The Issue At issue in these proceedings is whether there exists a need for a new open heart surgery program in HRS District IX and, if so, whether the applications of St. Mary's Hospital, Inc. (St. Mary's), Boca Raton Community Hospital, Inc. (Boca), and Martin Memorial Hospital Association, Inc. (Martin), or any of them, for a certificate of need to establish such a program should be approved.
Findings Of Fact Case status In September 1989, Boca Raton Community Hospital, Inc. (Boca), St. Mary's Hospital, Inc. (St. Mary's), and Martin Memorial Hospital Association, Inc. (Martin), filed timely applications with the Department of Health and Rehabilitative Services (Department or HRS) for a certificate of need (CON) to establish a new open heart surgery program in HRS District IX. That district is comprised of Palm Beach, Martin, St. Lucie, Indian River, and Okeechobee Counties. Boca's and Martin's applications sought authorization to establish an adult open heart surgery program, whereas St. Mary's application sought authorization to establish an adult and pediatric open heart surgery program. On January 26, 1990, the Department published notice in the Florida Administrative Weekly of its intent to grant Boca's application, and to deny the applications of St. Mary's and Martin. St. Mary's and Martin filed timely protests to the Department's proposed action, and three existing providers of open heart surgery services in the district, NME Hospitals, Inc., d/b/a Delray Community Hospital (Delray), JFK Medical Center, Inc. (JFK), and AMI/Palm Beach Gardens Medical Center, Inc. (Palm Beach Gardens), timely protested the Department's intention to grant Boca's application or intervened to oppose the approval of any new open heart surgery program in the district. The applicants Boca, a 394-bed not-for-profit community hospital, is the southernmost hospital in Palm Beach County and HRS District IX, being located in Boca Raton, Florida, just two miles north of the Broward County/HRS District X line. It was established in the 1960's, and is a comprehensive hospital providing adult cardiac catheterization services, as well as most services available in an acute care facility, with the exception of a designated psychiatric unit, burn unit, and neonatal intensive care. During the period of April 1988 through March 1989, Boca performed 656 adult inpatient cardiac catheterizations, and referred 192 patients for open heart surgery between July 1988 and June 1989. By its application, Boca proposes to establish an adult open heart surgery program to enhance its cardiology services. Boca's primary service area covers a radius of approximately ten miles around the hospital, and it routinely serves patients from Boynton Beach, Palm Beach County, on the north to Pompano Beach, Broward County, on the south. Presently, three providers of open heart surgery services are located proximate to Boca: approximately 11 miles north of Boca, an average drive time of 17 minutes, is Delray, a current provider of open heart surgery services in District IX; approximately 21 miles north of Boca, an average drive time of 32 minutes, is JFK, a current provider of open heart surgery services in District IX; and approximately 15 miles south of Boca, an average drive time of 19 minutes, is North Ridge General Hospital (North Ridge), a current provider of open heart surgery services in District X and the recipient of the vast majority of referrals for open heart services from Boca. St. Mary's, a 378-bed not-for-profit community hospital located in West Palm Beach, Florida, is owned by the Franciscian Sisters of Allegheny, and has served the community for more than 50 years. In addition to the full range of medical surgical services, St. Mary's offers obstetrics, a Regional Perinatal Intensive Care Center (RPICC) -- levels II and III, blood bank, dialysis center, substance abuse center, hospice center, free-standing cancer clinic, adult inpatient cardiac catheterization laboratory, and children's medical services clinic. Upon the opening of its 40-bed psychiatric center, which is currently under construction, St. Mary's will be the largest hospital in District IX. During the period of April 1988 through March 1989, St. Mary's performed 254 adult inpatient cardiac catheterziations. By its application, St. Mary's proposes to enhance its existing services by establishing an adult and pediatric open heart surgery program. Currently, there are no pediatric open heart surgery programs in District IX. There are, however, two current providers of adult open heart surgery services located in Palm Beach County and proximate to St. Mary's: approximately 6 miles north of St. Mary's is Palm Beach Gardens, and approximately 11 miles south of St. Mary's is JFK. Martin, a 336-bed not-for-profit community hospital established in 1939, is located in Stuart, Martin County, Florida. As with the other applicants, Martin offers a full range of acute care services, as well as adult inpatient cardiac catheterization services, a non-invasive cardiology laboratory, and cardiac rehabilitation and support services for cardiac patients and their families. No significant data is, however, available on Martin's adult inpatient cardiac catheterization program since it is a new service. By its application, Martin proposes to establish an adult open heart surgery program. Currently, there are no open heart surgery programs located in the four northern counties of District IX (Martin, St. Lucie, Indian River, and Okeechobee Counties), and Martin is currently the only hospital located in those four counties that provides in-patