures room. Angiographic studies of the coronary arteries require cardiac catheterization equipment. Over a year ago, DHRS issued Biscayne a certificate of need to renovate and replace equipment in two R&F rooms and the special procedures room. Also, digital angiographic equipment was added to for the special procedures room. Per this certificate of need, Biscayne has purchased the new equipment and renovated these rooms. Construction was scheduled to be complete in October, 1983, but has been delayed. Biscayne will not have to purchase all new equipment (as will Parkway) to add cardiac catheterization capabilities to its special procedures room. Instead, special General Electric equipment will be added to the existing angiographic equipment which will enhance its capabilities to include cardiac catheterization. As a result, Biscayne can provide cardiac catheterization at a projected additional cost of $298,566 compared to Parkway's projected cost of $822,701. However, Biscayne's projection does not recognize that some of the special procedure facility costs should be allocated to cardiac catheterization. Biscayne's pro forma income statement for the cardiac catheterization project allocates 43 percent usage of the special procedures room to this function. As noted by Parkway, a 43 percent special procedures room equipment cost allocation would raise Biscayne's cardiac catheterization capability costs to $683,314. Biscayne does not intend that the inclusion of cardiac catheterization capability will lower the number of special procedures that will be done in a normal eight-hour day. The capacity of the special procedures room as stated by Biscayne's Director of Radiology and supervisor of Biscayne's proposed special procedures room/catheterization laboratory, is 6 per day, 5 days week, for an annual total of 1,560. Biscayne's CON application for the special procedures room projects 1,484 special procedures in the first year and 1,524 in the second year, allowing for 76 additional procedures in the first year and 36 in the second year. Biscayne projects 300 cardiac catheterizations in the first year and 400 in the second year, thereby exceeding the capacity of the combined special procedures room/cardia catheterization laboratory by 224 procedures in the first year and 364 in the second year. Biscayne's proposed sharing of special procedure facilities is a cost savings measure, and in this respect is superior to Parkway's proposal. Although Biscayne could mobilize its cardiac catheterization laboratory on an emergency 24 hour, 7 day basis as required by DHRS Rule (discussed below), it would likely encounter scheduling and use conflicts under true emergency conditions, or even full utilization as noted above. Parkway argues that Biscayne's shared facility plan violates American Heart Association guidelines recommending cardiac catheterization labs be dedicated solely to this use. However, the evidence did not indicate that departure from this guideline would have any adverse impact on the quality of care provided. Parkway is located in Northeast Dade County directly on the Golden Glades Interchange, where Interstate 95, the Florida Turnpike and the Palmetto Expressway intersect. The majority of Parkway's service area is in Dade county, and 86.17 percent of Parkway's patients come from Dade County. Biscayne is located in Northeast Dade County near the Broward County line. The majority of Biscayne's primary service area is within Broward county, and more than 60 percent of Biscayne's patients originate from Broward County. Broward County is within DHRS District X. Comparative statistical information demonstrates that Parkway is more fully utilized, delivers more acute care and has greater patient activity than Biscayne: BASIC STATISTICAL INFORMATION PARKWAY BISCAYNE Licensed Capacity 412 458 Beds in Service 412 330 Discharges 12,917 9,202 Average Length of Stay 9.1 days 8.1 days Patient Days 110,385 79,634 Occupancy 73.4 percent 47.6 percent Bed Mix Med-Surg. 394/72.9 percent occ. 284/65.2 percent occ. Intensive Care 18/89.9 percent occ. 26/77.5 percent occ. E.R. Utilization Visits 27,520 13,110 The Hospital Cost Containment Board (HCCB) was formed in 1979 to monitor hospital costs/charges and to encourage cost containment for Florida hospitals through public awareness and the dissemination of information to the public. The HCCB is a division of the Florida Department of Insurance. Each year, the HCCB collects the prospective budget of each hospital sixty days prior to the first day of the fiscal year for each hospital. The HCCB reviews the data and budget submitted by a hospital, and then determines to accept the budget, reject the budget, or call a public hearing to make the hospital justify its budget. All HCCB action is based on the figures and budgets submitted by the hospitals themselves. The HCCB reviews the financial data submitted to it by various criteria which it labels "screens." The "total net revenue" screen is one of the screens utilized to compare a hospital's average patient charge to others in its peer group. "Total net revenue" refers to the amount of money a hospital actually receives for services provided to patients after all deductions are subtracted. In addition, the HCCB "adjusts" its various financial screens to eliminate the effect of outpatient care and revenues from inpatient activity. Thus, the screens are labeled, for example, as "adjusted revenues" or "adjusted costs." Comparisons between Biscayne and Parkway by using HCCB calculations of data and projections submitted by the two hospitals indicate the following (1983 budgets): Cost to the hospital per adjusted admission Cost to the hospital per adjusted day Total net revenue per adjusted admission Total net revenue per adjusted day PARKWAY BISCAYNE PARKWAY OVER BISCAYNE DOLLARS PERCENT $3954 $3438 $516 15.0 percent $ 458 $ 393 $ 65 16.5 percent $4263 $3595 $668 18.6 percent $ 494 $ 411 $ 83 20.2 percent Comparisons using the same screens for 1984 budgets are as follows: PARKWAY BISCAYNE PARKWAY OVER BISCAYNE DOLLARS PERCENT $4033 $3563 $470 13.2 percent $ 498 $ 422 $ 76 18.0 percent $4346 $3726 $620 16.6 percent $ 537 $ 442 $ 95 21.5 percent Cost to the hospital per adjusted admission Cost to the hospital per adjusted day Total net revenue per adjusted admission Total net revenue per adjusted day As indicated, Parkway's costs to provide hospital services and patient charges for these services have been, and are projected to be, substantially higher than those for Biscayne. PARKWAY BISCAYNE Rate of Increase from 1980 Base Year to 1983 Budget: Per Adjusted Admission 65.1 percent 48.4 percent Per Adjusted Day 65.8 percent 42.8 percent Rate of Increase from 1980 Base Year to 1981 Budget: Per Adjusted Admission 42.4 percent 33.8 percent Per Adjusted Day 50.7 percent 36.0 percent In addition to being more expensive than Biscayne, Parkway exceeds the 80th percentile of its hospital "peer group" in most financial screens. The HCCB places each hospital in a certain peer group based on a number of factors including beds in service, physician mix, Medicare utilization, hospital services index, and median family income. The objective of peer groups is to batch hospitals with similar characteristics for comparison purposes. Biscayne and Parkway are in the same peer group for budget year 1984. Each hospital is then compared to the 80th percentile in its peer group to determine whether that hospital "breaks the screen" or exceeds the standards set by law. "Breaking the screen" means that hospital is in the upper 20th percentile in its peer group. For budget year 1983, Parkway broke the screen for cost per adjusted day and adjusted admission, total net revenue per adjusted day and adjusted admission, and rate of change increases (1980-1983) per adjusted admission and adjusted day. It should be noted that Parkway's screen breaking during this period is at least partly attributable to its 25 million dollar renovation- expansion project. For budget year 1984, however, Parkway again broke the screens for cost per adjusted day, total net revenue per adjusted admission and adjusted day, and rate of change increases per adjusted admission and adjusted day for budget years 1981-1984. Biscayne did not break any of the screens during these same time periods. As noted by the HCCB, Parkway's current profit margin is 13.5 percent compared to the 9.3 percent average for proprietary hospitals in Florida.
Recommendation Based on the foregoing, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order granting the application of Biscayne Medical Center to establish cardiac catheterization capabilities in District XI, and denying the application of Parkway Regional Medical Center, Inc. DONE and ENTERED this 8th day of March, 1984, in Tallahassee, Florida. R. T. CARPENTER, 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 8th day of March, 1984. COPIES FURNISHED: James C. Hauser, Esquire John H. French, Jr., Esquire Post Office Box 1876 Tallahassee, Florida 32302 Keith E. Rounsaville, Esquire Harold W. Mullis, Jr., Esquire Post Office Box 1102 Tampa, Florida 33601 Claire D. Dryfuss, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard, Suite 406 Tallahassee, Florida 32301 Jean Laramore, Esquire G. Steven Pfeiffer, Esquire 325 North Calhoun Street Tallahassee, Florida 32301 David H. Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
The Issue Whether Cleveland Clinic Florida Hospital's application for a Certificate of Need to operate an adult inpatient cardiac catheterization program in AHCA District 10 should be granted or denied by the Agency for Health Care Administration?
Findings Of Fact The parties Cleveland Clinic Florida Hospital, ("CCFH,") is a not-for-profit corporation which owns and operates a 153 bed acute-care hospital located within the incorporated limits of Fort Lauderdale on Route A1A in the mid-section of Broward County, AHCA District 10. Among its 153 medical and surgical beds are approximately 11 beds in the intensive care unit and a similar number of intermediate care beds. CCFH is not a Level II trauma center; nor does it provide comprehensive medical rehabilitation services or the tertiary health care services of open heart surgery or organ transplantation. But, fully accredited by the Joint Commission of Health Care Organizations for Special Care Units, provision of tertiary care services in South Florida is a long-term goal of CCFH. Amisub (North Ridge Hospital), Inc., d/b/a North Ridge Medical Center, owns and operates a general acute-care hospital located in Broward County. It provides adult inpatient cardiac catheterization services as well as open heart surgery services. North Broward Hospital District, (the "District,") owns and operates hospitals in Broward County. Among the hospitals are three that provide, individually, adult inpatient cardiac catheterization services. The three hospitals, each a division of the District, are known as Broward General Medical Center, ("BGMC,") Imperial Point Medical Center, ("IPMC,") and North Broward Medical Center, ("NBMC.") In addition to cardiac cath services, BGMC provides open heart surgery services. Holy Cross Hospital is located in the northern part of Broward County within thirty minutes travel time of CCFH by emergency vehicle. It has 587 total licensed beds; 535 are acute care beds, 9 are level II NICU beds and 43 are rehabilitation beds. There is an open heart surgery program at Holy Cross and an adult inpatient cardiac catheterization program with two cardiac cath laboratories. The Agency for Health Care Administration is the single state agency authorized by Section 408.034(1), Florida Statutes, to issue or deny certificates of need, "written statements ... evidencing community need for a new ... health service [such as an adult inpatient cardiac catheterization program.]" Section 408.032(2), Florida Statutes. Other Cleveland Clinic Organizations Cleveland Clinic Florida ("CCF") is a not-for-profit corporation separate and apart from CCFH. Comprised originally of 24 or 25 physicians, most of whom came from the Cleveland Clinic Foundation in Cleveland, Ohio, it began operation in Broward County on February 29, 1988. CCF initially established an outpatient diagnostic and treatment facility on Cypress Creek Road in the eastern middle part of Broward County with the long- term aim of providing tertiary health care services in the South Florida market. It contracted for hospital services with North Beach Hospital, and with the growth of its practice, purchased the hospital in 1990. Converted into a separate not- for-profit corporation, (the applicant in this proceeding,) the hospital was re- named Cleveland Clinic Florida Hospital in 1993. In the six years since the inception of its practice, CCF has expanded into a multi-specialty group practice of approximately 85 physicians, representing more than 30 specialties. Both CCF and CCFH are subsidiaries of the same parent corporation. Although governed by separate entities, a Board of Trustees in the case of CCFH and a Board of Governors in the case of CCF, both entities' boards report to a common Board of Trustees. That board is the Executive Committee of the Board of Trustees of the parent corporation, the Cleveland Clinic Foundation. The Foundation, located in Cleveland, Ohio, is a not-for-profit corporation that serves as the sole corporate member of CCFH. Presently a multi-disciplinary group of approximately 500 salaried physicians, the Foundation is an integrated physician hospital organization, composed of hospital and clinical divisions and a research institute. In contrast to a traditional hospital environment in which a hospital governance may or may not be in accord with its service components' goals, these divisions and the research institute act in concert. The Foundation's organizations and its physicians, therefore, through collaborative effort, carry out the same mission: to provide better care of the sick, to investigate the problems of their illnesses, and to advance those who serve in like capacities. Fundamental values associated with this mission include quality, integrity, compassion, collaboration and commitment. Established in 1921, the Foundation has an extraordinarily distinguished history in cardiac care including coronary cardiac catheterization. Staff members, for example, performed the first valve transplant with bypass surgery. More pertinently, coronary angiography, a diagnostic procedure involving placement of a catheter into the heart, and which accounts for more than 80 percent of diagnostic cardiac catheterization activity, was performed for the first time at the Foundation. Today, the Foundation enjoys wide-spread recognition as a leader in cardiovascular care, research, and education. It is a major tertiary referral center for cardiac patients, treating high risk patients, many of whom have recurring heart disease. The Foundation's hospital in Cleveland has approximately 1,000 beds and is a full service tertiary care center with the exception that it does not provide obstetrics. The Foundation has seven cardiac cath laboratories used primarily for adult cardiac cath or angiography. An eighth laboratory is used to evaluate the arteries in the legs. There are approximately 17 cathing cardiologists on staff at the Foundation's hospital, compared to two on staff at CCFH. On average, 280 adult diagnostic cardiac cath procedures are performed there annually. 12. Despite the close relationship among the Cleveland Clinic organizations, CCFH is a separate entity from the others. The Foundation hospital, as outlined above, is both much larger than CCFH, and a major tertiary referral center when CCFH, at the moment, can only hope to provide tertiary services in the future. Most importantly, while advantages enjoyed by the Foundation may flow directly to CCFH because of their close relationship, the Foundation is not a co-applicant with CCFH in this proceeding. Nor is CCF a co-applicant. The applicant in this case is CCFH only. Pre-hearing Proceedings Including a Projection of Numeric Need Leading to the Agency's Intent to Grant CCFH's Application. 13. On August 6, 1993, the AHCA published in the Florida Administrative Weekly its Summary Need Projections. The Agency's publication projected a need for one additional adult inpatient cardiac catheterization program in District No party challenged the Agency's projection of numeric need. By letter dated August 19, 1993, CCFH notified the Agency of its intent to submit a Certificate of Need application for an adult inpatient cardiac catheterization program in District 10. On the same day that the letter of intent was filed with the agency, August 23, 1993, CCFH filed a copy of the letter with the Broward Regional Health Planning Council. Within fourteen days of the filing of the notice of intent with the Agency, CCFH twice published in the Fort Lauderdale Sun Sentinel a Notice of Filing. The first publication was on August 23, 1993, the second, on September 3, 1993. On September 22, 1993, CCFH filed the application with the Agency and on the same day filed a copy with the Broward Regional Health Planning Council. On October 7, 1993, the Agency acknowledged receipt of the application and informed CCFH that, "[c]ertain elements have been omitted from your proposal which are needed to implement formal review." Cleveland Clinic's Composite Ex. No. 2, Tab 3. Attached to the letter were a list of the omissions under the heading, "Omissions - Certificate of Need No. 7449." The letter informed CCFH that it was required by law to file an omissions response with both the Agency and the appropriate local health council by 5 p.m. on November 8, 1993, or else the application would be incomplete and deemed withdrawn by operation of Agency rule. On November 8, 1993, CCFH timely filed an omissions response with the Agency and a copy with the Broward Regional Health Planning Council. One week later, the Agency acknowledged receipt of the response and deemed the application complete effective November 9, 1993. On January 10, 1994, the Agency by letter to CCFH informed it of its intent to issue: Certificate of Need Number 7449 to Cleveland Clinic Florida Hospital for the establishment of an adult inpatient cardiac catheterization program at Cleveland Clinic Hospital located in Ft. Lauderdale, Broward County, District 10. Cleveland Clinic Composite Ex. No. 2, Tab 6. The letter also informed CCFH that the Agency intended to deny Certificate of Need No. 7551 for the establishment of a like program to be conducted by NME Hospitals, Inc. Outpatient Cath Lab Not Subject to CON Review At the time of hearing, CCFH had no outpatient cardiac catheterization program in operation. But, in October of 1993, CCFH requested a determination from the Agency as to whether it could establish an outpatient cardiac catheterization laboratory without certificate of need review. It received word that an outpatient lab would not require review by letter from the Agency dated October 25, 1993. Whatever one may think of the wisdom of a policy of allowing outpatient cardiac cath labs to escape CON review, (and the apparent conflict with requiring inpatient labs to undergo such review,) the Agency's determination is in keeping with the policy of this state. For its part, CCFH is committed to opening an outpatient cardiac cath lab, regardless of whether it receives the approval it seeks in this proceeding. Commencement of operation for the outpatient laboratory will occur prior to start-up of an inpatient program. At the time of hearing, the outpatient lab was expected to commence operation sometime between November, 1994 and January, 1995. CCFH's aspiration to have an inpatient, as well as an outpatient, cardiac catheterization program at its hospital supports its long-term objective of providing the tertiary services provided in open heart surgery. An inpatient program will be capable of providing immediate endocardiac catheter pacemaking in cases of cardiac arrest, and pressure recording for monitoring and evaluation of valvular disease, or heart failure. The Application Conversion of the Outpatient Lab CON Application No. 7449, (the "Application,") seeks authority to establish an adult inpatient cardiac catheterization program at the Cleveland Clinic Florida Hospital. If granted, the outpatient cardiac catheterization laboratory will be converted to inpatient use. But approval of the application will provide authority to perform diagnostic cardiac catheterization only, not therapeutic cardiac catheterization. To implement the inpatient cath program, CCFH will not incur any construction, design, or equipment costs beyond those incurred with the outpatient cardiac cath facilities. Location, Design and Equipment The proposed location for the cardiac cath laboratory has not changed since the application was submitted in September of 1993. Well situated in relation to the central supply, surgical, telemetry and intensive care areas of the hospital, the laboratory will be on the second floor of the hospital, the site of the pathology lab at the time of the application. It has the added benefit of being near where families can wait while procedures are conducted. And, near the elevator on the second floor and an adjacent post-procedure monitoring area, the location is well-suited to good patient flow. The proposed design has not changed either since the filing of the application. The design calls for special procedure x-rays, film storage, and a dark room for proper processing of films. There will be adequate and appropriate space allocated to each area of the laboratory including the patient holding area. The equipment, manufactured by Picker and Hewlett-Packard, is "state of the art." To be purchased, whether the laboratory remains outpatient or not, is x-ray equipment with the capability of cineangiography or cineangiocardiography, an image intensifier, an automatic injector, a diagnostic x-ray examination table for special procedures, a blood gas analyzer and a multi-channel polygraph. A Closed Lab Currently there are no closed cardiac cath labs in Broward County. But, CCFH intends to operate its cath program, if converted from outpatient to inpatient, as "closed," meaning use of the laboratory by medical staff will be restricted. In the case of CCFH, the restriction will allow only physicians employed by CCF to have access to the lab. Initially, medical staff will be restricted to two members of CCF. When warranted by volume of procedures, CCF will recruit additional physicians to perform cardiac catheterization procedures at the lab. Modeling the Foundation with its Assistance With the assistance of the Foundation, CCFH will model its cardiac cath program after the program in place at the Foundation, allowing for the unique needs of its patient base. The Foundation model entails guidelines and protocols that ensure procedures performed are appropriate, cost-effective, efficient, with acceptable morbidity and mortality, and in a setting that allows education, research and training of medical personnel. It involves salaried staff physicians, in a closed laboratory where the performance of the physicians, themselves, as well as of nurses and technicians are monitored and evaluated. The Foundation has developed standardized protocols for determining whether catheterization procedures are indicated, how they should be performed, and for the evaluation of patients before and after the procedure. It has also developed quality assurance, credentialing, recredentialing, and peer review protocols. Standardized protocols improve efficiency, lower costs, and contribute to better patient care. The Foundation will assist CCFH in developing standardized protocols, based on the protocols used at the Foundation. The Foundation will assist CCFH in training the staff which will perform procedures at the laboratory. The Foundation will make available staff to visit the hospital and will allow CCFH staff to participate in training at the Foundation. The Foundation's assistance should enable CCFH to implement the program expeditiously and efficiently. Other Protocols CCFH has in place a transfer protocol for the transfer of emergency patients to Holy Cross Hospital where open heart surgery and other coronary procedures not available at CCFH can be performed. Holy Cross has agreed to accept emergency transfers. Another Application In addition to the filing of the application in this case, CCFH filed another application for the batched cycle in the Spring of 1994. There are differences in the two applications because the data used by the two are different; the data for the second application being newer. The application in this case used the best data available at the time the application was prepared. Certificate of Need Criteria The criteria upon which the Agency "shall ... review applications for certificate-of-need determinations for health care facilities," Section 408.035(1), F.S., are listed in subsections (a) through (o) of the statute. In addition, Section 408.035(2), Florida Statutes, mandates the Agency to make certain findings of fact, listed in subsections (a) through (e) "[i]n cases of capital expenditure proposals for the provision of new health services to inpatients." Benefits and Absence of Harm Approval of the project is advanced by CCFH as meeting principally three public needs. First, it will further the development of the only fully- integrated health care provider in South Florida. This innovation into the South Florida market will improve quality and control cost. Second, it will improve access to services, albeit limited to cardiac care, for the uninsured population. Access to health care services for the uninsured population is one of the main needs of the health care system in Florida. Third, it will further expanded medical research and education in District 10 by allowing the Cleveland Clinic organization through the presence of CCFH in South Florida to sponsor research and postgraduate medical education in cardiology. Approval of the application will not do any harm. It will not result in any significant expenditure or duplication of equipment since CCFH has already committed to the equipment for its outpatient facility. It will not result in harm to the quality of inpatient cardiac cath services at existing providers. Nor will it cause significant financial injury to existing providers. Need in Relation to the Applicable District Health Plan and State Health Plan The State Health Plan The 1989 State Health Plan, superseded for the most part by the 1992 Interim State Health Plan, contains the latest statement at the state level of policy preferences for approval of new inpatient cardiac cath programs. The 1989 Plan lists four preferences, three of which apply to the application. The second preference applies to counties without any cardiac cath programs and so is not applicable to this proceeding. Of the remaining three preferences, CCFH's application does not conform to the third preference: "Preference shall be given to hospitals with a history of providing a disproportionate share of charity care and Medicaid patient days in the respective acute care subdistrict...". (Cleveland Clinic's Composite Ex. No. 2, Tab 4, p. 18, Testimony of Dr. Luke, Tr. 989.) The application conforms to the first and fourth preferences. The first preference is: "Preference shall be given to an applicant who proposes the establishment of both cardiac catheterization services and open heart surgical services provided that a need for open heart surgery is indicated." Id. The application conforms to this preference because CCFH has applied for authority to implement an open heart surgery program and because the "Florida Need Projections Adult Inpatient Cardiac Catheterization and Open Heart Surgery Programs and Pediatric Cardiac Catheterization and Open Heart Surgery Programs, January 1996 Planning Horizon" indicates a net need for one adult inpatient cardiac catheterization program and a net need for one adult open heart surgery program in District 10. Id. The fourth preference is: "Preference shall be given to an applicant who agrees to provide services to all patients regardless of their ability to pay." Id., p. 19. Consistent with its mission, CCFH has agreed to provide services to patients regardless of ability to pay as evidenced by its commitment to deliver 76 diagnostic caths per year to the uninsured population. The application is consistent with the goals of the 1992 Interim State Health Plan and "Healthy Homes, 1994," the 1994 Health Security Plan. Both of those plans demonstrate the intent of the State to promote improved access, quality, and cost control, based on the model of managed competition. The Cleveland Clinic is cited specifically in those plans as the type of organization that will facilitate managed competition. The District Health Plan The application conforms to both of the recommendations contained in the 1990 District 10 Comprehensive Health Plan. The application conforms to the sole applicable recommendation contained in the 1993 Certificate of Need Allocation Factors Report for Broward County. That recommendation, (also the second recommendation in the 1990 plan,) requires an applicant to document its willingness to make services available to all segments of the service area population, regardless of ability to pay. The recommendation is satisfied by CCFH's commitment in the application to perform seventy-six (76) diagnostic catheterization per year to the uninsured population. Availability, Accessibility, Quality of Care, Efficiency, Appropriateness, Extent of Utilization, and Adequacy of Like and Existing Services in the Service District of the Applicant Geographic Availability and Accessibility There are twelve existing providers of adult inpatient cardiac cath services located in District 10. There are five of these providers within five miles of CCFH: Holy Cross, North Ridge, IPMC, BGMC and Pompano Beach Medical Center. Less than eight miles away are three other providers: Plantation General Medical Center, Florida Medical Center and North Broward Medical Center. A thirteenth program was approved at University Medical Center in 1994. The road system in Broward County is highly developed. There are many facilities within a few minutes drive of any resident in Broward County. In sum, even were CCFH's aspiration of obtaining approval for an inpatient cardiac cath lab never granted, there is no portion of Broward County that is without close, easy and reasonable geographic access to diagnostic inpatient cardiac care. Extent of Utilization Several providers have multiple laboratories, including North Ridge with three separate cardiac catheterization labs. Not counting the new program at University Medical Center, there are 19 cardiac cath laboratories in the District. At a minimum, a single cardiac catheterization laboratory can reasonably accommodate between 1500 and 2000 cardiac catheterizations in a single year. The nineteen labs of the providers existing and in operation at the time of hearing, therefore, had the capacity to perform between 28,500 and 38,000 cardiac catheterizations per year. During 1993, there were 14,701 cardiac caths performed at existing providers in District 10, a number, it may be safely assumed, no more than half of the capacity supported by existing providers. Individually, no existing provider operated at as much as 80 percent capacity and six of the twelve operated at less than 30 percent capacity. Excess capacity led the Agency to conclude in its State Agency Action Report, ("SAAR"): the need for an additional program cannot be supported in total, although based on current and proposed referral patterns, the impact of an additional cardiac cathe- terization program in the district on these underutilized facilities appears minimal. Cleveland Clinic Composite Ex. No. 2, Tab 6, SAAR, p. 13. The primary impact of an inpatient program at CCFH will be on BGMC and Holy Cross, where CCF physicians currently perform diagnostic caths. The adequacy of existing capacity was confirmed by testimony from the Chief of the Certificate of Need and Budget Review sections of the Agency that she is not aware of any individuals within two years of June of 1994 who have been denied access to inpatient diagnostic cardiac cath services because of lack of capacity. Quality of Care Quality assurance, peer review, and credentialing processes are established in order to ensure the highest quality of care. The objective of these processes is to reduce the possibility of unwanted events during the course of treatment. The American College of Cardiology and American Heart Association ("ACC/AHA") have established guidelines regarding the number of diagnostic cardiac catheterization procedures a physician should perform in order to maintain proficiency in the procedure. The guidelines provide, generally, that each physician perform a minimum of 150 procedures annually. And, in general, the guidelines provide that where a physician performs at multiple laboratories, a minimum of 50 procedures should be performed at each laboratory. Some hospitals in Broward County do not require physicians to meet the guidelines. For example, the clinical criteria for performing cardiac cath services at BGMC require that a physician perform as few as 25 diagnostic procedures annually. During 1992 and 1993, only two of the nineteen physicians credentialed to perform diagnostic cardiac catheterization services at NBMC performed more than 40 procedures at the facility. But the guidelines are nothing more than for the purpose of offering guidance to a director of a laboratory in making decisions for what is appropriate in terms of operator experience with regard to credentialing. They are "not written in stone." (Tr. 367.) Exceptions are justifiably made on a case-by-case basis and do not necessarily reflect on quality of care. And there are exceptions in the guidelines, themselves, made for physicians who have extensive experience, that is, more than a thousand independently prepared cases. Nonetheless, one would expect that adherence to the guidelines would enhance quality of care. With the exception of the indirect negative reflection on quality of care that failure to adhere to the guidelines might have, and which could arguably lead to an inference that quality of care was suffering in some existing providers, there was no evidence that quality of care for inpatient cardiac catheterization patients suffers in Broward County. To the contrary, existing providers in District 10 are providing good quality of care. Access for Uninsured Persons Whether on an outpatient or an inpatient basis, CCFH has committed to perform 76 cardiac catheterization on uninsured patients annually, if their application for an inpatient service is granted. On an age-adjusted basis, the use rates for the District 10 uninsured population for diagnostic cardiac catheterization services are significantly below those for the insured population. But whether the use rates signify that the uninsured population of Broward County does not have adequate access to needed cardiac catheterization services is difficult to determine. Dr. Luke, CCFH's expert in health care planning, concluded that uninsured residents of District 10 do not have adequate access. His opinion was met with forceful resistance by other experts in health care planning presented by Cleveland Clinic's opponents. Even the Agency, CCFH's supporter in this proceeding, does not share Dr. Luke's opinion. But Dr. Luke's opinion gains support form the nature of cardiac catheterization. It is a service dependent on referrals. Uninsured persons plainly have more difficulty navigating the referral chain. While there are a number of vulnerabilities in the data Dr. Luke used to reach his opinion, without doubt, there are at least 76 members of the uninsured population per year in Broward County who need cardiac catheterization services annually. Whether they would receive such services, were Cleveland Clinic's application granted, is dependant upon whether they can successfully make their way along the referral chain. CCF, as a multi-specialty practice group, has few primary care physicians, the physicians who would make the initial referral that would lead to a cath procedure at CCFH. But, CCFH and CCF will engage in a program of outreach to identify appropriate uninsured candidates for cardiac catheterization services. CCFH and CCF will inform primary care physicians and clinics of their commitment to provide care to the uninsured population, and will encourage physicians to refer candidates for diagnostic cardiac catheterization services to CCF and CCFH. This outreach program enhances the chances that District 10's uninsured in need of cardiac catheterization services will receive them but there is no guarantee that the outreach program will be successful. Nor has CCFH, in its application or otherwise, offered such a guarantee. Ability and Record of the Applicant to Provide Quality of Care The CCFH cardiac catheterization program will enhance the quality of care offered in Broward County. The CCFH program will model its quality assurance, peer review, patient care, and credentialing/recredentialing protocols upon those used by the Foundation. These protocols meet or exceed the elements necessary to a successful quality assurance program contained in "Guidelines for Continuous Quality Improvement in the Cardiac Catheterization Laboratory" by Members of the Laboratory Performance Standards Committee of the Society for Cardiac Angiography & Interventions, a committee chaired by an employee of the Foundation, Frederick A. Heupler, Jr., M.D. The Foundation's quality assurance and peer review programs provide expressly for sharing quality assurance data with all physicians who perform procedures in the laboratory. The Foundation conducts weekly conferences at which data and specific cases are discussed among all the physicians performing procedures in the laboratory. The CCF physicians who will perform procedures in the CCFH laboratory will participate in the Foundation's conferences via the Foundation's telemedicine capability. The conferences perform an important educational function because in order to bring about quality improvement, the purpose of quality assurance, it is essential to provide feedback to all the physicians, nurses and technicians involved. The closed nature of the inpatient laboratory will enhance quality of care in several ways. Low-volume operators will be excluded thereby enhancing quality control. It will be easier to assure that the physicians with access to the lab meet recommended minimum volume standards necessary to assure quality. Cooperation is enhanced in the standardization of indications for procedures, practice of procedures and protocols. And, the ability to evaluate physicians' performances for purposes of recredentialing is enhanced. CCFH's status as an academically oriented organization enhances quality of care. For example, the presence of post- graduate fellows training in cardiology not only provides support to the laboratory but through their enthusiasm and inquisitiveness provide an animated atmosphere that brings out the best in the practitioners. As well as taking time to educate the fellows, the physicians spend more time educating the nursing staff. The nursing staff, therefore, benefits, in turn, from the stimulating environment afforded by the academic orientation to be provided in the Cleveland Clinic setting. The establishment of a cardiac catheterization program at CCFH will allow the CCF cardiologists to interact clinically with the rest of the CCF staff physicians, who practice predominantly at the hospital. The collegial clinical relationship among the CCF staff physicians enhances quality of care. The CCFH program will perform a minimum of 300 procedures annually by the second year of operation, consistent with the minimum number of procedures called for by the ACC/AHA Guidelines to ensure quality of care. The CCFH program will have a sufficient number and complement of staff to provide high quality services to the patients projected to be served by the program. The number and complement of staff are sufficient to allow for rapid mobilization of an on-call team 24 hours a day, seven days per week. The staff projected for the CCFH program will include a program director, board certified or board eligible in cardiology, radiology, or with subspecialty training in cardiology or cardiovascular radiology; a physician, board- certified or board-eligible in cardiology, radiology, or with specialized training in cardiac catheterization and angiographic techniques who will perform the examination; support staff, specially trained in critical care of cardiac patients, with a knowledge of cardiovascular medication and an understanding of catheterization and angiographic equipment; support staff, highly skilled in conventional radiographic techniques and angiographic principles, knowledgeable in every aspect of catheterization and angiographic instrumentation, with a thorough knowledge of the anatomy and physiology of the circulatory system; support staff for patient observation, handling blood samples and performing blood gas evaluation calculations; support staff for monitoring physiological data and alerting the physician of any changes; support staff to perform systematic tests and routine maintenance on cardiac catheterization equipment and be available immediately in the event of equipment failure during a procedure; and support staff trained in photographic processing and in the operation of automatic processors used for both sheet and cine film. The CCFH plan for care both before and after the procedure will be of high quality. 74. CCFH's cardiac catheterization program will be capable of providing immediate endocardiac catheter pacemaking in case of cardiac arrest and pressure recording for monitoring and to evaluate valvular disease, or heart failure. The following noninvasive cardiac or circulatory diagnostic services will be available at CCFH: Hematology studies or coagulation studies; Electrocardiography; Chest x-ray; Blood gas studies; and Clinical pathology studies and blood chemistry analysis. Availability of Alternatives to the Project While there was expert opinion that an appropriate alternative would be to use the expertise of CCF physicians by operating "a high quality Cleveland Clinic program in one of the existing combined diagnostic and open heart approved facilities," (Tr. 1415,) there are disadvantages to this alternative. First, the transfer of patients from CCFH to a hospital providing inpatient cardiac catheterization services poses risks to patients and anxiety for both the patient and family. Transfer of patients also disrupts continuity of care. Second, the equipment for the laboratory has been purchased. If the project is not implemented, inpatients at CCFH will bypass that equipment and be transferred elsewhere. Third, there are no cost savings associated with the alternative since CCFH will implement an outpatient program if the inpatient program is not approved. Fourth, the South Florida community will not benefit from the research and education capabilities of CCFH and Foundation. Finally, the community will not benefit from whatever free care it might receive if CCFH is able, in fact, to make good on its pledge for the provision of free care. In contrast, the proposed program will benefit the community by enhancing the chances of improving access to the uninsured population, expanding and enhancing medical research and education, and furthering development of the only fully-integrated health care provider in South Florida, which, in turn, will improve quality and control costs. The Need For Research and Educational Facilities North Broward Hospital District has a division of academic affairs related to the training of medical students. It has established medical student affiliations with Nova Southeastern College of Osteopathic Medicine in Broward County and the University of Florida School of Medicine. Broward General Medical Center is seeking approval to establish a residency program and currently instructs third and fourth year medical students on a regular basis. These students often observe cath lab procedures at both BGMC and NBMC. By 1995, BGMC will be listed as an available point of residency in the catalog for the University of Florida School of Medicine. In addition to assisting in the education of medical students, the District is seeking national approval as a continuing medical education (CME) site. CME programs are presently approved by the Florida Medical Association. The week the hearing in this proceeding commenced, for example, the District's division of academic affairs hosted a program on emergency cardiology services sponsored by the University of Florida. Research programs serve an important function as a point of dissemination of new medical techniques. The District is engaged in secondary research. It was recently selected to participate in a multi-center lifestyle heart trial. Six sites were selected nationwide with BGMC being one of the approved sites. The program will do research regarding the reversal of coronary heart disease. The District's hospitals, moreover, have an Institutional Research Board. Any physician can propose a research program to the Board. But, despite BGMC's research activity, there are no recognized research institutions in District 10. Unlike the research in which the District is engaged which is secondary in nature, academic centers such as the Foundation, perform primary or original research. The Foundation, together with CCF and CCFH, is actively engaged in research related to cardiology. Included among CCF and CCFH's research activities are multi- center research studies, most of which are coordinated with the Foundation. The Foundation serves as the principal investigator for those studies but District 10 will benefit from the close relationship with the Foundation enjoyed by CCF and CCFH. There are substantial benefits associated with graduate medical education, including enhancing the quality of medical services provided. When patient care takes place in the milieu of education and research, as it does at the Foundation's facility in Cleveland, it enhances a hospital's opportunity to recruit physicians interested in that type of activity more than in the economics of medicine. Because of the close relationship between the Foundation and CCFH, the benefits provided by the Foundation's research and educational environment spill over to the applicant. For example, the Foundation has one of the largest cardiology residency programs in the United States. Residents from that program, as well as other Foundation residency programs, rotate to CCF/CCFH for part of their training. The number of Foundation residents rotating to CCF/CCFH has grown from 6 to 29 over five years. Most of the residents are in primary care and internal medicine programs. CCFH will provide educational benefits independent of the benefits that flow from the Foundation. There exists a need for additional graduate medical education training sites both in Florida and in District 10. Florida ranks 41st among the 50 states in the number of residents per population. To help meet this need, CCFH provides an independent residency in surgery under the guidance of CCF. It is the only accredited graduate medical education program in District 10. The proposed inpatient cardiac cath lab will further the training of graduate medical students both in Florida and Broward County by increasing their educational opportunities. The program will provide CCFH with the full diagnostic capabilities needed in order to train internists and other primary medicine specialists in evaluating and caring for cardiovascular patients. The ability of primary care physicians to evaluate and care for cardiovascular patients is critical, given the high rate of cardiovascular disease in South Florida. The provision of graduate medicine education requires institutional commitment. The applicant is so committed and its application is backed by the commitment of CCF. The approval of the application will enhance medical research and education in District 10 and the State of Florida. Availability of Resources CCFH's estimate of project costs is found on the second page of Schedule 2 on page 63 of its omissions response. A breakdown of the estimated costs appears at pages 114 and 115 of the omissions response on Table 25, AHCA Form 1455, 1993. The total of the estimate, $117,000, accurately reflects the total costs for the application. CCFH has available the $117,000 necessary to meet the costs and to finance implementation. CCFH will be able to recruit the nursing and technical staff necessary to the implementation of the project. Long-term Financial Feasibility The immediate financial feasibility of the project is not in doubt. CCFH has available funds in cash from operations with which it intends to fund the start-up of the project. The long-term financial feasibility of this project is another matter. Measured by whether the project produces a positive net income following its start up period, long-term financial feasibility should not be an impossible matter to judge within accepted norms. But, determining long-term financial feasibility in this case is difficult because of the troublesome task of sorting out the truth when experts, all duly-qualified, have opinions, either as to the underlying data and assumptions or the ultimate conclusion, that are diametrically opposed. Petitioners and intervenor attacked fervently the assumptions underlying the opinion of CCFH's expert in health care finance that the project is financially feasible in the long-term. These assumptions were, in the main, provided to the finance expert by CCFH's expert in health care planning, Dr. Luke. The attack was launched from various angles. One expert witness noted that the Agency reported in its SAAR that it was unable to determine long- term financial feasibility and that such an observation by the Agency ordinarily would lead to preliminary action by the Agency in the form of a denial. Moreover, inconsistencies between the Application and the subsequent application were viewed by experts other than Dr. Luke as "profound." (See e.g., Tr. 1300.) Conclusions reached in the application were seen as inconsistent by opposing experts when compared with data that was used to support the opinion of CCFH's finance expert, data provided by the Foundation with regard to its hospital in Cleveland, Ohio. Furthermore, internal inconsistencies in the Application were observed by experts called by CCFH's opponents. These included that CCFH overstated volume projections, overstated its service area, used a flawed charge methodology, understated its average length of stays for four DRGs related to cardiac catheterization and failed to account for expenses associated with the outpatient cath lab that would support the inpatient lab, if approved. These inconsistencies led the opponents' expert witnesses either to offer the opinion that the project was not financially feasible in the long-term or to view the data and assumptions used by CCFH's financial expert as so flawed as to prevent the expert from reaching the opinion held by CCFH's financial expert and to constitute a failure in proof by CCFH that its project is financially feasible in the long term. The flaws observed by CCFH's opponents' experts, however, were explained by Dr. Luke so that the opinion of CCFH's expert in health care finance, as best can be determined, remains valid. For example, Petitioners and intervenor pressed hard on the average length of stay assumptions provided for various DRGs. Dr. Luke conceded that the average lengths of stay provided, based on the cardiac cath inpatient treatment by CCF physicians at BGMC and other area hospitals, are "certainly shorter than the [overall] experience of other area providers." (Tr. 1100, 1101.) But, in response to the assertion that the shorter length of stay could be due to treatment at CCFH prior to the transfer to another area hospital where the cardiac cath procedure was to be performed, Dr. Luke offered two explanations. First, there was no evidence to suggest that a much larger percentage of CCF cardiac cath patients were transferred than were patients of other physicians. Second, the total length of stay in the hospital would be less if a patient were treated solely at CCFH and not transferred to another hospital because of efficiencies in scheduling and time lost in the transfer, itself. Dr. Luke's opinion, in this regard, was bolstered by analysis as to length of stay of patients under the care of CCF physicians in DRGs comparable to inpatient cardiac cath DRGS. With regard to DRG 143, (Chest pain), CCFH's average length of stay is tied for the lowest in the district. Others are the lowest. CCFH's 2.7 average length of stay for DRG 140, for example, the lowest in the District, may be contrasted with NBMC's average length of stay for DRG 140, which is 4.3, nearly 160 percent higher than CCFH's. The notion, therefore, that CCFH would have significantly lower average lengths of stay for cardiac cath patients is not inconsistent with available data. Average length of stay is the critical building block in the financial feasibility model used by CCFH in its application. But, on rebuttal, CCFH's expert in health care offered the opinion that the project is financially feasible in the long term based on a methodology under which average length of stay is eliminated as a variable. This methodology uses "Cost per Case" data. CCFH's expert compared CCF physicians' cost per case to the costs per case of both petitioners and their experts in this proceeding as well as data from three clients of the expert who provide inpatient cardiac cath services and employ casemix cost accounting systems: Holmes Regional Medical Center, Sarasota Memorial Hospital and Memorial Medical Center of Jacksonville. The outcome of the analysis was that the cost per case projected by CCFH, $2225, fell in the middle of the range of the other providers, which ran from a low of approximately $1600 to a high of approximately $3000. Based on a cost per case analysis, CCFH's health care finance expert concluded that even were the CCFH cost per case understated and turned out to be as high as the average cost per case of any of the petitioners in this case, the project would still be financially feasible in the long term. To take another of the attacks raised by petitioners, that CCFH failed in its application to take into account for expenses associated with the outpatient cardiac cath lab that would support an inpatient lab, it was not necessary that there be such consideration in the application. CCFH has committed the costs associated with constructing and equipping it outpatient cardiac cath program. This commitment makes these costs "sunk." They will be undertaken regardless of whether CCFH's application is granted or not and so are not part of the costs of the inpatient project. It is difficult to determine whether Dr. Luke or his critics are right. On balance, it seems that the matter swings in Dr. Luke's favor. In any event, the testimony on rebuttal which established financial feasibility based on a cost-per-case methodology was not overcome by the parties opposed to CCFH's application. In sum, the project will be financially feasible in the long term. The project will generate a positive net income and positive cash flow after its start-up period. The projections of utilization relied upon in evaluating the long- term financial feasibility of the program are reasonable and achievable. Those projections are based on the historical experience of CCF physicians who perform cardiac catheterization services at other Broward County hospitals. Those physicians performed in excess of 400 procedures in 1992 and 1993. There was growth of approximately 2000 diagnostic cardiac catheterization procedures performed in District 10 between 1992 and 1993. The CCF physicians will need to obtain modest increases in their market shares in order to meet the projections of utilizations. The payor mix assumptions contained in the application are reasonable and achievable. The application accounts for all operational expenses necessary to the provision of inpatient cardiac catheterization services at CCFH. The Needs of a Multidisciplinary Clinic A multidisciplinary clinic is an organization which employs salaried physicians in a variety of medical specialties to provide diagnostic and therapeutic services to its patients. The physicians practice in a collegial collaborative environment. The multidisciplinary group clinic model promotes ease and economy in the diagnosis and care of patients. The clinic model uses a unified medical record, affording each physician who comes into contact with a patient all data and information pertaining to the patient. CCF is the only multidisciplinary group clinic in South Florida. Approximately eight percent of the discharges by CCF and CCFH in Major Diagnosis Category Five ("MDC-5"), which is the cardiac diagnostic group of the International Classification of Diseases, are attributable to patients who reside outside District 10 and the service districts adjacent to District 10. For purposes of health planning, a service district is a geographic area from which at least two-third's of a health care provider's patients are expected to come. The one-third to 20 percent remainder of the health care provider's patients come from outside the service district. A service district is used in analyzing growth in population or growth in demand for services because such growth will occur most intensively within the service district. The service district for CCFH includes all of Broward County and the southern portion of Palm Beach County. On average, approximately four percent of the MDC-5 discharges for other District 10 facilities reside outside District 10 and the adjacent service districts. The difference between the percentage of CCF and CCFH MDC-5 discharges from outside District 10 and service districts adjacent to District 10 and the average percentage of other District 10 hospitals' MDC-5 discharges from outside District 10 and adjacent service districts is statistically significant. Impact on Costs and Effects of Competition The CCFH program will sharpen competition for cardiac cath services in Broward County. CCFH, in conjunction with CCF and the Cleveland Clinic Florida Health Plan ("CCFHP"), constitute a fully-integrated health care delivery system. A fully integrated system enables a person in need of any type of medical care to receive services through the system. The relationship that exists between CCFH, CCF and CCFHP are unique in the Broward County market. Fully integrated health care delivery systems have been shown generally to produce efficiencies of operations and to improve the quality of care. The Cleveland Clinic system has had a positive impact on both the quality and cost efficiency of care offered in Broward County. CCH's average length of stay for patients and average charges for treatment of common cardiac problems are, on average, the lowest in Broward County. Both in Broward County and generally, health care is moving toward an environment of managed care and managed competition. Managed care and managed competition will result in a more competitive system, which will involve providers of health services bearing risk, in terms of prospective payment or prepaid medical plans. Managed care is intended to achieve high quality and cost efficiency in the delivery of medical services. The integrated health care delivery system model in place at CCFH is well suited for an environment of managed care and managed competition. Similar models in California, for example, have proven effective in offering high quality services at a lower cost in the California managed competition environment. In order for an integrated health care delivery system to achieve the goals of lower consumer costs and high quality, it must be able to control all elements of service delivery, including the costs of delivering services. The better the system can control its costs, the more competitive it can be. If the application is approved, CCFH will be able to control all its elements of the delivery of cardiac catheterization services. The approval of the application will enable CCFH to compete more effectively in the managed care environment because of the desire on the part of purchasers in the marketplace to receive the maximum number of services available. The more comprehensive CCFHP is the more its competitive stature is enhanced in the local market for health care services. To the extent that managed care entities compete on the basis of price, lower prices for health care services will occur. CCFHP has formed an accountable health partnership, ("AHP"). AHPs are organizations comprised of a service delivery system and a financing vehicle. The CCFHP AHP recently submitted a bid to a community health purchasing alliance ("CHPA"), which entities are organized under Florida law to serve as a clearinghouse of information to purchasers of health care, including the assembling and dissemination of information on constituent AHPs to interested parties. The CCFHP bid was the second lowest of the proposals offered to both the Broward County and Palm Beach County CHPAs. While the approval of the application is likely to lower the number of procedures done at all other programs in District 10, it will not have a material adverse impact on the quality of services offered at any existing inpatient cardiac cath program in the District. For those most likely to be affected by the program, approval does not at all threaten that they will drop below 300 procedures since the number of procedures conducted in their programs is in the thousands. For other programs operating at or about 300 procedures annually, approval should not impede their ability to perform in excess of 300 procedures annually. The approval of the application will not have a material impact on University Hospital, which recently received a certificate of need authorizing the development of an inpatient cardiac cath program. The approval of the application will result in the redirection to CCFH of cases primarily from BGMC and Holy Cross. Even with the redirection of cases, both BGMC and Holy Cross will retain in excess of 1000 procedures annually, which is more than adequate to ensure a program's quality. Nor will approval have a material adverse financial impact on any of the petitioners or intervenor. Both Holy Cross and North Ridge have enjoyed substantial operating margins and are otherwise extremely solvent. In the cases of IPMC, BGMC and NBMC, it is appropriate to evaluate the impact on the District system as a whole. The District has substantial financial resources. In the contexts of these organizations' financial strength, the impact of the CCFH inpatient cardiac cath program will be inconsequential. Past and Proposed Provision of Services to Medicaid and Indigent Patients It is the policy of CCFH to accept all patients, regardless of ability to pay. In addition to its commitment to provide free services to 76 uninsured patients as a condition of approval of the application, CCFH will also seek out Medicaid patients. This conditional commitment has the potential to be a substantial contribution to alleviating problems of the uninsured in obtaining needed inpatient cardiac catheterization services. But, as stated above, there simply is no guarantee that the commitment will be fulfilled. The Decision in the Dr. John T. MacDonald Foundation Case On April 1, 1994, slightly more than two months before final hearing in this case commenced, Hearing Officer Michael M. Parrish rendered a Final Order in Dr. John T. MacDonald Foundation, et al., v. Department of Health and Rehabilitative Services, DOAH Case Nos. 91-6390R (consolidated). The issue in the case was whether Rule 10-5.032, Florida Administrative Code, is an invalid exercise of delegated legislative authority. By the Final Order, the hearing office declared only a relatively small part of the rule invalid, leaving almost the entire text of the rule intact. Rule 10-5.032 "implements the provision of section 381.706(1)(c), F.S., which provides that certificate of need shall not be required for an expenditure to provide an outpatient service." Pertinently to this case, the rule goes on to define[] the requirements for the establish- ment of inpatient cardiac catheterization services, including minimum requirements for staffing, equipment, and a need methodology for cardiac catheterization programs. A certificate of need for the establishment of inpatient cardiac catheterization services shall not normally be approved unless the applicant meets all relevant statutory criteria, including the standards and need criteria set forth in this rule. Dr. John T. MacDonald Foundation, at 8. Sub-section (8) of the rule is entitled, "Need Determination." Paragraph (c) of subsection (8), also entitled, "Need Determination," sets out the "need formula" as follows: A new adult cardiac catheterization program may be approved if the difference between the projected program volume and the number of adult cardiac catheterizations performed in the service planning area during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool, minus the number of approved adult programs times 300, is at or exceeds a program volume of 300 for the applicable service planning area. This need formula is expressed as follows: NN = PCCPV - ACCPV - APP Where: NN is the 12-month net adult program volume need in the service planning area projected 2 years into the future for the respective planning horizon. Net need projections are published by the department as a fixed need pool twice a year. The planning horizon for applications submitted between January 1 and June 30 shall be July of the year 2 years subsequent to the year the application is submitted. The planning horizon for applications submitted between July 1 and December 31 shall be January of the year 2 years subsequent to the year which follows the year the application is submitted. PCCPV is the projected adult cardiac catheterization program volume which equals the actual adult cardiac catheterization program volume (ACCPV) rate per thousand adult population 15 years and over for the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool, multiplied by the projected adult population 15 years of age and over 2 years into the future for the respective planning horizon. The population projections shall be based on the most recent population projections available from the Executive Office of the Governor which are available to the department 3 weeks prior to the fixed need pool publication. ACCPV equals the actual adult cardiac catheterization program volume for the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool. APP is the projected program volume for approved adult programs. The projected program volume for each approved program shall be 300 admissions. Id., at 14 and 15. The rule goes on in (8)(d): Irrespective of the net need calculated under paragraph (c), no additional cardiac catheterization program shall normally be granted unless ACCPV divided by the number of operational programs for the service planning area is at or exceeds a program volume of 300 patient admissions. Id., at 15. The Hearing Officer summarized the rule as follows: it, projects a number of anticipated admissions to cardiac catheterization programs in the horizon year by multiplying the current use rate (number of admissions per thousand adult population) times the projected population. If the difference between the current volume and the projected volume is greater than 300, a new program may be awarded, so long as all of the existing programs, plus the proposed program, are projected to perform an average of 300 admissions each. An approved program is assigned a value of 300 for purposes of determining the average. Id., at 15 and 16. After summarizing the rule in the Final Order, the hearing officer took it to task on the basis of a number of deficiencies, not the least of which is that the rule fails to take into account the number of cath laboratories as opposed to the number of cath programs within a district. This point is found in Finding of Fact No. 29 in the Final Order. Even the most cavalier reading of Finding of Fact No. 29 shows the point could not have been made more plainly: The rule does not take into consideration the number of individual catheterization laboratories, rather it considers the number of cardiac catheterization programs. The difference is that an individual hospital will have only one program, but it may have more than one laboratory in each program. Id., at 19. In addition to deficiencies, the rule, in the view of the hearing officer, contains a fatal flaw. It does not address the capacity of existing cardiac catheterization programs or the capacity of existing laboratories. Furthermore, its use of 300 as the threshold number of procedures was an unexplained deviation from an earlier standard of 600 procedures as the threshold. This deviation was also an "unexplained departure from the National Guidelines for Health Planning, and an unexplained departure from other published guidelines recognized as authoritative." Id., at 25. The hearing officer went on in the Final Order to find that "[a]n essential ingredient of any functional need determination methodology is a method for identifying unmet need." Id., at 26. To do so, the methodology must identify "not only ... a reasonable estimate of future need," but also "a reasonable estimate of the future capacity of existing providers to meet that need." Id. The rule's shortcomings are summarized in Finding of Fact 43 of the order: The failure of the subject rule to consider the future capacity of existing providers in calculating future need has an adverse effect upon the ability to accurately predict future unmet need and also has a potential for adverse effect upon the quality of care offered by the existing providers. The rule authorizes the approval of a new inpatient cardiac catheteri- zation program even though many of the existing programs may be operating substantially below their capacity. The addition of new programs under such circumstances has the adverse effect of tending to reduce utilization of existing facilities that are already functioning well below capacity. Id., 26, 27. Ultimately, parts of the rule were determined by the Hearing Officer to be beyond the bounds of "reasonableness" and therefore arbitrary and capricious, and hence, an invalid exercise of delegated legislative authority, see Section 120.52(8), F.S., as follows: The term "operational programs," was determined arbitrary and capricious because the term failed to take into account the number of laboratories within each program. The hearing officer wrote, "[I]llogical results [produced by the use of the term] can be avoided only by use of a methodology that takes into account the number of existing and approved laboratories." Id., at 32; The use of the phrase "a program volume of 300 patient admissions" was determined un- reasonable because it is inconsistent with the National Guidelines For Health Planning and other authoritative guidelines and because it bears no rational relationship to the actual capacity of cardiac catheterization laboratories, Id., at 33; and, Paragraph (9) of the rule was determined to be arbitrary and capricious because "it has the effect of ignoring the existence of any new laboratories added to existing facilities." Id., at 34. The effect of the hearing officer's ruling and the explanation underpinning the ruling was to turn much of the rule, and certainly the numeric need formula, into mincemeat. It clearly called for the initiation of rulemaking if AHCA wanted a rule establishing "need methodology" for calculating numeric inpatient cardiac catheterization program need. But AHCA chose to look at the Final Order in a different way, a way that one would think would occur only in a hearing officer's wildest nightmare. Instead of reading the Final Order in its entirety, and taking it as a whole in able for the order to make sense, AHCA, followed only the strict, literal, reading of paragraphs 4., and 5., on pages 35 and 36 of the order, where it is declared: That the following portions of Rule 10-5.032, Florida Administrative Code, are an invalid exercise of delegated legislatively authority for the reasons stated above: the use of the term "operational programs" at paragraph (8)(d), the use of the phrase "a program volume of 300 patient admissions" at paragraph (8)(d), and the last sentence of paragraph (9). That, with the exception of the portions of the rule described in the immediately preceding paragraph, Rule 10-5.032, Florida Administrative Code, has not been shown to be an invalid exercise of delegated legislative authority, and the chal- lenges to other portions of the rule are hereby dismissed. Id., at 35, 36. By reading the declaration of partial invalidity "literally," in the strictest sense of the word, AHCA chose to leave in effect the numeric need formula: "NN = PCCPV - ACCPV - APP." This decision was made despite the fact that nearly the entire Final Order is devoted to an explanation of why the formula is dysfunctional in ways which strike at the very heart of the Certificate of Need program. Moreover, the strictly literal reading of the Final Order by AHCA leaves a rule on the books with portions which make no sense. AHCA conceded as much, through its Chief of the Certificate of Need and Budget Review sections of the Agency, elicited during the hearing in direct examination by AHCA's own counsel: Q: ... Now, specifically, as to paragraph 59C-1.0328, I think it is (d), with the language that has been stricken by the hearing officer in the John T. MacDonald case, does that paragraph make any sense to you? A: Not without that language in there, no. It doesn't read as something that could actually function. (e.s., Testimony of Elizabeth Dudek, Tr. 1468-1469.) The remainder of the Final Order was characterized in this manner by the Agency, Well, in looking through the final order, and then discussing it with other members of my staff and the legal staff, and in determining how we actually utilize the rule and what the difference in what is stated within the final order and the rule ... there did not appear to be any language that indicated ... that we needed to review capacity, nor the number of laboratories that were there. There were some comments related to both, but the findings were only such in the final order that the provisions of (8)(d) and then of (9) were deleted. (Tr. 1470-1). Suffice it to say, as will be articulated in the Conclusions of Law, below, this hearing officer does not read the Final Order in the Dr. John T. MacDonald Foundation case in the same way as does the Agency.
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.
The Issue The basic issue in this case is whether Deering Hospital's application for a certificate of need to operate an inpatient cardiac catheterization program should be granted or denied.
Findings Of Fact Deering Hospital, formerly known as Coral Reef Hospital, is located at 9333 Southwest 152nd Street, Miami, Florida, in HRS District 11, Dade County. Deering Hospital has a total of 260 beds: 170 medical/surgical, 54 adult psychiatric, 16 adolescent and child psychiatric and 20 substance abuse beds. It is an acute care hospital. Deering's primary geographic service area is north to the town of Kendall, west to the Everglades, east to Biscayne Bay and south to 232nd Street. The secondary service area is south to the Florida Keys. Deering's primary service is defined by 62 percent of its admissions, its secondary service area by 17 percent, and all other areas, including North Monroe County, comprise 21 percent of all its admissions. Competitors in Deering's primary and secondary service areas include Kendall Regional Medical Center, Baptist Hospital, South Miami Hospital, and South Miami-Homestead Hospital, which was previously called James Archer Smith Hospital. These hospitals have shared a service area as long as they all have existed. South Miami-Homestead Hospital does not have a cardiac catheterization laboratory. Deering is within 30 minutes travel time of three full service cardiac catheterization programs located in facilities with open heart surgery, including two of the challengers to its application. On June 18, 1990 South Dade Health Care Group, Ltd., was formed in order to acquire Coral Reef Hospital. South Dade Health Care Group, Ltd., at the time of the application was and is currently licensed by HRS to operate Deering Hospital. Columbia Hospital Corporation of South Dade ("Columbia') is the general partner of South Dade Health Care Group, Ltd. Columbia, acting on behalf of South Dade Health Care Group, Ltd., acquired Coral Reef on September 26, 1990. Coral Reef changed its name to Deering Hospital on April 2, 1991. Deering's CON application in this batch cycle was submitted on March 25, 1991. The June 18, 1990, audited balance sheet for South Dade Health Care Group, Inc., was prepared for a development stage enterprise and is an audit of costs to start up the hospital after the acquisition by Columbia. The December 31, 1990, audit covers a 97 day period from September 26, 1990, (date of acquisition) to December 31, 1990, and included development and organizational costs. Since the applicant/entity/licensee did not exist before June 18, 1990, and the hospital was not acquired by that entity before September 26, 1992, there are no other financial statements that could have been prepared before the Deering application was submitted on March 25, 1991. South Dade Health Care, Group, Ltd., submitted a timely and valid letter of intent and a timely application for Certificate of Need ("CON") 6664 to provide in the July 1993 planning horizon inpatient cardiac catheterization services at Deering Hospital. South Dade Health Care Group, Ltd., and Columbia have authorized Deering Hospital's participation in this case. The capital projects list in the application is complete. When Deering was purchased by Columbia in 1990, Deering had a special procedure room that was apparently equipped and had the capacity to provide diagnostic coronary catheterizations as well as peripheral (i.e., the extremities) vascular diagnostic and therapeutic procedures. Although outpatient catheterizations had been performed in the special procedure room in the past, none were being done when Columbia acquired the hospital in September 1990. In late 1990, following evaluation of the equipment, Deering recruited an experienced CCRN cardiac catheterization laboratory nurse, hired a qualified CV tech, and began offering outpatient cardiac catheterization services. The decision to begin outpatient cardiac catheterization services was based in part on the idea that there would be no capital costs since the equipment to perform the procedures already existed. In December of 1990, the existing outpatient cardiac catheterization laboratory did about nine procedures and experienced some equipment failures. As a result of the equipment failures, Deering temporarily stopped doing outpatient cardiac catheterization, but was able to continue doing special procedures (vascular and arterial catheterizations, not coronary) in the room. After exploring various possibilities, Deering entered into a lease to obtain new equipment for its existing outpatient cardiac catheterization laboratory and signed a renewal lease to continue the lease of the equipment that was already in the outpatient laboratory. In January of 1992 the hospital resumed doing outpatient cardiac catheterization procedures and ten outpatient cardiac catheterizations have been performed in the room since January 31, 1992. From 1985 through April of 1991 the Deering outpatient cardiac catheterization program has done a total of twenty-nine outpatient procedures. The lab was closed temporarily to outpatient cardiac catheterization procedures from March 1991 through January 1992 in order to bring in new equipment. The hospital has been diligent and persistent, from the date Deering was acquired by Columbia to the present, in its efforts to maintain and enhance its outpatient cardiac catheterization program. Currently, however, if a Deering inpatient needs a cardiac catheterization, that patient must be taken past an active outpatient catheterization laboratory at Deering, only to be transferred to another hospital with an inpatient cardiac catheterization certificate of need. In health planning, it is generally desirable to use existing facilities and equipment to do additional procedures. By its application in this case, Deering proposes to use its existing outpatient cardiac catheterization laboratory to perform inpatient cardiac catheterization. For calendar year 1991, about 50 cardiac catheterization inpatients were transferred from Deering to other hospitals. Patients requiring inpatient cardiac catheterization or open heart are transferred from Deering to South Miami Hospital, Baptist Hospital, or Kendall Regional Medical Center. At Deering the spatial relationships between the existing outpatient cardiac catheterization laboratory and related services such as telemetry and intensive care appear to be adequate. Deering has 16 telemetry beds and they can be easily increased if needed. An uncomplicated inpatient cardiac catheterization typically results in one day in telemetry. Deering has ample capacity for over 300 additional telemetry patient days. At Deering the intensive care unit and the coronary care unit are collectively referred to as the critical care service (CCS). Deering has 14 CCS beds where a patient can be directly connected to a cardiovascular monitor allowing monitoring of any clinical changes. The current CCS average daily census is ten (10). Deering's application is not by or on behalf of an HMO. No evidence was presented to show that HMO's in District 11 have unmet cardiac catheterization needs or that Deering's application would fulfill any needs of HMO's. To the contrary, HMO's have a tendency to prefer cardiac catheterization services at facilities with open heart surgery. Typically an uncomplicated diagnostic cardiac catheterization does not require a CCS stay. Even if 50 percent of Deering's cardiac catheterization inpatients required CCS during their stay, Deering has the capacity to accommodate the 150 additional CCS patients annually. The physical space which comprises the existing outpatient cardiac catheterization laboratory is clinically adequate in its current configuration to facilitate communication during the procedure and time savings. The dark room, computer room and procedure room are all adjunct. There are no medical or clinical reasons why the space is not adequate. According to the medical director, who has extensive experience at other hospitals and who has performed outpatient cardiac catheterizations in Deering's procedure room, Deering's procedure room is more than adequate for performing inpatient cardiac catheterization. If the inpatient certificate of need is granted, the procedure room where outpatient catheterizations are currently performed will continue to be a mixed used room, i.e., peripheral angioplasties and coronary catheterizations will be scheduled in the same room. Deering Hospital is JCAHO accredited. It received a three year accreditation in 1991. The laboratory currently used for outpatient procedures was surveyed by JCAHO as a special procedure room. Deering has never been cited in any JCAHO or HRS licensure survey for any inadequacy in life, safety, or fire codes in the outpatient cardiac catheterization special procedure room. Deering currently has all of the equipment, staff and ancillary services described in, and required by, the applicable rule. Deering has two physicians on staff that serve and are compensated as co-directors of the existing outpatient cardiac catheterization laboratory. Dr. Palomo is co-medical director of the existing outpatient cardiac catheterization program and will be co-medical director of the inpatient program if the program is approved. Dr. Palomo is Board certified in internal medicine and Board certified in cardiovascular diseases. He was previously an assistant professor of medicine at the University of Miami and ran the cardiac catheterization lab at the Veteran's hospital in Miami. Last year Dr. Palomo performed 300 cardiac catheterizations in the Miami area. Dr. Palomo has cardiology staff privileges at six Miami hospitals, including two of the challengers to this application, Baptist Hospital and South Miami Hospital. He lives ten minutes from Deering Hospital and his office is located eight minutes from Deering. There is no industry standard for credentialing cardiac catheterization laboratory nurses, but it is generally agreed that all cardiac catheterization personnel should be ACLS trained. All Deering nurses who are cross-trained for the cardiac catheterization laboratory are ACLS certified. Deering has also cross-trained an ECHOvascular technician into the scrub roll in the laboratory. All current cardiac catheterization laboratory staff and all cross-trained cardiac catheterization laboratory staff are already full time Deering employees. Current staff can accommodate the projected volume of inpatient cardiac catheterizations and the current rate of peripheral and outpatient catheterizations. If awarded the service, Deering would be able to implement the service the day of the award. The current staff is adequate regardless of whether they are performing an inpatient, outpatient, or peripheral procedure. The staffing of the inpatient lab would be the same as the current outpatient laboratory; i.e., a physician, RN and a CVT. There would not be any need to add staff if the number of procedures increased between 300 and 1,000 annually. Accordingly, Deering does not intend to recruit additional professional personnel from the local market. The capacity of Deering's existing laboratory, when used for inpatient cardiac catheterization procedures, can conservatively be calculated as follows: 1 hour from arrival at the procedure room to departure from the procedure room, times an 8 hour day, times a 5 day week, times 52 weeks a year equals 2,080 case theoretical capacity. One-half that theoretical capacity is four cases a day or 1,040 cases a year. A cardiac catheterization laboratory can typically do between 1,000 and 1,500 cases per year. Four cases per day (1,040 cases per year) is a reasonable number to express the capacity of Deering's existing laboratory to accommodate inpatient procedures with current space, equipment and staff. The existing inpatient cardiac catheterization laboratories in District 11 have similar capacities. With additional staffing, Deering or any of the existing laboratories might have even greater capacities. If granted inpatient cardiac catheterization services, Deering would not do coronary angioplasties because it does not have open heart surgery in the same facility. Deering maintains transfer agreements with other facilities for services that Deering does not provide. Deering has developed an adequate protocol outlining how an open heart or angioplasty backup patient would be transferred. Deering has established medically appropriate criteria for granting and maintaining privileges in its outpatient cardiac catheterization laboratory that would be suitable for the proposed inpatient cardiac catheterization program. Deering has developed adequate and appropriate forms to manage its patient care in the outpatient program which would be suitable for the inpatient program. Deering has developed clinically adequate and appropriate protocols for temporary pacemaking, recording hemodynamic data, and insuring the emergency availability of staff in the cardiac catheterization laboratory. Deering has a policy and procedures statement to orient new employees to the cardiac catheterization laboratory. Generally, there is no alternative to cardiac catheterization when catheterization is medically indicated. However, there are alternatives to Deering's application, such as allowing existing providers to achieve efficient levels of utilization. Deering is not proposing joint, shared, or cooperative health care services. Deering is not proposing to provide services for research or teaching purposes. Deering does not propose to provide a substantial portion of its services to individuals not residing in the service district. Indeed, inpatient cardiac catheterization services are readily available in adjoining service areas. Deering is not proposing any new construction in its application. Deering is not proposing to add nursing home beds. No service reductions will occur as a result of this proposal. Financial feasibility of a project means the project can be accomplished within the financial resources of the overall institution. Short- term financial feasibility means the applicant can cover the start-up project costs. Long-term financial feasibility means the project will generate a surplus of operating revenue over operating expenses within two years. The proposed project would most likely be financially feasible in the short and long-term, even though (for reasons addressed below) it is unlikely to achieve the results projected in the pro formas. This is because Deering is already operating an outpatient cardiac catheterization laboratory and would have very little additional expense if it began performing inpatient cardiac catheterizations using the existing staff and the existing equipment. If the project were to be approved, the hospital as a whole would probably have a positive cash flow in the first and second year, because with a mere four or five inpatient procedures it would recover the additional costs associated with converting the existing outpatient lab to an inpatient lab. A contribution margin is the difference between the variable expenses and variable revenues on a per unit basis or in the aggregate. For additional inpatient cardiac catheterization services on a per case basis, Deering projects a positive contribution margin of $2,500 per procedure. This is similar to the contribution margins of other hospitals performing inpatient cardiac catheterizations in Deering's service area. Break-even analysis determines how many procedures must be done before incremental fixed costs are covered. Since incremental fixed costs are $10,000, after only 4 or 5 inpatient procedures the service would break-even. For a number of reasons mentioned below, it is very unlikely that Deering would be able to achieve its projected utilization levels. Specifically, it is unlikely that Deering would be able to achieve a utilization level of 300 admissions per year by the end of its second year of operation. The analysis on which Deering bases its much higher utilization projections appears to be flawed in several respects and is also contrary to reasonable expectations based on the average historical performance of diagnostic-only cardiac catheterization programs in District 11. In an effort to demonstrate that Deering would perform in excess of 300 procedures per year, Deering's health planning expert, undertook the following analysis: The number of MDC-5 (circulatory diagnoses) at Deering in 1990 was approximately 750. It was assumed, from data in the Winslow report and the Dade County actual data that one third of the MDC-5 admissions would receive a cardiac catheterization. Multiplying 750 times one third results in 250 admissions at Deering who would receive a catheterization, or approximately 20 per month. Because some people would refuse to have a catheterization, or would undergo it at another facility, it was assumed that 17 patients per month, or approximately 195 per year, would be cathed at Deering in the first year of operations. It was assumed that the growth at Deering between year one and year two of operations at Deering would be equal to the projected growth in catheterizations in Dade County between July, 1989 and January, 1994. It was assumed that all of the cases projected above would be inpatients. Based on this analysis, it was projected that Deering would be able to do in excess of 300 cases per year starting in its second year of operations. The greater weight of the evidence indicates that this methodology suffers from a number of flaws. The "one third" factor applied in step 2, above, is erroneous and was incorrectly applied even if correct. The Winslow paper provides no support for the proposition that one third of all MDC-5 admissions will require catheterization. The actual statistic from Dade County is that all inpatient catheterizations, including those done in anticipation of open heart surgery and for angioplasty, constitute 21 percent of the number of MDC-5 admissions. Of the catheterizations done in Dade County, 9 percent (1,382 catheterizations out of a total of 16,155) were performed in conjunction with open heart surgery and 16 percent (2,700 of 16,155) were angioplasties. Because Deering will be unable to do either open heart surgery or angioplasty, a full 25 percent of the catheterization case load is unavailable there. Applying the 21 percent factor (percent of actual inpatient catheterizations to MDC-5 admissions) would result in 158 potential catheterizations. Dropping out 25 percent of those (the percent requiring open heart surgery and angioplasty) results in 118 potential cases. Using then the 85 percent figure (to reflect those who refuse to be catheterized or must go elsewhere because of managed care agreements, etc.) leaves approximately 100 inpatient cases in the first year, or roughly half of what Deering projects. There is no persuasive support for the idea advanced by Deering that its growth between year one and year two of operations would be the same rate of growth that all Dade County providers experienced between 1989 and 1994. To the contrary, such an experience is most unlikely. First, the projected rate of growth assumes that Dade County's use rate will continue at the same rate. This is optimistic. Second, it assumes that Deering will reflect the growth in the number of cardiac catheterizations in Dade County even though it is only providing diagnostic catheterizations (i.e. no angioplasties or catheterizations during open heart surgery). Finally, it assumes that Deering's rate in providing cardiac catheterizations will be the same as four and one half years experience in Dade County. If the actual annual rate of increase in Dade County were applied to Deering's own projected first year utilization, it would still only be likely to do 230 cases in the second year. The actual number of patients transferred from Deering for inpatient catheterizations plus its actual number of outpatient procedures provides a more accurate guide to the number of cases Deering could be expected to do. Based upon these figures, Deering might be expected to do between 70 and 150 cases the first year and less than 200 the second. One assumption made by Deering to support its utilization projections was that there would be a growth in the utilization of cardiovascular services at Deering. The historical use pattern at Deering fails to reveal any trend that would suggest such an increase. According to data reported to the HCCCB, there was an overall decline in the number of intensive care days at Deering between 1985 and 1991. Similarly, emergency room visits have also declined during the same period. Emergency room admissions account for 60 percent of all admissions to Deering. As a result, the total number of patient days at Deering has declined from 47,089 in 1985 to 40,975 in 1991. Thus, although Deering is projecting a large increase in utilization to project satisfactory utilization of its proposed laboratory, the historical record does not support that record. According to Deering, indicators of cardiac volume include the following services: EKGs; echocardiograms; holter monitors; treadmills; pulmonary function tests; thallium exams; and, coagulation studies. According to data presented by Deering, none of those "cardiac volume indicators" showed an increase in utilization between 1988 and 1990. In its financial analysis, Deering assumed that all of the 195 procedures in the first year and all 360 in the second year would be inpatient procedures. In Dade County for the 12 months ending September 30, 1991, 39 percent of all catheterizations were done on an outpatient basis (6,240 outpatient procedures out of 16,165 total cases). That percentage would be even higher at facilities that are unable to provide open heart surgery. (For example, currently 80 percent of the cardiac catheterization procedures at Doctors' Hospital are outpatient procedures.) In all of Florida approximately 50 percent of all cardiac catheterizations are inpatient. The trend in Dade County, in Florida, and nationally is that the number, and percentage, of outpatient procedures is increasing. The significance of this fact as it relates to Deering's financial projections is that Deering did not make any adjustment in its utilization projections to account for outpatient utilization and projected the pro formas by assuming that income associated with each case would be the income associated with a full inpatient admission. Thus, the pro forma projections are overstated to the extent that the projected procedures will actually be performed on an outpatient basis. At least 35 percent of Deering's procedures are likely to be on an outpatient basis with the trend indicating that outpatient utilization will actually be much higher. In projecting the average length of stay to be attributed to each inpatient catheterization at Deering, it was assumed that it would be the same length of stay as the District 11 average. The District 11 average includes the average inpatient stay associated with open heart surgery, which is much longer than for a routine diagnostic catheterization. Thus, Deering has overstated its projected average length of stay. In addition, the average length of stay for inpatient catheterizations has been dropping. This compounds the extent to which the number of inpatient days associated with catheterizations has been overstated in Deering's pro formas. One assumption in Deering's financial analysis is that patient days at Deering would increase at the same rate as the population increase in Dade County. This assumption finds no support in the evidence presented at hearing. In fact, it was demonstrated that the actual number of patient days have been declining at Deering since 1985. In 1985, Deering has 47,089 patient days; in 1991 it had 40,975 patient days, a drop of 13 percent. This drop occurred even though Dade County has had continuous steady growth. The financial assumption that Deering's inpatient days will grow at the same rate as the population as a whole is found to be unsupported. One reality check of Deering's projection that it will perform in excess of 300 procedures in its second year of operations is to measure its proposed "capture rate" against that of the other hospitals it will be competing against. In 1990 there were a total of 491 cardiac catheterizations performed on patients who reside in Deering's primary service area. Of these, Baptist, which is a full service provider, was able to capture only 203 cases, or 41 percent. If Deering, with one catheterization lab which is also used to do peripheral procedures, were to capture 300 procedures from its primary service area, this would represent in excess of 60 percent of the procedures from that area, or one and one half times better than Baptist is able to do with a full service catheterization facility, three dedicated catheterization laboratories, four full catheterization teams, and angioplasty and open heart capabilities. It is most unlikely that Deering can achieve such a projection. Deering proposes to provide a diagnostic-only program. Of the 13 cardiac catheterization programs in Dade County, nine are traditional and four are diagnostic-only. The diagnostic-only laboratories in District 11 have historically operated at significantly lower volumes than the laboratories in facilities with open heart surgery. During calendar year 1991 the four diagnostic-only providers performed the following number of procedures: Doctors' Hospital 301 Humana Hospital-Biscayne 55 Palmetto General Hospital 432 Parkway Regional Med. Center 262 TOTAL 1050 The total of 1050 procedures constitutes an average of 262.5 procedures for each of the four existing providers. If this pool of 1050 procedures were to be divided five ways to accommodate a new provider, there would be an average of 210 procedures per diagnostic-only provider. It would require an increase of almost 50 percent in the number of procedures being done by diagnostic-only laboratories for five such laboratories to be performing an average of 300 procedures per year. This is yet another reason for which it is most unlikely that Deering would achieve the utilization levels it projects. There appears to have been little physician acceptance of the outpatient catheterization laboratory at Deering. From 1985 through the date of hearing, Deering only performed 29 cardiac catheterizations. Dr. Palomo is the medical director of the Deering cardiac catheterization laboratory. One of his duties as medical director is "promoting" the laboratory. In 1992, through June 16, Dr. Palomo performed only two or three cardiac catheterizations at Deering; in calendar year 1991, he did four to six cardiac catheterizations at Deering. Dr. Palomo does approximately 300 catheterizations per year. It is unlikely that Deering will perform over 300 catheterization cases per year when its own medical director is doing less than 2 percent of his cases there. South Miami is an acute care hospital located in Dade County. South Miami has a open cardiac catheterization program which means any physician within the community can apply for privileges, and, if granted, perform cardiac catheterizations at South Miami. Until recently, it was a closed program. Baptist is a large, full service acute care hospital located in South Miami, Dade County, District 11. Baptist provides a full array of cardiac services at its Miami Vascular Institute. These include cardiac catheterization, open heart surgery, and angioplasty. Baptist is within the primary service area of Deering. It is approximately eight minutes drive from Deering. Deering currently transfers its cases needing inpatient catheterizations to other hospitals, including Baptist. If Deering were to be approved, and if it were able to perform 360 cases in its second year of operations as it projects, it would most likely be performing something in the neighborhood of 150 cases that otherwise would have been done at Baptist. 3/ This was calculated as follows: There were a total of 491 catheteriza- tions performed in 1990 on patients residing in Deering's primary service area. Of those 491 cases, Baptist performed the catheterizations for 203 patients. If Deering were to perform 360 inpatient catheterizations in its second year of operations, it is projected that Baptist would lose cases in the same relation as its current market penetration, i.e. 41 percent. This equates to 149 cases. This methodology presents a reasonable projection of the number of cases that Baptist would be likely to lose if Deering's application for inpatient cardiac catheterization were approved and Deering were able to achieve its projected utilization levels. Baptist has a contribution margin of approximately $2,560 per cardiac catheterization. This figure is the average revenue per case less the variable costs per case. Using the methodology described above, it is projected that the net annual loss at Baptist, if Deering were approved, would be in the neighborhood of $380,000.00. If Deering were to achieve its projected utilization levels, it is likely that it would also be performing a substantial number of cases that otherwise would have gone to South Miami Hospital or one of the other nearby existing providers. Doctors' Hospital is a 255-bed acute care hospital located in Coral Gables, Dade County, Florida. Doctors' has had a cardiac catheterization program since December of 1986, and is authorized to perform diagnostic catheterization on both inpatients and outpatients. With its current staffing compliment, the Doctors' cardiac catheterization laboratory could comfortably perform four catheterizations per day or between 800 and 900 per year. Doctors' performs cardiac catheterization on all patients regardless of ability to pay. Since 1988, the Doctors' cardiac catheterization laboratory has experienced declining utilization. The following chart represents the utilization of Doctors' cardiac catheterization laboratory since 1988: TOTAL INPATIENT AND CALENDAR YEAR OUTPATIENT CARDIAC CATHS 1988 484 1989 400 1990 380 1991 295 1992 240 (estimated) The Doctors' inpatient cardiac catheterization program is at a crossroads. The current volume is well below the minimum quality threshold which is acceptable for cardiac catheterization laboratories. In its early years of operation, the Doctors' cardiac catheterization laboratory generated a profit. Such is no longer the case. Several factors have resulted in the declining utilization of Doctors' cardiac catheterization laboratory. One of the factors is that more of the existing laboratories have become open staff versus closed staff. Doctors' laboratory has always had an open staff policy. At the time that Doctors' established its cardiac catheterization laboratory, it was one of only two that had an open staff policy. Another factor in the decline of utilization at Doctors' has been a shift from inpatient to outpatient cardiac catheterization. Therefore, the opening of outpatient-only cardiac catheterization laboratories, including the one at Deering, has resulted in a reduction in the number of outpatient cardiac catheterization procedures done at Doctors'. Doctors' does not offer angioplasty or open heart surgery. Doctors' diagnostic-only cardiac catheterization capability has contributed to its declining utilization since Doctors' is unable to compete with full service hospitals for cardiac catheterization patients that require the services of a full service hospital. Another factor which has resulted in the decline in utilization at the Doctors' cardiac catheterization laboratory is a change in HMO service patterns to facilities that can provide full-service cardiology services, including cardiac catheterization, angioplasty, and open heart surgery. The primary reason Doctors' Hospital catheterization laboratory is now losing money is its decrease in utilization. As utilization of a cardiac catheterization laboratory declines, the per unit cost of providing a catheterization increases. Based upon the current market share of inpatient cardiac catheterization patients in District 11, and assuming Deering would be able to achieve its projected year two utilization of 360 new inpatient cardiac catheterization patients, a small number of those patients probably would have otherwise gone to Doctors' Hospital. Because of the declining utilization at the Doctors' cardiac catheterization laboratory, and the fact that its program is not co-located with open heart surgery, the loss of even a small number of patients may be significant to the future viability of the cardiac catheterization program at Doctors' Hospital. If the Deering inpatient program were to be approved, both the Deering and Doctors' programs would likely be low volume programs operating at utilization levels well below the minimum for maintaining quality standards and well below the minimum for economic efficiency. There are 13 providers of inpatient cardiac catheterization services in Dade County which operate a total of 24 catheterization laboratories. These providers are geographically well dispersed in the population centers of the county. The existing inpatient cardiac catheterization providers in District 11 are available, provide high quality care, are appropriate, and are accessible. In District 11 there is an ample excess capacity to provide additional inpatient cardiac catheterizations at existing facilities. The existing catheterization laboratories are not producing sufficient numbers of cases to be operating efficiently. The practical capacity of a typical catheterization laboratory is somewhere between 1,000 and 1,500 cases per year. Given that there are 24 existing catheterization laboratories and four more expected to come on line soon, the existing providers are operating at approximately half of their capacity. These programs have not reached a level of optimal efficiency in terms of operations. Optimal efficiency for health planning purposes should be measured at a level of approximately 80 or 85 percent of capacity. The economic efficiency of the existing providers of inpatient cardiac catheterization would be enhanced if new entries into the market were precluded until existing providers were operating at approximately 80 or 85 percent of their practical capacity. It is well accepted in health planning that a catheterization laboratory must perform at least 300 cases per year in order to maintain proficiency and quality. There appears to be a relative correlation between the number of cases performed in a laboratory and the skill of the staff. In District 11, HMO's and PPO's have shifted their service patterns to facilities that can provide full cardiac services including angioplasty and open heart surgery. The shift in use patterns has had a significant effect on cardiac catheterization laboratories unable to provide angioplasty and open heart surgery. This effect would likely be felt at Deering Hospital if its inpatient lab were approved and supports the conclusion that Deering, as a provider of diagnostic catheterizations only, would be unlikely to achieve its utilization projections. Cardiac catheterization services are highly competitive in District As such, the approval of Deering's application will have little beneficial improvement by way of increased competition. Additionally, the trend in District 11 is for third party payers to contract for the provision of cardiac services at full service providers. As such, Deering would be unable to effectively compete with the nine full service providers of which three, Baptist, South Miami, and Kendall, are in Deering's primary service area. There is no evidence that any patient has had, or is likely to have, problems accessing inpatient catheterization services if this proposal is not approved. The geographic access standard contained in the applicable rule is met by the existing providers. Additionally, none of the programs or doctors have been unable to schedule catheterizations because of heavy utilization at any District 11 catheterization provider. Accordingly, patients are not likely to experience any difficulty in accessing inpatient cardiac catheterization services if Deering's application is denied. Currently and historically, cardiac catheterization has been regulated by HRS as an inpatient institutional health service, not a tertiary service. On February 8, 1991, HRS published official notice of the need for one more inpatient cardiac catheterization program in District 11 for the 1993 planning horizon, calculated in accordance with the methodology in the applicable rule. The fixed need pool in this case was never challenged by Petitioners. The projected number of procedures by population in the planning horizon using the methodology in Joint Exhibit 1 and actual data collected by HRS show that there are enough procedures in the marketplace for Deering to perform 300 in the second year of operation and for the protestants in this case to maintain their annual current volumes. However, major portions of that rule- based methodology have been found to be invalid in the Final Order issued this same day in the related rule challenge cases.
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that a Final Order be issued in this case denying the subject certificate of need application. DONE AND ENTERED this 1st day of April, 1994, at Tallahassee, Leon County, Florida. MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of April, 1994.
The Issue The issue presented by the instant case is whether Petitioner's application for a certificate of need to provide inpatient cardiac catheterization services at Pembroke Pines General Hospital should be granted.
Findings Of Fact Based on the evidence received at hearing and matters officially recognized, the Hearing Officer makes the following Findings of Fact: Petitioner and its Parent Corporation Petitioner is a for-profit Florida corporation formed on February 1, 1985, by Encino, California-based Nu-Med Hospitals, Inc. (NM), of which it is a wholly-owned subsidiary. NM provides various administrative services to Petitioner. In return for these services, Petitioner pays NM an annual fee. The fee in 1987 was approximately $1.8 million. In 1988, it was about $952,000. NM has also advanced loans to Petitioner. One such loan was in the amount of approximately $31.4 million at an interest rate of 15.6%, the same interest rate that NM had to pay to obtain the money which was the subject of the loan. Although interest rates have declined, the loan has not been refinanced. The failure to refinance has added substantially to Petitioner's costs. Furthermore, there is a significantly greater cash flow from Petitioner to NM than would be the case had the loan been refinanced. The total pre-tax cash flow from Petitioner to NM, including the amount attributable to the "excess interest" of the aforementioned loan, was $7,900,000 (or roughly 40% of NM's equity investment in Petitioner) in fiscal year 1987 and $4,387,000 (or roughly 23% of NM's equity investment in Petitioner) in fiscal year 1988. In addition to providing administrative services and making loans to Petitioner, NM has also invested more than $17 million over the past four years in Petitioner. Petitioner had an after-tax profit of $852,300 in fiscal year 1987. In fiscal year 1988, it had an after-tax loss of $346,600. Preliminary figures reveal that Petitioner suffered an after-tax loss of slightly more than $1 3l0 in fiscal year 1989. Pembroke Pines General Hospital. Petitioner owns and operates Pembroke Pines General Hospital (PPGH). PPGH is an acute- care hospital with a licensed capacity of 301 beds. It is fully accredited by the Joint Commission on Accreditation of Health Care Organizations. The hospital's bed complement includes 24 intensive care beds (12 coronary beds and 12 surgical beds) 2/ and 32 telemetry beds. Its telemetry unit will be expanded to 48 beds in the near future. In July, 1988, PPGH instituted an eleven bed obstetrical unit. Prior to the acquisition of the hospital in 1985, NM conducted a due diligence study to seek information about the hospital and became aware of the extent of the services provided by the hospital. According to 1987 actual data collected by the Hospital Cost Containment Board (HCCB), PPGH earned a 7.1% return on tangible equity and ranked 7th in this category of the 18 hospitals in Broward County reporting such information; PPGH had a cash flow to total debt ratio of .112% and ranked 9th in this category of the 20 hospitals in Broward County reporting such information; and its total margin percent was 2.6% and it ranked 8th in this category of the 20 hospitals in Broward County reporting such information. According to 1988 actual data collected by the HCCB, in terms of gross revenue per adjusted admission, PPGH ranked 8th of the 30 hospitals in HCCB Group 5 and 3rd of the 20 hospitals in Broward County reporting such information; and in terms of net revenue per adjusted revenue, PPGH ranked 7th of the 30 hospitals in HCCB Group 5 and 5th of the 20 hospitals in Broward County reporting such information. PPGH is located in Respondent's District x, the boundaries of which mirror those of Broward County. It is situated in the southwest quadrant of the county on the corner of Sheridan Street and University Drive. In the area surrounding the hospital is a large concentration of physicians' offices, including one housing a five-member group which limits its practice exclusively to cardiology and is the largest such group in Broward County. The group provides total cardiovascular care to its patients, including echocardiography and nuclear, invasive and clinical cardiology services. It has an active patient case load of 5,000 to 6,000. Of the members of the group, only Dr. Joseph Horgan and Dr. Barry Schiff practice invasive cardiology. Their practice is not confined to invasive cardiology, however. They are also clinical cardiologists. Both are board-certified in internal medicine, as well as cardiology. The Horgan-Schiff group accounts for 15 to 35 patients a day at PPGH, which has an active cardiology service, notwithstanding that it does not offer open heart surgery. The group provides on-site coverage at PPGH from 8:00 A.M. to 7:00 or 8:00 P.M. during the weekday. At other hours members of the group are on call and are able to quickly respond to emergencies at the hospital. Approximately 25 to 30 physicians in the area surrounding the hospital refer their patients who need cardiac catheterizations exclusively to the group. PPGH's primary service area, as defined by Petitioner, is bounded on the north by State load 84, on the south by the Broward County/Dade County line, on the east by the Florida Turnpike, and on the west by the eastern boundary of the conservation area. Included in this area are the cities of Pembroke Pines, Miramar, Davie and Cooper City. Most of Dr. Horgan's and Dr. Schiff's patients reside in PPGH's primary service area. While PPGH is not the only acute-care hospital that serves the residents of this area, it is the only hospital that is located within the area's geographic boundaries. Intervenor PPGH's primary service area is within the jurisdictional boundaries of the South Broward Hospital District (SBHD). SBHD is an independent taxing district which encompasses roughly the southern third of Broward County. It was created in 1947 by a special act of the Legislature to provide quality health care services to the residents of the district regardless of their ability to pay. Hollywood Memorial Hospital SBHD operates several facilities in the district, including a 24-hour walk-in medical center in Pembroke Pines, a freestanding ambulatory surgical center, an oncology center and a radiation therapy center. Its flagship, however, is Hollywood Memorial Hospital (Memorial), a public acute-care hospital that has grown from a 100-bed facility to a 737-bed facility offering a wide variety of health care services. Memorial is located six or seven miles east of PPGH outside of PPGH's primary service area. It is the closest hospital to PPGH. Many of the physicians who have privileges at PPGH also have privileges at Memorial. For instance, 13 of the 16 clinical cardiologists on the medical staff of PPGH, including Dr. Horgan and Dr. Schiff, are also on the medical staff of Memorial. The Horgan-Schiff group is responsible for 10 to 30 patients at Memorial on any given day. Charity Care, Medicaid and Medicare Memorial is the major provider of charity care to residents of the SBHD. In fiscal years 1987, 1988, and 1989, it provided $16,928,000, $22,728,000, and $22,258,000, respectively, in gross indigent charity care 3/ and $6,153 000, $13,739,000, and $7,587,000, respectively, in net unfunded (by tax revenues) indigent charity care. For fiscal year 199(), Memorial projects that it will provide $24,442,000 in gross indigent charity care, of which $14,211,000 will be funded by tax reVenues. A sizeable portion of the hospital's indigent charity care is funded by its operating revenues. During fiscal year 1989, the hospital earned slightly less than $3 million from its operations. Total revenues over expenses that year, however, exceeded $12 million, more than $8 million of which was attributable to returns on its investments. For fiscal year 1988, the hospital's total revenues over expenses was almost $14 million. In calendar year 1986, PPGH furnished 1.1% of the indigent charity care provided in Broward County. It ranked in the top 50% of hospitals in the county in this regard. Memorial ranked 2nd in the county, providing 22.8% of the county's indigent charity care during the calendar year. In calendar year 1987, PPGH provided $596,295 in indigent charity care. This constituted 1.29% of its gross patient revenues. In comparison, during this same period, Memorial provided $18,248,517, or 9.79% of its gross patient revenues, in indigent charity care. In terms of indigent charity care provided during calendar year 1987 as a percentage of gross patient revenue, PPGH ranked 5th of the 12 hospitals reporting in the county and 118th of the 209 hospitals reporting in the state. Memorial, on the other hand, ranked 3rd in the count, behind two other public hospitals, and 19th in the state In calendar year 1988, PPGH ranked 16th of the 30 hospitals in HCCB Group 5 in this category. Of the 20 hospitals reporting in the county, PPGH ranked 10th and Memorial ranked 2nd. Both Memorial and PPGH participate in the Medicaid program. As participants in the program, they are reimbursed for the services they provide to Medicaid patients, but generally not in the amount private pay patients are charged for the same services. The difference between what they receive from Medicaid and what they would have received from a private pay patient is referred to as a "Medicaid deduction." In calendar year 1988, PPGH's "Medicaid deductions" represented .76% of its gross patient revenues. In this category, it ranked 26th of the 30 hospitals in its HCCB group and 8th of the 20 hospitals in Broward County. Memorial, whose Medicaid deductions were 5.29% of its gross patient revenues, ranked 2nd in the county. Based on PPGH's operating budget for calendar year 1989, it ranks 192nd of the approximately 230 acute-care hospitals in the state in the amount of "Medicaid deductions" as a percentage of gross patient revenues. A further comparative review of calendar year 1989 operating budgets reveals that of the 22 hospitals in its HCCB group in calendar year 1989, PPGH ranks last in Medicaid days as a percentage of total patient days. During the third quarter of calendar year 1988, 1.3% of PPGH's gross patient revenues and 5.4% of Memorial's gross patient revenues were attributable to Medicaid patients. PPGH's 1.3% was the 8th highest and Memorial's 5.4% was the third highest of Broward County's 20 hospitals. Pursuant to a contractual arrangement with Respondent, PPGH provides medical services to patients at South Florida State Hospital, a mental health facility operated by the state. In return for the provision of these services;, PPGH is reimbursed at rates comparable to those that apply to Medicaid patients. South Florida State Hospital patients constitute approximately 2 to 5% of PPGH's Average Daily Census. Unlike Memorial, PPGH does not receive any tax revenues to help defray its expenses. PPGH has offered to serve indigent patients who live in the SBHD if the SBHD will reimburse it the same rate the SBHD reimburses Memorial for such services. The SBHD, however, has refused the offer. In terms of Medicare utilization, 1988 HCCB actual data reflects that PPGH ranked 13th of the 30 hospitals in its group and 11th of the 20 hospitals reporting in Broward County. District X Population and Demographics The Executive Office of the Governor, in a report prepared June 22, 1988, estimated that on January 1, 1988, the adult population (15 years of age and over) of Broward County was 1,001,822, and projected that it would increase to 1,047,900 on January 1, 1991. PPGH's primary service area in southwest Broward County has experienced rapid and sustained population growth in recent years. It is the site of several significant retirement communities, including a Century Village development which is expected to have 17,000 residents at build-out. Nonetheless, the population of this area is younger than that of Broward County as a whole. Approximately, 23% of the total population in southwest Broward County is over 55 years of age. While this is two percentage points higher than the national average, it is considerably lower than the countywide figure. Individuals aged 45 to 74 constitute 33.5% of the County's total population, but only 29.7% of the total population of southwest Broward County. The leading cause of death in Broward County is heart disease, a disease to which individuals become more susceptible as they age. Average Daily Census, Occupancy Rates, and Market Scare Notwithstanding the substantial population growth in Broward County, there is now, and has been since at least 1983, a large number of excess hospital beds in District X. The occupancy rates of Broward County hospitals, excluding PPGH, were as follows for calendar years 1983 through 1988: 1983- 65.4%; 1984- 61.3%; 1985- 57.1%; 1986- 55.5%; 1987- 56.2%; and 1988- 52.6%. PPGH, which had a capacity of 301 licensed beds throughout the period, had even lower occupancy rates. During the period, its Average Daily Census (ADC) and, consequently, its occupancy rate declined each year as follows: 4/ Calendar ADC Occupancy Rate 42.5% 37.9% 37.2% 34.1% 32.9% 30.9% Year 1983 127.9 1984 114 1985 111.8 1986 102.6 1987 98.9 1988 93 Based upon statistics for the first six months of calendar year 1989, however, it appears that the hospital's ADC for the entire calendar year will not further decline, but rather will increase to 100.6. 5/ Calendar Year ADC 1983 570.7 1984 533.7 1985 513.6 1986 538.7 1987 552.6 1988 560.5 During calendar years 1983 through 1988, Memorial's occupancy rates far exceeded those of PPGF, as reflected below: Occupancy Rate 78.6% 72.5% 69.7% 73.1% 75.0% 76.1% Based upon statistics for the first six months of calendar year 1989, it appears that for the entire calendar year Memorial's ADC will be 526.5 and its occupancy rate will be 71.3%. Memorial's occupancy rates have been higher than PPGH's due, at least in part, to the fact that Memorial has been able to offer heavily used specialized services not available at PPGH, including neonatal, rehabilitative, and short-term psychiatric care. Furthermore, while PPGH and Memorial both have pharmacy, 6/ physical therapy, nuclear medicine, and cardiac rehabilitation programs, the regular hours of operation of these programs are longer at Memorial. Based upon their ADCs, PPGH's and Memorial's share of the total Broward County market for calendar years 1983 through 1988 was as follows: 7/ Year PPGH 1983 3.6% 1984 3.1% 1985 3.3% 1986 3.1% 1987 3.0% 1988 2.8% Calendar Memorial 16.2% 14.7% 15.1% 16.2% 16.9% 17.2% January, 1988, through June, 1988, discharge data reveals that during that period PPGH and Memorial were responsible for 19.2% and 61.8%, respectively, of the total number of patients from PPGH's primary service area who were discharged from PPGH and District X hospitals with existing or approved inpatient cardiac catheterization programs. Although the ADC for PPGH's total bed complement declined from 1983 to 1988, the number of emergency room visits and emergency room admissions at PPGH increased 18.2% and 31.6%, respectively, during that period. The percentage increases are even greater if only the latter four years of this five-year period are considered. In terms of the average number of critical care beds occupied on a daily basis PPGH has experienced an increase of 28.9% from 1983 to 1988 and an increase of 35.4% from 1984 to 1988. Data reflecting PPGH's performance during the first five and six months of calendar year 1989 indicate that the increase in the number of emergency room visits, emergency room admissions and critical care beds occupied on a daily basis at PPGH has continued. Cardiac Catheterization As accurately described by Respondent in its rules a cardiac catheterization is a medical procedure requiring the passage of a catheter into one or more cardiac chambers of the left and right heart, with or without coronary arteriograms, for the purpose of diagnosing congenital or acquired cardiovascular diseases, or for determining measurement of blood pressure flow. Cardiac catheterization also includes the selective catheterization of the coronary ostia with injection of contrast medium into the coronary arteries. The flow of contrast medium through the coronary arteries may be recorded on x-ray film. The x-ray picture, or angiogram, that is produced can provide information quite helpful to the patient's physician. If it reveals a clot or other blockage restricting the flow of blood to the heart, a balloon-tipped catheter may be used to dilate or open the affected artery. Such a procedure is referred to as a coronary angioplasty. In contrast to cardiac catheterization, which is a diagnostic tool, coronary angioplasty is a therapeutic procedure. A high percentage of patients who receive a coronary angioplasty require open heart surgery immediately following the procedure. Cardiac catheterizations are generally, but not always, elective procedures which need not be performed immediately. There are occasions, however, where a patient is in the throes of a heart attack and requires an emergency coronary angioplasty to restore the flow of blood to the heart to minimize damage to the heart muscle. Under these circumstances, an emergency diagnostic cardiac catheterization, which can be completed in as little as five to six minutes, must also be performed so that the cardiologist will know precisely where in the arterial tree the blockage is located. Respondent permits health care providers to perform such emergency inpatient procedures regardless of whether they possess a certificate of need. Cardiac catheterizations are performed in equipped laboratories and, in the absence of complications, are usually completed within 60 minutes. They may be done on an inpatient or outpatient basis, depending on the condition of the patient. The equipment used is the same, however, whether the procedure is performed on an inpatient or on an outpatient. Recent technological advancements have made it possible to perform more procedures on an outpatient basis than previously. Smaller-sized catheters can now be used. As a result, the entry wound typically heals faster and there are fewer vascular complications. Dr. Horgan and Dr. Schiff were among the first invasive cardiologists in South Florida to employ these smaller- sized catheters. Physicians performing cardiac catheterizations are assisted by technicians and nurses who have specialized skills and training. These technicians and nurses are, at times, in short supply. Competition amongst hospitals to recruit and retain these support staff members is therefore sometimes keen. The majority of cardiac catheterizations are performed on individuals 45 to 74 years of age. 39 There has been no showing that there are any alternative diagnostic procedures which are preferable to cardiac catheterization. District X Inpatient Cardiac Catheterization Programs Broward County is not divided into cardiac catheterization subdistricts. The following seven facilities in Broward County, each of which is within two hours travel time of 90% of the county's population, provide inpatient cardiac: catheterization services pursuant to certificates of need granted by Respondent: Broward General Hospital; Florida Medical Center; Holy Cross Hospital; Memorial; North Broward Regional Medical Center: North Ridge Hospital; and Plantation General Hospital. Broward General, North Broward, and Plantation General each have one cardiac catheterization laboratory. Memorial also has one laboratory, but has plans to construct another pursuant to a "major renovation certificate of need" granted several years ago. It is unclear, however, as to when construction will begin. North Ridge has two laboratories. Florida Medical and Holy Cross each have two laboratories as well, plus one backup laboratory. The average hospital charge and the average length of stay per inpatient admission to these inpatient cardiac catheterization programs during calendar years 1986 and 1987 and the first nine months of calendar year 1988 were as follows: Calendar Average Average Stay 3.71 days 3.27 days 3.43 days 2.98 days 3.70 days 3.00 days Year Charge 1986 (All $4,365.14 Patients) 4936 (Excluding $3,932.44 Medicaid and Medicare) 1987 (All $4,359.92 Patients) 1987 (Excluding $4,041.80 Medicare and Medicaid) 1988 (All $5,054.17 Patients) 1988 (Excluding $4,393.60 Medicare and Medicaid) Cardiac catheterizations are also performed on an outpatient basis at these seven existing facilities. The number of cardiac catheterizations performed in Broward County increased almost 60% from 1985 to 1987, an increase that can be attributed to the aging of the county's population and the advances in cardiac catheterization technology. During the period from April, 1987, through March, 1988, there was a total of 9,289 cardiac catheterization admissions, both inpatient and outpatient, at these facilities, an amount substantially less than their combined capacity. During the period from July, 1987, through June 1988, they also collectively operated well below their combined capacity, handling a total of 9,236 inpatient and outpatient cardiac catheterization admissions Each of the existing laboratories in Broward County can handle at least 1,000 to 1,200 cardiac catheterizations a year during their normal hours of operation with their regular staff. 8/ These laboratories appear to be operating efficiently and to be available to all segments of the county's adult population requiring routine/diagnostic cardiac catheterization services. Furthermore, there is no indication that the quality of care offered at these laboratories is in any way lacking. In addition to these seven existing programs, Respondent has also granted certificates of need authorizing routine/diagnostic inpatient cardiac catheterizations to be performed at two other health care facilities: Imperial Point Hospital and Humana Bennett Hospital. Humana Bennett's primary service area overlaps PPGH's service area. It takes approximately 15 to 20 minutes by car to get to Humana Bennett from PPGH under normal driving conditions. The programs at Imperial Point and Humana Bennett are not yet operational. If their laboratories have hours of operation and staffing levels comparable to those of the laboratories in the county that are currently in operation, these laboratories will also each have the capacity to handle at least 1,000 to 1,200 cardiac catheterizations annually. The same can be said for Memorial's proposed second laboratory. Memorial's Inpatient Cardiac Catheterization Program Since 1981, Memorial's inpatient cardiac catheterization program has been open only to those cardiologists who devote their entire practice to performing cardiac catheterizations. It is closed to cardiologists, like Dr. Horgan and Dr. Schiff, who are not full-time invasive cardiologists. While it has its disadvantages, closing the program in this manner is a policy decision that, on balance, tends to enhance, rather than compromise, the program's efficiency as well the quality of care received by the program's patients. Other cardiac catheterization laboratories in Broward County are "closed" like Memorial's laboratory. The majority of the county's cardiac catheterization laboratories, however, including those at Broward General, Florida Medical, North Broward Regional and Plantation General, have laboratories that are open to any qualified invasive cardiologist. In addition, the laboratories at Humana Bennett and Imperial Point will be "open" when they become operational. In 1984, Dr. Horgan applied for privileges at Memorial's cardiac catheterization laboratory. Following a hearing before the SBHD's Board of Commissioners, final action was taken by the board to deny Dr. Horgan's application. Dr. Horgan appealed the board's decision to the Fourth District Court of Appeal. The board's decision was affirmed by the appellate court. Thereafter, in early 1987, at the request of the administrator of Memorial, Dr. Horgan, as well as his partner Dr. Schiff, discussed with Memorial representatives the possibility of their performing cardiac catheterizations at Memorial. Although approval of such an arrangement was initially given by the hospital, it was later withdrawn after members of the hospital's cardiology department complained about the arrangement. At present, three full-time invasive cardiologists, Dr. Mario Sperber and his partners Dr. Barry Alter and Dr. Michael Mareke have privileges to perform cardiac catheterizations at Memorial. They charge $1-500 for a routine/diagnostic left and right heart catheterization. Included in this charge is a fee of $191 that is passed on to the radiologist who assists in the interpretation of the angiogram. Because it has an open heart surgery program, Memorial is also authorized to perform routine/non-emergency angioplasties. These angioplasties are performed in Memorial's cardiac catheterization laboratory. The total number of procedures done in this laboratory during fiscal year 1988 was 1,635, seven of which were performed on Medicaid patients and 176 of which were performed on an outpatient basis. The total number of procedures, including angioplasties, done in Memorial's cardiac catheterization laboratory during fiscal year 1989 increased slightly to 1,650. The number of those procedures performed on an outpatient basis, however, almost doubled. The ratio of routine/diagnostic inpatient cardiac catheterizations to routine/diagnostic outpatient cardiac cathetrizations performed at Memorial has decreased from about 6 to 1 to approximately 4 to A further decrease is likely in view of the technological improvements that have been made. During calendar year 1988, 1,238 routine/diagnostic cardiac catheterizations, 234 angioplasties, and 512 open heart surgeries were performed at Memorial. During the first six months of calendar year 1989, there ware 680 routine/diagnostic cardiac catheterizations, 168 angioplasties, and 241 open heart surgeries done at Memorial. Approximately 23% of the total number of inpatient procedures performed in Memorial's cardiac catheterization laboratory during the first six months of calendar year 1988 were done on patients who resided in PPGH's primary service area. From fiscal year 1988 to fiscal year 1989, the revenues over direct expenses of Memorial's cardiac catheterization laboratory increased slightly. PPGH's Cardiac Catheterization Laboratory In addition to the previously mentioned cardiac catheterization laboratories in Broward County, there is also a 695-square foot cardiac catheterization laboratory located inside the operating room suite at PPGH. Cardiac catheterizations are performed at this laboratory, however, exclusively on an outpatient basis. It is the only such outpatient laboratory in Broward County and it was the first of its kind in South Florida. The laboratory at PPGH is leased to a Florida limited partnership, University Heart Institute, Ltd (Partnership) which operates the outpatient cardiac catheterization program at the hospital. 10/ The leasing of a department of a hospital is not an uncommon practice in Broward County. Petitioner provides the space needed to operate the outpatient cardiac catheterization program at PPGH, as well as other support services, pursuant to a management agreement with the Partnership. In return for the space and services it provides, Petitioner receives a nominal sum of $1.00 a month from the Partnership. The management agreement has a termination provision which permits Petitioner to terminate the agreement if, at any time after the first twelve months, "the Partnership has a negative cash flow over a period of six or more calendar months." Petitioner is a 50% general partner of the Partnership. Accordingly, pursuant to generally accepted accounting principles, Petitioner must reflect: the financial activities of the Partnership on its balance sheet as though they were its own. The other general partner in the venture is University Hospital, Inc., (UHI), a corporation controlled by Dr. Horgan and Dr. Schiff and their partner, Dr. Dweck. Petitioner and UHI have equal control over the Partnership. There are also about 20 limited partners, all of whom are physicians. The profits and losses of the Partnership are divided as follows: 50% to Petitioner; 25% to UHI; and 25% to the limited partners. During the first year of operation of the cardiac catheterization laboratory, the Partnership earned a profit of approximately $100,000. PPGH's cardiac catheterization laboratory began operation on April 29, 1988, after the area of the hospital in which it is located received less than $50,000 worth of renovation work. Two-hundred and forty-eight outpatients received cardiac catheterizations at the laboratory in the first twelve months of its operation. During the thirteenth month of its operation, cardiac catheterizations were done on an additional 22 outpatients. Of the 270 outpatients who received cardiac catheterizations during the first thirteen months of the laboratory's operation, only one was a Medicaid patient. The overwhelming majority of outpatients who have received cardiac catheterizations at PPGH's laboratory have been from southwest Broward County and have been referred to the laboratory by Dr. Horgan and Dr. Schiff. Dr. Joseph S. Horgan, M.D., P.A., and Dr. Barry H. Schiff, M.D., P.A., are the exclusive providers of cardiac catheterization services at PPGH's laboratory pursuant to a professional services agreement they entered into with the Partnership. Under the agreement, only "physicians that are associated with, employed or otherwise engaged under contract with" these two Florida corporations run by Dr. Horgan and Dr. Schiff, respectively, may use the laboratory. Dr. Horgan and Dr. Schiff therefore have the sole authority to determine who may perform cardiac catheterizations at PPGH's laboratory. They also serve as co-medical directors of the laboratory and, in these capacities, are responsible for the development and implementation of all policies pertinent to the operation of the laboratory. To date, only Dr. Horgan and Dr. Schiff have performed cardiac catheterizations at the laboratory. A third invasive cardiologist, however, will soon join Dr. Horgan and Dr. Schiff in providing such services at the hospital. The hospital's laboratory will be closed to all other invasive cardiologists. Dr. Horgan and Dr. Schiff charge $950 for a routine/diagnostic right or left heart catheterization and $1,175 for a routine/diagnostic right and left heart catheterization. These charges are consistent with the provision of the professional services agreement with the Partnership which requires that their fees "be competitive with the usual and customary fees charged in the community for similar services." Under the agreement, Dr. Horgan and Dr. Schiff are entitled to keep the fees they receive for the professional services they render. Most of Drs. Horgan's and Schiff's patients receive a right and left heart catheterization. As a result, they average 1.8 procedures per patient and their average charge per patient is $1,100. Unlike the invasive cardiologists who practice at Memorial's laboratory, Dr. Horgan and Dr. Schiff do not utilize radiologists to assist them in interpreting the angiograms they produce. Dr. Horgan and Dr. Schiff have proven to be highly competent and skilled invasive cardiologists and they offer high quality care to the outpatients they catheterize at PPGH's laboratory. There have been no moralities at the laboratory and only a few outpatients have experienced complications after being catheterized. Furthermore, approximately 91% of the catheterizations performed at the laboratory reveal some abnormality. This high rate of abnormal catheterizations suggests that Dr. Horgan and Dr. Schiff are exercising sound judgment in referring outpatients to the laboratory, as opposed to making these referrals without justification. In the professional services agreement with the Partnership, Dr. Horgan and Dr. Schiff have agreed "not to provide outpatient cardiac catheterization and peripheral vascular procedure services within Broward or Dade Counties, Florida for a two (2) year period after the commencement of the term of this Agreement [at any facility other than PPGH] except that [they) shall continue to provide such services at Plantation General Hospital, Florida Medical Center, University of Miami, Jackson Memorial Hospital and Cedars Medical Center of Miami." Most of the cardiac catheterizations that Dr. Horgan and Dr. Schiff perform are done on an outpatient basis. They do cardiac catheterizations on an inpatient basis only if the patient's medical condition warrants. They perform these inpatient cardiac catheterizations at Florida Medical and Plantation General. Between May 1, 1988, and April 30, 1989, they performed inpatient cardiac catheterizations on about 125 to 150 patients in these two facilities. Florida Medical and Plantation General are each within a half hour driving time of PPGH. Florida Medical offers open heart surgery and routine/non-emergency angioplasty. Plantation General has received preliminary approval from Respondent to provide open heart surgery services. Dr. Horgan's and Dr. Schiff's patients receive good care at Florida Medical and Plantation General. In addition to performing these inpatient cardiac catheterizations at Florida Medical and Plantation-General, during the one year period ending April 30, 1989, they also referred approximately 160 patients to Memorial for cardiac catheterization services. If Petitioner had the certificate of need that it is seeking in the instant case, none of these referrals would have been made. When they are performing cardiac: catheterizations at PPGH, Dr. Horgan and Dr. Schiff are assisted by a highly qualified and well-trained support staff consisting of a catheterization technician and three Registered Nurse's, one of whom is the staff director. All four staff members are employees of Petitioner, not the Partnership. Their combined annual salaries total about $119,000. Collectively, they receive approximately another $36,000 from Petitioner in fringe benefits. The Partnership reimburses Petitioner for monies expended “0 compensate these staff members for the work they perform in PPGH's cardiac catheterization laboratory. These staff members, however, do not work full-time in the laboratory. They are also assigned to other-areas of the hospital, most notably the intensive care unit. The majority of cardiac catheterization laboratories in Broward and Dade Counties have support staffs similar in size to the support staff assigned to PPGH's laboratory. The equipment in PPGH's cardiac catheterization laboratory was purchased by the Partnership from Dr. Horgan at Dr. Horgan's cost. Dr. Horgan paid approximately $250,000 for the equipment when he purchased it from EWA Industries, Inc., shortly before the opening of the laboratory. A portion of the money Dr. Horgan used to pay for the equipment came from a loan he received from Petitioner. At the time of its original purchase, the equipment was, for the most part, newly reconditioned. The equipment is not "state-of-the-art." It lacks certain features that are available on other equipment, such as digital/computer analysis capability. These features, however, are of relatively insignificant value. Despite lacking these features, the equipment in PPGH's outpatient cardiac catheterization laboratory is more than adequate, as evidenced by the high quality of Dr. Horgan's and Dr. Schiff's angiograms. Furthermore, although the equipment is made of parts manufactured by different manufacturers, obtaining parts for repair is not a major problem. They are readily available from EWA, which is based in Miami. In addition, there are two distributors and service centers located in Broward County from whom replacement parts may be obtained. Although PPGH has the medical and support staff and the equipment, as well as the ancillary services, necessary to provide routine/diagnostic cardiac catheterization services to inpatients at the hospital, it has not been authorized to do so by Respondent. PPGH's inability to offer these inpatient services places it at a competitive disadvantage relative to those facilities in the county that are authorized to provide these services. For instance, it makes it more difficult for PPGH to compete for contracts with health maintenance organizations and other third party payers. More significantly, PPGH's competitors offering inpatient cardiac catheterization services are able to capture patient revenues that would otherwise be received by PPGH if it were able to provide such services. PPGH's situation, however, is not unique. The majority of hospitals in Broward County are not authorized to offer inpatient cardiac catheterization services. Moreover, even though its competitive position would be enhanced if it were able to offer such services, its inability to do so does net threaten its survival as a health care facility in the Broward County market. If an inpatient at PPGH needs a routine/diagnostic cardiac catheterization that, because of the patient's unstable medical condition, cannot be performed on an outpatient basis, the patient must be transferred to another facility that is authorized to provide inpatient cardiac catheterization services. During fiscal year 1988, PPGH transferred 106 such patients to other facilities to receive inpatient cardiac catheterizations. Even if PPGH had been able to provide inpatient cardiac catheterization services to these patients, some of them would have had to have been ultimately transferred to another facility in any event to receive routine/non- emergency angioplasty or open heart surgery. Patients transferred from PPGH to another facility to receive cardiac catheterizations on an inpatient basis are generally transported by ambulance. A round-trip ambulance ride from PPGH typically costs between $500 and $700. In addition to increasing these patients' costs, such transfers may also cause them to experience additional stress. Clearly, in hindsight, it can be said that these transferred patients would have been better off if they had been initially admitted to a facility with inpatient cardiac catheterization capability instead of PPGH. Unfortunately, however, it is often difficult to determine at the time of admission whether a patient will need cardiac catheterization services. Furthermore, there are occasions where a patient arrives at PPGH's emergency room in such a medically unstable condition that he must wait at the hospital until his condition improves before he can be transported to another facility. It is not uncommon for Dr. Horgan's and Dr. Schiff's patients who need to be transferred from PPGH to receive an inpatient cardiac catheterization to have to wait two or three days before there is an opening in the cardiac catheterization laboratory schedule at Florida Medical or Plantation General that is convenient to them and their physician. During this time, these patients remain at PPGH, thus increasing the length of their stay there and they undergo expensive diagnostic testing designed to provide information that may be useful in managing these patients until they are able to be transferred and catheterized. While such scheduling problems have been experienced in the past, the situation should improve when the laboratories at Imperial Point and Humana Bennett become operational. Furthermore, there has been no Chowing that the patients who had to wait two or three or more days to be transferred from PPGH to Florida Medical or Plantation General could not have received such services at another existing provided, such as Memorial, had they so desired. Patients of Dr. Horgan and Dr. Schiff have died at PPGH while waiting to be transferred to another facility to receive an inpatient cardiac catheterization. A significant number of these patients could have survived had they received an emergency cardiac catheterization and angioplasty. Although the necessary equipment and staff were available at PPGH to perform these procedures, these procedures were nonetheless not performed. Because these were emergency situations where the 34 patients' lives were threatened, PPGH's lack of a certificate of need did not preclude Dr. Horgan and Dr. Schiff from performing these procedures at PPGH. Petitioner's Application for a Certificate of Need Approximately five months after the first outpatient cardiac catheterization procedure was performed at PPGH, Petitioner submitted an application for a certificate of need to provide inpatient cardiac catheterization services at the facility. Petitioner proposes to use, in providing these services, the same laboratory, equipment and staff it now uses for its outpatient program. The application estimates that the total cost of the project will be only $10,000, which represents "the legal and consulting fees associated with the Certificate of Need Application." There will be no financing, refinancing, professional services, construction or equipment costs, according to the application. In estimating the total cost of the project, Petitioner does not include the costs that were incurred to commence operation of PPGH's outpatient cardiac catheterization program, notwithstanding that these costs were incurred in contemplation of the filing of the instant application. 11/ The application also contains an estimate of revenues and expenses for the first two years of operation of the proposed project. The estimate includes projected revenues and expenses attributable to both the inpatient and outpatient operations of the laboratory. Petitioner projects in its application that 532 patients (320 inpatients and 212 outpatients) will visit PPGH's cardiac catheterization laboratory the first year it is able to offer inpatient services 12/ and that 592 patients (355 inpatients and 237 outpatients) will visit the laboratory the following year. Given Dr. Horgan's and Dr. Schiff's track record 13/ and reputation and the financial interest they have in the successful operation of the laboratory, 14/ it is not unreasonable to believe that they will attract these projected numbers of patients to the laboratory. Moreover, they, along with the third invasive cardiologist who will soon join them, should easily b able to handle such patient case loads at the laboratory during reasonable hours of operation with the laboratory's existing support staff and equipment. In projecting the gross revenues that will be generated by the inpatients who visit the laboratory, Petitioner assumes that these inpatients will be charged an average of $4,935 per patient the first year and $5,176 per patient the second year. These charges are consistent with the average charges of existing providers in the county. With respect to outpatients, Petitioner assumes that they will be charged on the average $2,300 per patient the first year and $2,415 per patient the second year. These charges are consistent with the laboratory's current average charge per outpatient. In view of the foregoing, Petitioner's projections in its application regarding gross revenues are reasonable. Of the patients that will visit the laboratory during the first two years of the inpatient program, Petitioner projects in its application that 2% will be Medicaid recipients and 3% will receive charity or free care. In view of PPGH's past performance in these areas, it appears unlikely that these percentages will be realized.15/ Accordingly, Petitioner's projections in its application regarding the deductions from gross revenues for Medicaid contractual allowances and charity care are unreasonably high. The projections made by Petitioner regarding direct and indirect expenses, in the aggregate, are not unreasonably low, notwithstanding that the application's statement of projected revenues does not make specific reference to certain expense items relating to inpatient care, such as nursing care and food supply costs. If anything, Petitioner has overestimated total expenses.16/ Providing only outpatient services, which generate less net income per patient than do inpatient services, the laboratory at PPGH returned a profit of approximately $100,000 in its first year of operation. The profitability of the laboratory will likely increase, as Petitioner projects, if it is able to offer inpatient, in addition to outpatient, services. In both the short-term and the long-term, Petitioner' proposal to provide such services is financially feasible. As evidenced by the attachments to Petitioner's application, as supplemented in response to Respondent's October 13, 1988, omissions letter, PPGH has transfer agreements with St. Francis Hospital and Florida Medical, both of which are within thirty minutes driving time of PPGH and have open heart surgery capability. Potential Impact of Granting the Application While Petitioner will benefit if its application is granted, the same cannot be said for existing providers of 16 For example, Petitioner allocates the entire salary of each of the four support staff members to the cardiac catheterization laboratory, even though these employees also work in other parts of the hospital. 38 inpatient cardiac catheterization services in Broward County. They will have to contend with another effective competitor seeking a share of the already highly competitive Broward County inpatient cardiac catheterization market. Collectively, the existing facilities will lose inpatient cardiac catheterization patients and net revenues they otherwise would have had if the laboratory at PPGH did not offer inpatient services.17/ Memorial will be among those `facilities suffering the greatest such losses. While it is difficult to predict the precise extent of these losses, they no doubt will be significant and therefore adversely impact Memorial's ability to provide charity care. At the very least, Memorial will lose to PPGH the inpatient cardiac catheterization patients that Dr. Horgan and Dr. Schiff now refer to Memorial's laboratory and the net revenues these patients generate. As previously mentioned, Dr. Horgan and Dr. Schiff referred 160 patients to Memorial's laboratory during the year ending April 30, 1989.96. Routine/non-emergency angioplasties and open heart surgery will not be performed at PPGH if Petitioner's application is granted. Accordingly, Memorial will not lose to PPGH any patients requiring these services as a result of the granting of the application. Although patients at PPGH who require routine/diagnostic inpatient cardiac catheterization services will not have to be transferred to another facility to receive inpatient cardiac catheterizations if the application is granted, it will still be necessary to transfer patients needing routine/non-emergency angioplasty and open heart surgery. With the advent of an inpatient cardiac catheterization program at PPGH, the hospital will attract, in far greater numbers than it does presently, individuals who require, not only inpatient cardiac catheterization services, but also routine/non emergency angioplasty or open heart surgery and who therefore must be transferred to another facility. Therefore, there likely will be more, rather than fewer, total transfers of patients than there would be if PPGH did not offer inpatient cardiac catheterization services.18/ Although cardiac catheterization support staff are generally difficult to recruit and retain, the granting of the instant application will not make it any more difficult for existing providers in Broward County to attract and keep such staff members inasmuch as Petitioner already has a support staff assigned to its cardiac catheterization laboratory at PPGH and it does not intend to expand its staff if it is given authorization to provide services at the laboratory on an inpatient basis. Regardless of whether Petitioner's application is granted, the adult population of Broward County requiring inpatient cardiac catheterization services will be able to receive such services from existing and approved providers in the county, which have the collective capacity to meet the population's demand for these services. It is more efficient to make greater use of the current collective capacity of these providers than to add to the county's overall capacity to serve cardiac catheterization inpatients. Furthermore, there is no reason to believe that PPGH will provide quality of care appreciably different from that offered by any existing or approved inpatient cardiac catheterization provider. Even if Petitioner's application is denied, patients of Dr. Horgan and Dr. Schiff who live in the area surrounding PPGH will still be able to receive routine/diagnostic cardiac catheterizations from these two invasive cardiologists, albeit at a facility that is slightly further from their homes and Dr. Horgan's and Dr. Schiff's offices than is PPGH. If an inpatient cardiac catheterization program is established at PPGH, the program's charges will be comparable to those of its competitors. They will neither be excessive, nor unusually low, in relation to those of other programs. Accordingly, approval of the program will have no significant impact on costs and patient charges. Florida Administrative Code Rule 10-5.O11(1) Respondent has adopted procedures governing its review of applications, such as Petitioner's, for certificates of need authorizing the establishment of an inpatient cardiac catheterization program. These procedures are found in Florida Administrative Code Rule 10- 5.011(1)(e).41 Respondent published notice in the April 22, 1988, edition of Florida Administrative Weekly of the amendments it proposed to make to the rule as it existed at that time. (The version of the rule that Respondent sought to amend Bill be referred to hereinafter as the "old rule.") These proposed rule amendments were the subject of rule challenge petitions filed with the Division of Administrative Hearings. The petitions were voluntarily dismissed after the challengers and Respondent negotiated a settlement, pursuant to which Respondent made certain modifications to the proposed amendments to Rule 10- 5011(1)(e). Among the modifications was the addition of the following language relating to the intent of the rule: It is the intent of the department to allocate the projected growth in the number of cardiac catheterization admissions to new providers regardless of the ability of existing providers to absorb the projected need. In addition, the prefatory language of the provision relating to need determination was modified to read as follows: In order to assure patient safety and staff efficiency, to foster competition among providers, and to achieve maximum economic use of existing resources, the following criteria shall be considered in the approval of Certificate of Need applications for new adult cardiac catheterization programs. The minimum annual projected net program volume need for the establishment of a new adult cardiac catheterization program shall be at or exceed 300 admissions for the service planning area. Applicants shall demonstrate that they will be able to reach an annual program volume of 300 admissions within 2 years after the program becomes operational. Notice of these changes and the other modifications that were made to the April 22, 1988, proposed rule amendments was published in the July 29, 1988, edition of Florida Administrative Weekly. Eleven days earlier, these proposed rule amendments, as modified, (hereinafter referred to as the "new rule") had been filed with the Secretary of State. In August 1988, the new rule was challenged on the ground that Respondent had not complied with the procedural requirements of Section 120.54, Florida Statutes, in making changes to the proposed rule amendments originally published on April 22, 1988.19/ The hearing officer assigned to these cases treated the rule challenge petitions as having been filed pursuant to Section 120.54, Florida Statutes, rather than Section 120.56, Florida Statutes, notwithstanding that the new rule had been filed with the Secretary of State more than 20 days prior to the filing of any of these petitions. Following a hearing on the matter, the hearing officer, on June 29, 1989, entered a final order holding that "the amendments to paragraph 2 (h), paragraph 3(c) III, and paragraph 6(a) and the amendment regarding the definition of `inpatient visit' are an invalid exercise of delegated legislative authority, because they were adopted without adhering to the proper procedures for adoption delineated in Section 120.54, Florida Statutes." On or about July 27, 1989, Respondent appealed the hearing officer's final order to the First District Court of Appeal. The appeal is still pending. Since August, 1988, Respondent has been applying the new rule in evaluating inpatient cardiac catheterization certificate of need applications. It applied the new rule in making its preliminary determination to deny Petitioner's application, which was in the first batching cycle after the effective date of the new rule.20/ Although the packet of application materials Respondent sent to Petitioner did not contain any express indication that the new rule would be applied in evaluating its application, Petitioner conceded in its completed application that it had "been informed [through other means) by [Respondent) that the [new rule would] likely be used in evaluating this CON application." In view of this advisement, Petitioner addressed in its application the various provisions of the new rule as they related to its application. The State Health Plan Issues relating to cardiac catheterization are discussed in the 1985-1987 State Health Plan. Among such issues is that of minimum case loads. Regarding this issue, the plan contains the following discussion: Up until 1977 the literature showed a consensus on the need for minimum case loads. Since 1977, expert opinion has become more divided on the issue with many provider representatives advocating that the standards now reflected in federal and many state laws are no longer necessary and justifiable. However, a general opinion among the medical profession is that a certain minimum number case load is essential to assure quality results. A number of complications can occur in catheterization programs if all personnel are not experienced and active. Studies may have to be repeated because inadequate data were received. This could result in unnecessary exposure of patients to radiation and hazards caused by the injection of of engaged contrast materials and the manipulation catheters. The established federal and state minimum standards of 300 procedures annually for adult and 150 for pediatric cardiac catheterization laboratories are believed to be adequate to maintain the expertise of the professional team in this highly specialized service. The plan also addresses the "concern surrounding. . . the physical proximity and the relationship between the [cardiac catheterization] diagnostic facility and a cardiovascular surgical program." It notes that the "Inter-society Commission on Heart Disease Resources (ISCHDR) stresses the need for a very close relationship between the two services;" "national health planning guidelines support this emphasis through a recommendation that no new cardiac catheterization unit be opened in any facility not providing open heart surgery;" and the "Florida rule requires that cardiac catheterization laboratories where coronary angioplasty (e.g., plastic surgery upon blood vessels) is performed must be located in health care facilities which also provide open heart surgery." One of the goals of the State Health Plan is to ensure the appropriate availability of cardiac: catheterization services at a reasonable cost. An objective of the plan is to "maintain an average of 600 cardiac catheterization procedures per laboratory in each district through 1990." The project proposed by Petitioner in the instant case conforms with this goal and objective to the extent that the services offered at PPGH will be competitively priced and that it is likely that the laboratory at PPGH will average at least 600 procedures annually. Local Health Plan The 1988 District X Comprehensive Health Plan contains the following analysis and recommendation with respect to the provision of cardiac catheterization services in Broward County: AVAILABILITY AND ACCESSIBILITY The hospitals offering cardiac catheterization services are well located throughout the County for geographic accessibility. Financial barriers continue to raise questions about accessibility of these services to the poor. QUALITY All of the facilities offering cardiac catheterizations in Broward County are providing in excess of the minimum number of procedures recommended.21/ RECOMMENDATION 1 Applicants for Certificate of Need approval should document either their intention and/or experience in meeting or exceeding the standards promulgated by the appropriate national accreditation body and by HRS. RECOMMENDATION 2 Applicants proposing to initiate or expand cardiac catheterization must make those services available to all segments of the population regardless of the ability to pay. RECOMMENDATION 3 Outpatient cardiac catheterization services should continue to be regulated under the Certificate of Need program. Petitioner has demonstrated that the inpatient cardiac catheterization program it proposes to establish at PPGH will meet or exceed the accreditation standards referred to in Recommendation 1 of the plan. Petitioner's stated policy is to make the services of PPGH available to all segments of the population regardless of their ability to pay. Petitioner's past performance in the area of indigent care suggests, however, that Petitioner may not be firmly committed to implementing this policy. The suggestion is also made in the plan that "[a)11 else being equal applications to establish new cardiac catheterization laboratories in Broward County in facilities with existing open heart surgical capability will receive priority - when being considered for certificates of need."
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Respondent enter a final order denying Petitioner's application for a certificate of need to establish an inpatient cardiac catheterization program at Pembroke Pines General Hospital. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 12th day of January, 1990. Administrative Hearings Parkway 32399-1550 of the Administrative Hearings January, 1990. STUART M. LERNER Hearing Officer Division of The DeSoto Building 1230 Apalachee Tallahassee, Florida (904) 488-9675 Filed with the Clerk Division of this 12th day of
The Issue The issues for determination are whether Petitioners should be awarded certificates of need authorizing the establishment of inpatient cardiac catheterization services at their respective facilities. As a result of stipulations of the parties, matters for consideration with regard to award of those certificates of need primarily involve a determination as to whether Petitioners' applications meet rule criteria relating to need (numeric and non-numeric), provision of a written protocol or transfer agreement, and utilization standards.
Findings Of Fact The legislature has deregulated the establishment of outpatient cardiac catheterization laboratories (cardiac cath labs), but a certificate of need (CON) is required before a hospital can operate an inpatient cardiac cath lab. The Department of Health and Rehabilitative Services (HRS) has not approved, as the result of initial agency action, a new cardiac cath lab CON in HRS' Service District Five since 1977. The Parties Palms Petitioner NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital (Palms), is a 310 bed acute care hospital located in Pasadena, Florida. Pasadena is geographically located in the southern portion of Pinellas County, Florida. Pasadena, though geographically small, is one of the most densely populated cities in the United States. Within one half mile of Palms are 10,000 people of whom 60 percent are 65 years of age or older. Palms is a full service hospital with an extensive range of medical and surgical services, including a 24 hour emergency room; a coronary care intensive care unit; a surgical intensive care unit; and a respiratory intensive care unit. Palms also offers a full spectrum of non-invasive cardiology services including electrocardiography, echocardiagraphy, nuclear medicine, stress testing and 24 hour monitoring. Palms has five cardiologists, four of them invasive cardiologists, on its active staff and five cardiologists on its courtesy staff. The four invasive cardiologists would utilize a cardiac cath lab or program at Palms. Palms is situated on 13 acres with a main hospital complex that encompasses over 400,000 square feet. There are over 300 physicians on Palms' medical staff, representing virtually every medical specialty. The hospital is accredited by the Joint Commission on Accreditation of Healthcare Organizations. HRS Service District Number Five, which encompasses Palms location, is composed of Pinellas and Pasco Counties. The service district is heavily populated by persons age 65 and over; the persons who, nationally, have the highest rate of cardiac catheterization admissions per 1,000 persons. The rate for deaths resulting from major cardiovascular diseases and heart disease in Pinellas County is 150 percent above the rate for such deaths within the entire State of Florida. Notably, thirty percent of the approximately 200,000 persons within Palms' primary service area are age 65 or older. Further, sixty-eight percent of Palms' patients are medicare patients with an average age of 77 to 78 years. The average age of the medicare population at other hospitals in Pinellas County ranges from 72 to 73 years of age. During 1987 and 1988, 516 inpatients at Palms required cardiac cath services (238 in 1987 and 278 in 1988). A diagnostic cardiac catheterization (cardiac cath) is an invasive medical operation in which a catheter is passed via vascular access in the arm or leg into the heart for purposes of diagnosing cardiovascular diseases or measuring blood pressure flow. Significant advances in the technology of cardiac catheterization permits usage of cardiac caths in the emergency treatment of heart attacks through injection of thrombolytic agents directly into the blood clot causing the heart attack. While these medications can be given intravenously, such an option is not available in the case of elderly patients, who run a higher risk of internal bleeding as a side effect of the drug, and patients who delay seeking medical attention after the onset of a heart attack. Approximately 30 percent of the patients arriving at Palms' emergency room have a cardiac related problem. The number of these patients who are candidates for intravenous injection of thrombolytic agents is small. Approval of Palms' application would significantly improve the quality of care of these patients by permitting the injection of thrombolytic agents directly into the blood clot causing the heart attack, a permitted medical procedure in the process of administering a diagnostic cardiac cath. After the onset of a heart attack, there exists a six hour window during which potentially life-saving drugs can be administered. Due to the possible side effects of these drugs, cardiologists must often perform a cardiac cath to diagnose the ailment prior to administering the drugs. Consequently, patients who present themselves for treatment at Palms several hours after the onset of heart attack symptoms may be precluded from receiving these drugs in view of the lack of a cardiac cath lab or program at Palms. Mease Petitioner Mease Health Care, Inc., (Mease) owns and operates Mease Hospital Dunedin and Mease Hospital Countryside. Mease also operates clinics located in New Port Richey, Palm Harbor, Countryside and Dunedin, Florida. These clinics serve a combined 350,000 patients per year. Mease Hospital Dunedin is a 278 bed facility located in Dunedin, Florida. The Mease Dunedin Clinic houses approximately 60 physicians. Mease Countryside Hospital, opened in 1985, consists of 100 beds and is located approximately eight miles from Mease Hospital Dunedin. Approximately 30 physicians have offices at the Mease Countryside Clinic. Most physicians practicing in the clinics have hospital privileges only at the Mease facilities. Another 100 physicians on the staff of these two hospitals have practices in the surrounding area and admit patients to the Mease facilities. Physicians housed in the Mease Countryside and Dunedin Clinics provide a significant source of patient referrals for the two hospitals, since most physicians practicing in the two clinics have hospital privileges only at the Mease facilities. Ninety percent of patients hospitalized by physicians in the two clinics are hospitalized in Mease Dunedin or Mease Countryside hospital facilities. Mease currently operates a cardiac cath lab at its Mease Dunedin campus on an outpatient basis. This existing facility could be utilized by Mease for inpatient catheterization. The existing outpatient cath lab is outfitted with a Phillips Digital Cardiac Imaging System, the most medically advanced equipment of this type in Pinellas County. Mease's current outpatient cath lab meets all applicable standards for the operation of an inpatient cath lab and is adequately staffed to perform 600 cardiac caths per year. There is no difference in the physical layout of an inpatient cath lab versus an outpatient cath lab. Mease also provides diagnostic services such as echocardiography and nuclear cardiology. Growth in cardiology services experienced by Mease is consistent with the provision of these additional services. Morton Plant Morton F. Hospital, Inc., (Morton Plant) is a not-for-profit 740 bed general acute care hospital spread among twelve buildings on a 36 acre campus in Clearwater, Florida, approximately three or four miles from Mease. Morton Plant offers a wide range of health care services, including cardiac cath, open heart surgery, a cardiac rehabilitation program, post-cardiac surgery recovery areas and intensive coronary care units. HRS HRS is the state agency which is responsible for administering Sections 381.701 through 381.715, Florida Statutes, the "Health Facility and Services Development Act", under which applications for Certificates of Need (CON) are filed, reviewed, and either granted or denied by that department. Petitioners' Applications The applications of Mease and Palms, seeking a CON to implement inpatient cardiac cath services were filed with HRS on September 28, 1988. After initial review, HRS sent omissions letters to the applicants on October 13, 1988. Responses from Mease and Palms were made on November 11, 1988, and HRS denied both applications on January 12, 1989. Both Petitioners timely requested formal hearings regarding the denials. "Old Rule Versus New Rule" HRS has adopted procedures governing its review of applications, such as those of the petitioners, for CONs authorizing the establishment of inpatient cardiac catheterization programs. These procedures include HRS' numeric methodology for estimating need for cardiac cath labs or programs. This methodology has traditionally been found in Florida Administrative Code Rule 10- 5.011(1)(e). On April 22, 1988, HRS published a proposed "new" rule containing a new methodology for estimating cardiac cath program need. A key component of the new rule is the use of "admissions" to a cardiac cath program, as opposed to the old rule's use of "procedures", to determine numeric need for additional CONs. The new rule was timely challenged by two parties in proceedings before the Division Of Administrative Hearings. However, the matters in dispute between HRS and the challengers were resolved and the proceedings voluntarily dismissed. Subsequently, HRS filed the new rule as revised with the Secretary of State's office and published the new rule on July 29, 1988. The new revised rule was challenged within 21 days of publication pursuant to Section 120.54, Florida Statutes, by three new parties in Division Of Administrative Hearings Cases numbered 88-3970R, 88-4018R and 88-4019R. A Final Order eventually issued in those cases finding the rule challenges to have been timely brought pursuant to Section 120.54, Florida Statutes, and finding the revisions to be an invalid exercise of delegated legislative authority as a result of noncompliance by HRS with requirements of Section 120.54, Florida Statutes. Florida Medical Center v. DHRS, 11 FALR 3904 (Final Order issued June 29, 1989). The Final Order in Florida Medical Center has been appealed. The parties to this proceeding were permitted to present evidence of need for the respective applications under both the new and old versions of Rule 10- 5.011(1)(e) Florida Administrative Code, although all the parties were informed by order dated September 20, 1989, that the undersigned intended to apply those provisions of the administrative rule criteria in existence prior to the successful challenge to the proposed amendments treated in the Final Order issued in Florida Medical Center. Stipulations Palms and Mease stipulate that each other's application meets the quality of care criteria set forth in Section 381.705(1)(c), Florida Statutes. Morton Plant disputes only Mease's ability to insure quality of care through sufficient utilization. HRS stipulates that both applications meet quality of care criteria with the sole exception that neither applicant included a "written protocol" as noted on page II of the State Agency Action Report (SAAR). The parties stipulate that the requirement for a written protocol exists within the "new" version of the cardiac cath rule and not in the original version of the rule. The parties further stipulate that the terms "written protocol" and "transfer agreement" are not defined in either version of the cardiac cath rule. The parties stipulate that criteria contained in Section 381.705(1)(e), Florida Statutes, (relating to operation of joint, cooperative or shared health care resources) are not applicable to either of the applications in this case. HRS stipulates that criteria contained in Section 381.705(1)(f), Florida Statutes, (regarding the need within the service district of an applicant for special equipment and services not reasonably accessible within adjoining areas) are not applicable to either the Palms or Mease applications. Morton Plant contends these criteria are in issue with regard to Mease's application. All parties stipulate that criteria contained in Section 381.705(1)(g), Florida Statutes, (relating to need for research and educational facilities in conjunction with the applications) are not in issue. Criteria relating to manpower and resources contained in Section 381.705(1)(h), Florida Statutes, are not deemed applicable to the applications by HRS or the Petitioners. Morton Plant contends that these criteria are in issue with regard to the availability of necessary health manpower resources insofar as the Mease application is concerned. Petitioners agree that their applications meet immediate and long term financial feasibility requirements of Section 381.705(1)(i), Florida Statutes. HRS also joins in that agreement, provided costs associated with the cardiac cath lab director at the lab proposed by Palms does not affect the financial feasibility of Palms' project. Morton Plant contests the long term feasibility of Mease's project. All parties agree that criteria contained in Section 381.705(1)(m), Florida Statutes, relating to the costs and methods of proposed construction and equipment acquisition, are met by Palms' application and are not applicable to Mease's application. Criteria contained in Section 381.705(1)(n), Florida Statutes, relating to provision of services to Medicare and medically indigent patients, are met by the Petitioners according to HRS. The other parties contend these criteria are in issue. The parties agree that requirements of Section 381.705(2)(c) and (e), Florida Statutes, (relating to new construction alternatives and proposals for additional nursing bed capacity) are not applicable to the applications at issue in this case. The parties agree that the licensure and accreditation of the parties are not in issue and need not be proven. HRS stipulates that Palms' application and Mease's application satisfy all rule criteria under both the old and new versions of the cardiac cath rule with exception of those criteria relating to need (numeric and non-numeric), a written protocol or transfer agreement, and utilization standards set forth in the rule. Availability of existing services Palms Palms' patients requiring the services of a cardiac cath lab must be transferred by ambulance to other facilities where such service is available. Most of these transfers are made to All Children's Hospital (All Children's) in St. Petersburg, Florida, the nearest facility with cardiac cath services. Cath procedures are performed at that facility by cardiologists possessing staff privileges at Palms, as well as All Children's. On average, the transfer of a patient from Palms to All Children's takes an average of one and a half to two hours, although the actual automobile travel time is less than an hour. After a determination that a cardiac cath is needed, arrangements for the transfer involve negotiating an available time at All Children's and preparing the patient for transfer. Patient medical records are copied, consent forms signed, explanations given to patients and intravenous administration of fluids is begun. Because of their unstable condition, specialized nurses, capable of interpreting cardiac monitors and administering drugs associated with cardiac problems, must accompany these cardiac patients in the ambulance. All Children's ambulance is often not available for transfers from Palms. In those instances, Palms must provide an ambulance and nurse. If the need for such a transfer occurs in the middle of a nursing shift, Palms must pull a nurse from another unit in the hospital to accompany the patient. If plans for the transfer are known in advance of the beginning of a nursing shift, additional nursing staff is arranged for that shift. Some patients experience difficulties in the course of such a transfer. The number of intravenous applications (IVs) attached to a patient is limited during an ambulance transfer, consequently some patients must have some IVs removed. During transportation of the patient, IVs are often shaken loose, medications become unbalanced, other medical appliances become disconnected and some patients experience blood loss as well as a loss of blood pressure. Some patients have required blood transfusions upon arrival at the cardiac cath facilities. In view of the associated difficulties, some cardiovascular patients at Palms are simply too sick to undergo a transfer to another facility where cardiac cath services are available. If a cardiac cath lab or program existed at Palms, an estimated $68,000 in transportation charges would be saved in the first year alone. All Children's, a pediatric hospital, is the only hospital in the State of Florida that performs cardiac cath procedures on both adults and children in the same lab. Since All Children's is a tertiary, regional referral center, more than two thirds of the pediatric diagnostic cardiac caths are performed on nonresidents of the service district. Over 55 percent of all diagnostic cardiac caths at All Children's are performed on nonresidents of the district. Angioplasty is a therapeutic, as opposed to diagnostic, cardiac cath procedure. Such cardiac caths can only be performed at facilities providing open heart surgery services. All Children's is the only hospital in South Pinellas County able to perform angioplasty. All Children's has two cardiac cath labs. Both are heavily utilized. From July 1987 through June 1988, there were 1,268 cardiac admissions to the two labs. All Children's historic rate of 2.12 cardiac cath procedures per admission equates to 2,688 procedures performed on these patients. While this number of "procedures" is in excess of the minimum 600 "procedures" per lab standard applicable under the numeric need methodology used by HRS prior to publication of the proposed admission-based need determination formula, different definitions of the term "procedure" are ascribed to the term in accordance with the context of its usage. Under HRS' proposed admission-based need determination formula, there were 1,099 adult cardiac cath admissions to All Children's program from April 1987 through March 1988. This number of admissions is substantially in excess of the 300 admissions per program standard required for program operation under the proposed new rule policy. Currently 15 cardiologists normally use All Children's two labs on a regular basis. Three of these cardiologists deal with pediatric patients. A fourth pediatric cardiologist is being recruited by All Children's. This additional cardiologist will perform electrophysiology, a cardiac cath procedure involving use of multiple catheters. Electrophysiology studies are extremely time-consuming and this additional cardiologist's lab usage will contribute to present lab access difficulty. Presently, All Children's has a "block time" schedule for the different cardiologists on the active staff at the hospital. Each cardiologist has a scheduled block of time for usage of the cardiac cath labs. As a result, a cardiologist can not have a patient, admitted during the previous night, catheterized on a particular day unless that physician's block of time happens to fall on that day. This process effectively eliminates a majority of time during the week when a cardiologist may schedule catheterization for a patient. Pediatric cardiac caths require more lab time than adult cardiac caths and All Children's gives preference in scheduling caths to pediatric patients. Further, All Children's facilities are blocked all day on Mondays for pediatric patients. It is not unusual, in view of the preference given pediatric patients and emergency cath requirements, for adult cardiac cath patients to be "bumped" from the schedule after their arrival at All Children's. The length of hospitalization of adult cardiac cath patients therefore increases, along with a substantial increase in the patient's medical care costs. The decision of All Children's to block both of the hospital's labs for pediatric caths each Monday has resulted in the postponement of cardiac caths for Palms' patients until Monday night or Tuesday. The result is that weekend patients from Palms have a lengthened hospital stay, assuming the patients are stable and can endure the sometimes two or three days wait for a catheterization study. Palms' cardiologists also experience difficulty placing their patients after catheterization at All Children's. Since All Children's is a pediatric hospital, there are no adult beds with the exception of eight intensive care beds which are usually filled by open heart and other surgical patients. As a result of the lack of available beds at All Children's, alternatives are to transfer Palms' patients to Bayfront Medical Center, a facility adjoining All Children's, following catheterization, or return them by ambulance to Palms. This latter alternative is often followed since Bayfront Medical Center is frequently without available beds. Since a significant percentage of diagnostic cardiac cath patients must later undergo a therapeutic catheterization, Palms' patients, who are returned to Palms after diagnostic catheterization, must be transferred back to All Children's for additional cath work. In one instance, a Palms' inpatient was transferred a total of nine times. The difficulty of access to the cardiac cath labs at All Children's is particularly acute during the first quarter of each year when many elderly people come to the St. Petersburg area to enjoy the warmer climate. Significant health care risks to delaying diagnostic cardiac caths include instances at Palms where patients with unstable angina have suffered large myocardial infarctions before their transfer to another facility's cardiac cath lab. These risks are enhanced for Palms' cardiac inpatients, many of whom have multiple health problems. Palms' inpatients have a higher comorbidity index than all other hospitals in the service district. The approximately 30 primary care physicians on the active staff of Palms are not on the active staff of any other hospital. As a result, they are unable to follow their patients and continue treating their other ailments when those patients are transferred to another facility for cardiac catheterization work. If these primary care physicians could follow their patients, the quality of care would be improved. In addition to difficulty obtaining timely access to All Children's cath labs, the volume of work performed at the lab has resulted in cardiac cath technicians requesting, on at least one occasion, that a catheterization be stopped due to the fatigue of the technicians. Approval of additional inpatient diagnostic cath labs or programs in the area would reduce or eliminate the occasions of such stoppage in the future. Cardiac patients admitted to hospitals in the service district which do not have inpatient cardiac cath services wait, on the average, 1.5 days longer in the hospital before they receive catheterization than do those patients admitted to hospitals in the district providing such services. As a result, patients undergoing cardiac cath procedures and staying in a hospital without inpatient cardiac lab services average a stay which is 1.6 days longer than patients staying in a hospital with inpatient cath services. If Palms were able to provide inpatient cath services, an average additional charge of $1,800 per patient undergoing cardiac cath would be eliminated. This equates to a total savings of $200,000 to $300,000 in medical costs from the reduction of the average length of stay as the result of an inpatient program at Palms. Since hospitalized patients are at increased risk for developing nosocomial illness, diseases or infections contracted during a hospital stay, reducing the length of stay also lessens the patient's opportunity to develop such an illness. Approval of the Palms application, while temporarily lowering the number of diagnostic cardiac caths performed at All Children's, would eventually result in an increase in the number of cardiac caths performed at All Children's. This is particularly applicable to the increase in therapeutic caths that would occur at All Children's as the result of establishment of a diagnostic inpatient cardiac cath lab at Palms. The elderly and seasonal population which would be served by an inpatient cath lab at Palms would result in increased referrals from Palms to All Children's for therapeutic cath services. Two other hospitals in South Pinellas County operate inpatient diagnostic cardiac cath labs, St. Anthony's Hospital (St. Anthony's) and Humana Hospital Northside (Humana). Since neither hospital provides therapeutic cath services, a patient transferred there from Palms for the purpose of a diagnostic cath must later be transferred a second time to All Children's in the event therapeutic services are required. The diagnostic cardiac cath lab at St. Anthony's is owned and operated by the Rogers Heart Foundation, a private non- profit foundation. The emphasis at the Foundation on cardiac research has led to a very low use rate in its cath lab. Additionally, staff privileges are limited to those cardiologists willing to serve on rotation as an emergency room physician. As a result of the reluctance of cardiologists, who have limited their practice to cardiology, to meet the emergency room duty requirement, the staff of St. Anthony's is effectively a closed one. The cardiac cath equipment at St. Anthony's is out- dated and fails to produce quality images. Problems have been encountered by cardiologists with the quality of film developed by St. Anthony's cardiac cath lab. Consequently, the lack of growth and modernization of the St. Anthony's lab does not present a reasonable alternative to Palms' application. The alternative of Humana presents a shortage of intensive care and cardiac cath beds similar to that experience with All Children~s, especially during the winter months. Continued diagnostic catheterization of Palms patients at Humana will result in increased competition for an already insufficient number of beds. Humana is located even further from Palms than All Children's, worsening the current problems associated with transfer of Palms' patients to All Children's. Further, Humana, according to the rate of admissions to its cath lab in the second year of operation, will Substantially exceed the new proposed HRS policy of 300 admissions required to justify a program's operation. During 1988, Palms ranked fourth out of the 24 hospitals in the service district in the number of inpatients requiring diagnostic cardiac caths. If those hospitals operating cardiac cath labs are eliminated from the list, then Palms ranked first in the total number of inpatients requiring cath services at the remaining 17 hospitals. In 1988, Palms' 278 inpatients requiring diagnostic cardiac cath services was more than the 219 at St. Anthony's and the 174 for Humana's first year, even though those facilities had cath labs. Palms' total also exceeded the 201 patients requiring this service at both of the Mease hospital sites. The likelihood of discernable adverse impact on the cardiac cath programs at St. Anthony's and Humana as the result of establishing diagnostic cath services at Palms is small in view of the infrequent admission of Palms' patients to those programs. Serious problems will continue to be experienced by Palms' patients in obtaining inpatient diagnostic cardiac cath services if the Palms application is denied. In view of the demographics of the surrounding area and patient age composition at Palms, establishment of a diagnostic cardiac cath program in that hospital would result in an improvement of the standard of care received by inpatients there. The unique nature of All Children's primary mission as a pediatric hospital, and its inability to provide ready access to its cardiac cath labs by Palms' patients for the purpose of diagnostic cardiac cath services, coupled with other previously- noted access problems constitute exceptional and "not normal" circumstances sufficient to justify approval of a diagnostic cardiac cath lab at Palms without regard to numeric need requirements of either the "old" or "new" versions of Rule 10- 5.011(1)(e), Florida Administrative Code. Mease Accessibility to health services has two aspects; geographical accessibility and financial accessibility. The "old" rule policy of HRS has a two hour travel standard within which a cardiac cath lab must be available. The proposed rule has a one hour standard. Morton Plant is approximately three or four miles from the Mease Dunedin campus. Both hospitals provide services to the same population. The Mease Countryside Campus is approximately eight miles from the Mease Dunedin campus. The considerable testimony regarding the problem and inconvenience of transporting patients for cardiac cath presented by Palms is not appropriate to Mease. The cardiac cath labs at Morton Plant are not overcrowded, although alternatives to that possibility are being contemplated in the future through the addition of another cardiac cath lab. Based upon projections presented at the final hearing, an additional cath lab may be necessary by 1991. The present labs are not utilized on the weekends except for emergencies and difficulty in scheduling a diagnostic or therapeutic cath is rarely encountered. However, a scheduling suggestion was made by Morton Plant officials, requesting that cathing cardiologists not schedule elective cardiac caths on Mondays and Fridays. But, Morton Plant has not implemented any rule making the cath labs unavailable for elective procedures at those times. One of the Morton Plant labs has been in operation since 1985 and the equipment in that lab is scheduled to be replaced in the fall of 1990. This refurbishment should eliminate concerns regarding reliability of that lab's machinery, although all maintenance of the equipment in both labs is conducted at night to permit both labs to be functional during the day. Mease opened an outpatient cardiac cath lab in April, 1989. Mease expects to perform 160 to 175 outpatient diagnostic caths in the first year of operation. The lab is not presently profitable. However, transfer of inpatients to other facilities for purpose of inpatient caths does impact negatively on Mease. Mease loses approximately $133,000 per year as the result of inpatient transfers, exclusive of ambulance fees. These losses represent the difference between the medicare reimbursement to Mease and the charges that Mease must pay to the other facility for provisions of the inpatient cath services. From October 1, 1988 through September 30, 1989, between 250 and 260 Mease inpatients were transferred to other facilities to receive inpatient caths. Ambulance cost per patient varies depending upon the destination facility which is generally either Largo Medical Center in Largo, Florida, for a charge of $436 round trip or Morton Plant for a round trip charge of $378. An estimated one hour is needed to make the transfer of a patient from Mease to Morton Plant, although actual travel time to the nearby facility is obviously much less. The services of those Mease nurses who accompany each patient are unavailable to Mease for other services for approximately two hours. The transfer of any inpatient to another hospital constitutes less than optimal care and can compromise patient safety as illustrated by one instance of the transfer of a Mease patient who suffered a major heart attack en route to another facility and became a "cardiac cripple." However, such examples with regard to accessibility to other facilities by Mease patients are not sufficient to constitute exceptional or not normal circumstances for purpose of granting the Mease application. Need For The Proposed Projects Prior to publication of the new proposed rule, HRS recognized that multiple procedures may be performed on a single patient during one admission to a cardiac cath lab. However, in the course of application of the old rule methodology to determine need for additional cardiac cath CONs, HRs did not, as a matter of operational policy, ascribe that same meaning to the term "procedures" in formula computations made to determine numeric need for those labs. Typically, a patient undergoes more than one procedure in the course of a cardiac cath. To determine an actual number of procedures, in the generic sense of the word, performed by existing cardiac cath labs in the service district, Mease and Palms subpoenaed information from all those labs. As a result of that effort, Mease and Palms have shown that 7,507 cardiac cath procedures were performed in the service district during the period July 1987 through June 1988. Of this total, approximately 5,081 were diagnostic cardiac caths. Cardiac cath lab admissions for diagnostic and therapeutic cardiac caths during the July 1987 through June 1988 period totaled 4,057 patients in the service district, averaging 1.85 procedures per cath lab admission. Similarly, diagnostic cardiac caths averaged 1.47 procedures per admission. A Diagnosis Related Group (DRG) is a combination of variable diagnoses codes and procedure codes that are used by Medicare to assign a fixed level of reimbursement to the type of medical services rendered by a provider. The term ICD-9CM Code is an acronym for the Internal Classification of Diseases, 9th Revision, Clinical Modification. The ICD-9 coding system is a classification for morbidity and mortality statistics which are modified for use in the United States for statistical collection. There are five diagnosis codes which identity conditions treated and three procedure codes identifying the type of treatment provided. The federal government and the State of Florida's Health Care Cost Containment Board (HCCCB) require that Florida hospitals maintain and report ICD-9-CM Code information. The American Hospital Association, with input from the federal Health Care Financing Administration, the National Center for Health Statistics, and the American Medical Records Association, publishes standards and rules to ensure uniformity in the reporting of ICD-9 information. Further, the Peer Review Organization, as part of its contract with the Health Standards Quality Bureau, reviews the accuracy of ICD-9 coding by hospitals. Florida hospitals report ICD-9 information to the HCCCB by filling out a Uniform Hospital Discharge Data Sheet for each patient. The HCCCB requires Florida hospitals to report up to five diagnosis and three procedure codes. Different ICD-9 codes are assigned for different types of cardiac catheterization procedures. Hospitals are expected to Code each individual cardiac catheterization procedure performed on the patient in accordance with specific instructions published by the American Hospital Association. ICD-9 code information reported to the HCCCB by existing providers of cardiac cath services in the service district corroborates the findings derived by Petitioners from information obtained through subpoenas to those providers, and verifies there is generally some multiple of ICD-9 code procedures per patient in a single admission. While ICD-9 code information is the most reliable tool available for health care planning purposes, the counting of procedures by those codes is not an appropriate measuring tool or good indication of need for two reasons. First, certain procedures may be a component of each and every catheterization, such as pressure measurements and angiography. The same amount of time and resources per patient are utilized regardless of whether the event is recorded as one "admission" or two "procedures". Secondly, different hospitals do record or code the various procedures differently, thereby skewing the results of any attempt to average procedures district wide in order to develop a ratio of procedures to admissions. In this regard, it is noted that Mease and Morton Plant do not code angiography as a separate procedure, consequently they have a low ratio of procedures to admissions in comparison to Palms. In developing its proposed new rule policy, HRS considered methodical scenarios for converting prpcedures to admissions, including a conversion factor of 1.2 procedures per admission and a conversion factor of 1.9 procedures per admission. Neither of these conversion options are utilized in the proposed new rule. Further, the evidence presented at the final hearing fails to establish that HRS has in place any methodology for the conversion of cardiac cath lab procedures to admissions to cardiac cath programs. Petitioners contend that HRS relied in the past upon local health councils to gather the correct number of cardiac cath lab procedures performed by existing labs in a service district, and that hospitals with cardiac cath labs erroneously reported lab admissions to the District Five Local Health Council rather than the total number of procedures performed in the labs. Petitioners further contend that as a result of unwitting reliance upon the number of cardiac cath lab patient admissions instead of the number of procedures performed on patients admitted to those labs, HRS historically suppressed projections of cardiac cath lab need in the Service District Five when applying the "old" rule. The weight of the evidence presented at the final hearing supports a finding that actual need may be at some minor variance with that projected by HRS' need formula computation under the old rule. The extent that such need exceeds the projected amount, while not totally capable of discernment on the basis of the evidence presented, is probably in the neighborhood of 1.01 procedures per admission. It is found that HRS did not intentionally suppress need projections in the district and that the minor variance shown does not substantially affect numeric need determinations calculated under the old rule. As previously alluded to above, the term "procedure" in the rule methodology previously utilized by HRS historically meant the aggregate of what is performed on one admission to a cardiac cath lab. The old rule was based on federal guidelines providing that procedures were equal to an admission. At the time the old rule was written, the terms "cases", "cardiac catheterization", and "cardiac catherization procedures" were used interchangeably with the advent of DRGs for medicare reimbursement purposes, hospitals responded to local health councils' data collection requests by reporting "Procedures" used for reimbursement purposes. The resultant confusion spawned the motivation for HRS to propose the new rule methodology which uses the term "admission." HRS reviewed the applications at issue here pursuant to the proposed new rule and its "admissions" based numeric need methodology. That review, conducted on the basis of admissions, was consistent with the policy of HRS to interpret the term "procedure" to mean "admission." Further, in view of the equivalency accorded the those terms by HRS, the number of procedures for purposes of numeric need calculation under the "old" rule formula does not require inflation in order to apply the old rule's numeric need formula. HRS has candidly admitted that various providers reported the number of "admissions" rather than "procedures". The policy of HRS, although subject to a minor margin of error with the advent of DRGs, to count admissions as procedures is one that has been consistently and fairly applied without regard to whether the result led to the granting or denial of a particular application. From a health planning perspective, an admission or patient is the appropriate unit of measurement to determine future need for cardiac cath services. The goal of the CON program is to ensure an appropriate allocation of services while controlling capital expenditures. The Petitioners contend that cardiac catheterization admissions are not a good measure of resource consumption and that the type of catheterization, i.e., adult versus pediatric and therapeutic versus diagnostic, should be considered. To an extent, the position is well taken, but in the absence of an agency policy that measures numeric need in that fashion, the alternative proposed by the Petitioners is unpalatable. The Petitioners' overly broad proposal for consideration of "procedure" as a multiple of "admission" for purposes of need formula computation results in a proliferation of cardiac cath labs in derogation of the CON program goal previously mentioned. The use of 300 admissions as a minimum number required for a new lab under the proposed "new" rule is not a recognition by HRS of any applicable conversion factor of procedures to admissions. Instead, the number of 300 admissions is a standard that must be met after all existing providers have their present patient volume protected, as opposed to a simple minimal admission number required to maintain skill proficiency of medical personnel. Under the old rule, a volume of only 600 patients per lab is protected in contrast to the new rule's proposal to protect uncapped patient volume in existing cardiac programs. To that extent, the old rule does not place the same emphasis on utilization of existing labs or programs as does the new rule. HRS' SAAR on the Petitioners' applications confirmed a total of 4,712 admissions to cardiac cath labs in the service district from April, 1987 until March, 1988. If the number of admissions is equated to mean the number of procedures, in accordance with HRS rule policy applied to the formula previously used to determine numeric need, then the result of that computation under the "old" rule is no numeric need for additional cardiac cath labs in the service district. Likewise, computations under the proposed "new" rule need formula utilizing reported admissions during the base period also results in a finding of no numeric need for additional cath labs in the district. Out-migration While it is conceded by the parties that strict application of the numeric need methodology of the proposed "new" rule results in a finding of no need for additional cardiac cath labs, Petitioners contend that HRS is required to factor into that new need methodology the number of residents in the service district who go outside the district to obtain cardiac cath services. While subsection h of the "new" rule requires that HRS consider such data in the determination of need, there is no requirement that the number of such residents be included within the need determination formula. As established at the final hearing, out-migration serves to establish need for a facility, in the absence of numeric need, where it is shown that residents are leaving the service district due to unavailability of the services within the district. While residents are leaving the service district in this instance to obtain cardiac cath services, the evidence fails to establish that this action is due to service unavailability. Quality Of Care The parties stipulated that both applicants partially meet the statutory requirement requiring proof of the ability to render quality care and the previous record of the applicant to render quality of care. HRS contends both applicants failed to a provide a "written protocol" for the transfer of emergency patients to open heart surgery providers in compliance with requirements of the "new" rule. HRS concedes that both applications meet quality of care requirements, including those relating to a "transfer agreement" if reviewed under the "old" rule. HRS has not formally defined the term "written protocol", but no evidence exists that either applicant would fail to provide quality of care with regard to transfer of patients in the event such became necessary. The purpose of a written protocol is to assure HRS that proper quality of care procedures would be used in transferring open heart patients. HRS professes confidence in the ability of the applicants to perform this service and therefore this requirement is considered fulfilled in the event approval of the applications is determined pursuant to provisions of the "new" rule. Availability Of Resources Morton Plant's concerns regarding Mease's ability to render quality of care are restricted to whether Mease has provided for sufficiently trained staff to handle the projected volume of cases in the event that Mease's application is approved. Availability of appropriately trained professionals is also a Morton Plant concern. The projections of Mease for salaries, number of employees, expenses, training or acquisition of employees, and overtime costs are reasonable and meet requirememts relating to availability of resources. Consistency With State And Local Plans The state health plan in effect when these applications were filed contains a goal that an average of 600 cardiac cath procedures per lab be maintained within the district. HRS found this provision of the state health plan to be inapplicable since these applications were not reviewed in conjunction with requirements of the "old" rule. Regardless of this omission, neither application meets this goal in view of the traditional interpretation accorded the term "procedures" by HRS. With regard to the district plan, all counties within Service District Five have existing or approved cardiac catheterization providers. With the exception of the access difficulties noted with regard to Palms, services are well distributed. Neither applicant is a major referral hospital, although both have traditionally served all patients without regard to the ability of the patient to pay. Adequacy And Availability Of Other Services There are other existing providers of diagnostic inpatient cardiac cath services available in service district five, whose capacity is not fully utilized. Mease, whose Dunedin campus is located only three to four miles from Morton Plant, proposes to provide services to the same patient population. As previously noted, the concerns about the adequacy of equipment in one of the Morton Plant cath labs is in the process of being addressed through the installation of new equipment in the fall of 1990. Although there are existing providers available, the instances of access difficulty recited by witnesses for Palms are likely to be compounded as more patients undergo cardiac catheterization at those alternative facilities in the future. The demographics of Palms' elderly and multiple illness-laden inpatient population increase the complications likely to be experienced by those inpatients during transfer for purposes of diagnostic catheterization. Likewise, outpatient cath lab establishment would not be a realistic alternative for these patients, or a cost effective measure. While many inpatients would invariably have to be transferred later for therapeutic cath services, the rigors of such a journey would be avoided initially for all inpatients and a considerable number of inpatients thereafter. Impact On Existing Costs No testimony presented at final hearing supports a finding of an adverse impact on any existing provider in the event that Palms' application is approved. Of the three other full service hospitals in Palms' primary service area, only one has a cardiac cath program. Palms projects savings from the elimination of ambulance transfers and reductions in the length of stay for Palms' inpatients receiving diagnostic cardiac caths at approximately $157,000 in the first year of operation. Cost per cardiac cath patient for this service would be approximately $2,200 on average, an amount comparable to other providers in the Palms area. One thrust of Mease's argument, in terms of impact of its program upon the costs of inpatient cardiac cath, is directed to the losses which Mease experiences through the transfer of inpatients to Morton Plant. While increased utilization of Mease's present outpatient cardiac cath lab by its inpatients would decrease or eliminate the present loss of income experienced by the hospital, the burden of that cost benefit to Mease falls upon Morton Plant. The number of inpatients projected by Mease would be derived primarily from individuals who would otherwise receive cardiac cath services at Morton Plant. Approximately 30 percent of the total procedures performed at Morton Plant would be lost if the Mease application is approved. Such a loss would not be detrimental to the Morton Plant program, other than to require Morton Plant to postpone future contemplated increases in the number of cardiac cath labs in the present program. Approval of the Mease application would increase competition to some degree among other providers of diagnostic cath services to inpatients in Mease's primary service area. As previously noted, the impact of competition would be primarily upon Morton Plant, whose cardiac cath facilities, while nearing capacity limits, are not over utilized at the present time. Mease estimates that an average cath charge to inpatients would be $1,500 if its CON is approved. The loss of revenue to Morton Plant will average $1,606 for each inpatient cath lost to another facility, or $511,000 if Mease's application is approved. This amount closely approximates the positive revenue impact of $563,785 estimated by Mease in the event of CON approval. Financial Feasibility All parties, except HRS, stipulated that Palms' application was financially feasible. HRS' position was that Palms' application met this criterion, provided costs of Palms' cardiac cath lab director did not affect financial feasibility. Palms presented evidence at the final hearing amplifying the information in its application and establishing that the cost of the lab director will not affect financial feasibility of the project. The directorship will be a voluntary, non-paying position rotated among the cardiologists with privileges to perform catheterizations. Palms' proposal is financially feasible. HRS stipulated that Mease's project is financially feasible. Morton Plant disputes the long term financial feasibility of Mease's project. Mease maintains that its provision of inpatient cath service will have no cost because the equipment has already been purchased and is being used to do outpatient caths. However, Mease also has an expense item on its inpatient pro forma for depreciation of that same equipment and maintains that the cost for providing the cath service will decrease as costs will be spread over more patients with the advent of inpatient cath services. The more reasonable assumption is that the cost of the equipment is a cost associated with the present CON application, particularly since Mease admits to the motivation of implementing outpatient service in an attempt to enhance the probability of obtaining an inpatient lab. Notwithstanding this cost discrepancy, Mease's application is financially feasible. Medicaid And Medically Indigent HRS has stipulated that the Petitioners' past and proposed provision of health care services to Medicaid patients and the medically indigent is not at issue. However, the parties contend that the matter is in issue between them. As a not-for-profit hospital, part of Mease's mission is to provide needed medical care, independently of the patient's ability to pay. Mease would apply this same philosophy to patients needing services in its inpatient cath lab. Mease provides its fair share of medicaid and charity services relative to the community in which it is located. Palms has made a commitment to serve all patients regardless of ability to pay. Palms does not have any policies which would discourage Medicaid patients. Comparative Review There is insufficient numeric need under either the new or old rule formula to approve either of the Petitioners' applications on that basis. However, Palms presented considerable evidence of exceptional and not normal circumstances justifying approval of its application. In particular, the overcrowding at All Children's, inpatient transfer problems, the severity of the scheduling difficulties at All Children's and other access problems provide an adequate basis for approval of the Palms application. Palms generates more inpatients requiring inpatient diagnostic cath services than does Mease. Notably, 4.76 percent of the total service district diagnostic cath inpatients originate from Palms as opposed to 3.37 percent for Mease. The average age of Palms' inpatients is higher than that of Mease's inpatients. Palms' inpatients have a higher comorbidity index than both Mease and the service district as a whole. Palms has had, historically, more inpatients in the 45-64 age cohort and the over age 65 cohort undergo cardiac cath than has Mease. Mease provides more Medicaid care than Palms, but Palms does not provide obstetrics and pediatric services, two areas of care traditionally high in Medicaid utilization. If the comparison is limited to Medicaid utilization for cardiology services, Palms ranks higher than Mease. Capital costs of Mease's construction of an outpatient lab capable of provision of inpatient services is not included in its application, although depreciation and amortization of the lab and equipment is included. Mease's outpatient lab was constructed in an effort to improve its application for a CON to provide inpatient services, therefore exclusion of that cost results in an unfair comparison of capital expenditure between the two applications. Discounting Mease's claim that its provision of inpatient cath service will have no cost because the equipment has already been purchased and is being used to do outpatient caths, the application of Palms is superior to that of Mease.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered approving the application of Palms for an inpatient cardiac catheterization lab or program Certificate of Need, and denying the application of Mease. DONE AND ENTERED this 22nd day of March, 1990, 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 22nd day of March, 1990. APPENDIX The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties. Mease's Proposed Findings. 1.-3. Adopted in substance. 4. Rejected as to cost, not supported by weight of the evidence. 5.-15. Adopted in substance. 16. Rejected, conclusion of law. 17.-20. Rejected, cumulative. 21.-25. Rejected, unnecessary. 26.-31. Adopted in substance, but qualified in some instances. Rejected, unnecessary. Adopted in substance. Rejected, unnecessary. Rejected, misrepresentative of HRS policy interpretation of "procedures" in the context of rule application. Rejected, not supported by the weight of the evidence. 37.-38. Adopted in substance. 39. Adopted. 40.-41. Rejected, not supported by weight of the evidence. 42.-43. Rejected, unnecessary. 44.-45. Rejected, not supported by weight of the evidence. Adopted. Rejected, not supported by weight of the evidence. 48.-51. Rejected, cumulative. 52.-58. Adopted by reference. Rejected, relevancy. Rejected as recitation of testimony, alternatively ultimate conclusion not supported by weight of the evidence. Adopted by reference. Rejected, relevancy. 63.-65. Adopted. Rejected, speculative. Adopted by reference. Rejected, not supported by weight of the evidence. Rejected, cumulative. 70.-72. Adopted in substance. Rejected, cumulative. Adopted in substance. 76. Rejected on basis of creditability. 77.-78. Adopted. 79.-81. Adopted in substance. 82.-84. Rejected, cumulative. 85.-86. Rejected, not supported by weight of the evidence. 87.-88. Adopted by reference. 89. Rejected, cumulative and speculative. 90.-91. Adopted in substance. 92. Rejected, not supported by weight of the evidence. 93.-94. Adopted in substance. 95.-97. Rejected, not supported by weight of the evidence. 98.-99. Adopted by reference. 100. Rejected, unnecessary. 101.-103. Adopted in substance. 104.-110. Rejected, not supported by weight of the evidence. 111. Adopted in substance. 112.-114. Rejected, not supported by weight of the evidence. 115.-116. Rejected on basis of creditability. 117.-122. Adopted by reference. Rejected, not supported by weight of the evidence. Adopted in substance. Rejected on basis of creditability. 126.-128. Rejected, cumulative. 129. Rejected, not supported by weight of the evidence. 130.-131. Adopted in substance. 132.-138. Adopted by reference, although cumulative. 139.-141. Rejected, relevancy. 142. Rejected, not supported by weight of the evidence. 143. Rejected, relevancy. 144. Adopted with modifications. 145. Rejected, not supported by weight of the evidence. Palms' Proposed Findings. 1.-10. Adopted in substance. 11. Rejected, unnecessary. 12.-25. Adopted in substance. 26. Rejected, unnecessary. 27.-41. Adopted in substance. 42. Rejected, not supported by the evidence. 43.-45. Adopted in substance. 46. Rejected, unnecessary. 47.-57. Adopted in substance, though not verbatim. 58. Rejected, conjecture unsupported by weight of the evidence. 59.-63. Adopted in substance. 64. Rejected, unnecessary. 65.-71. Adopted in substance. 72.-75. Rejected, unnecessary. 76. Adopted as to first sentence. Rejected as to second sentence as unsupported legal conclusion. 77.-79. Adopted in substance. Rejected, not supported by weight of the evidence. Adopted for recitation of factual background in recommended order. However, the term "procedure" refers to ICD-9 procedures and not to "procedures" as that term has been defined by agency policy for need formula calculation. Proposed finding's conclusion of additional lab numeric need is rejected as not supported by weight of the evidence. 82.-88. Adopted in substance, though not verbatim. 89.-92. Rejected, unnecessary. 93.-94. Rejected, unsupported by weight of the evidence. 95.-101. Rejected, unnecessary. 102. Rejected, not supported by weight of the evidence. 103.-105. Rejected as legal argument and conclusions unsupported by weight of the evidence to advance the theory that ICD- 9 procedures should govern over the agency's policy definition of procedures under the old rule, and that such other definition should control the determination of number of admissions used to calculate numeric need under the new rule. Rejected, unnecessary. First sentence adopted in substance, remainder of this proposed finding is rejected as argumentative legal conclusion not supported by weight of the evidence to the extent that subsection h data must be included in numeric need formula calculations. Rejected as to ultimate conclusion of this proposed finding as unsupported by weight of the evidence. 109.-114. Adopted in substance. 115.-117. Adopted by reference. 118.-119. Rejected, not supported by weight of the evidence. 120.-125. Adopted in substance. 126. Rejected, unnecessary. 127.-130. Adopted in substance. 131. Rejected, not supported by weight of the evidence. 132.-137. Adopted in substance, though not verbatim. Morton Plant's Proposed Findings. 1.-5. Adopted in substance. Adopted in substance with exception of last sentence which is not supported by weight of the evidence. Adopted by reference. Rejected as to ultimate conclusion as unsupported by the weight of the evidence. 9.-11. Adopted in substance. 12.-15. Adopted in substance. 16.-18. Rejected, unnecessary. First sentence reject, unsupported by evidence as to Palms. Adopted by reference as to remainder of this proposed finding. Adopted in substance. Rejected, unnecessary. Adopted in substance. Rejected, unnecessary. Rejected, except as to last sentence which is adopted in substance. Adopted by reference. 26-28. Adopted in substance. 29. Adopted in substance with exception of next to last sentence of this proposed finding which is rejected as unsupported by weight of the evidence. 30.-34. Adopted in substance. First sentence rejected as unsupported by the weight of the evidence. Remainder of this proposed finding is rejected as unnecessary. Rejected as unnecessary. 37.-38. Adopted in substance. 39.-40. Rejected, unnecessary. Ultimate conclusion of this proposed finding regarding accessibility of cardiac cath services to Mease inpatients is adopted in substance. This proposed finding is apparently directed only to the Mease application in view of the usage of the singular in the reference to denial of the "application" and as such the remainder is rejected as unnecessary. Adopted in substance. All aspects of this proposed finding are not supported by the weight of the evidence. Therefore, as a multiple proposed finding not susceptible to division, it is rejected for that reason. Adopted in substance. Rejected, not supported by the weight of the evidence. Rejected, not supported by the weight of the evidence. 47.-48. Rejected as unnecessary with exception of last sentence of proposed finding number 48 which is rejected as unsupported by the weight of the evidence. 49.-50. Rejected, not supported by the weight of the evidence. 51. Adopted in substance. 52.-56. Rejected, legal argument. 57. Adopted in substance. HRS' proposed findings. Adopted in substance, as to patients requiring angioplasty. Rejected, unnecessary. Rejected, not supported by weight of the evidence. Adopted in substance. Rejected, unnecessary. Adopted in substance. 7.-10. Adopted in substance. 11. Rejected, unnecessary. 12.-13. Adopted by reference. Rejected as unnecessary. First sentence adopted in substance, remainder rejected as speculative, not supported by weight of the evidence. Rejected, not supported by weight of the evidence. Adopted by reference. Adopted in substance. 19.-21. Adopted in substance. 22.-23. Rejected, unnecessary. 24.-25. Adopted in substance with exception of last sentence of proposed finding number 25 which is not supported by the weight of the evidence. 26.-27. Rejected, unnecessary. 28. Adopted by reference. 29.-30. Adopted in substance. Adopted in substance. Last sentence rejected as unsupported by the weight of the evidence. Adopted by reference. 34.-35. Adopted. Rejected, not supported by weight of the evidence. Adopted in substance. Not supported by the weight of the evidence. 39.-45. Adopted in substance. Rejected, unnecessary. Adopted in substance except as to last sentence which is rejected as unnecessary. Adopted. 49.-53. Rejected as unnecessary. 54. Adopted. 55.-56. Rejected, unnecessary. 57.-58. Adopted in substance. 59. Rejected, unnecessary. 60.-61. Adopted in substance. 62. Rejected, unnecessary. 63.-67. Adopted in substance. 68.-72. Rejected, unnecessary. 73.-77. Adopted in substance. 78.-79. Rejected as unnecessary. 80.-81. Rejected as legal conclusions. 82. Rejected as unnecessary. 83.-87. Rejected, legal conclusions and argument. 88.-89. Adopted in substance. 90.-92. Rejected, unnecessary. Adopted in substance. Rejected, unnecessary. Adopted in substance. 96.-98. Adopted by reference. 99. Rejected, unnecessary. 100.-101. Adopted in substance. Rejected, recitation of testimony. Rejected as to Palms, not supported by weight of the evidence. As to Mease, existing inpatient providers provide an alternative. 104.-105. Rejected, not supported by the weight of the evidence. 106. Rejected as cumulative. 107.-108. Rejected as unnecessary. Adopted by reference. Rejected, legal argument. Adopted in substance. Adopted by reference. 113.-114. Adopted in substance with modification. 115. Adopted in substance. COPIES FURNISHED: Edgar Lee Elzie, Jr., Esq. 215 South Monroe Street, Suite 804 Tallahassee, FL 32301 C. Gary Williams, Esq. Stephen C. Emmanuel, Esq. 227 South Calhoun St. P.O. Box 391 Tallahassee, FL 32302 Ken Hoffman, Esq. W. David Watkins, Esq. P.O. Box 6507 Tallahassee, FL 32314-6507 Cynthia S. Tunnicliff, Esq. Loula Fuller, Esq. P.O. Drawer 190 Tallahassee, FL 32302 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 =================================================================
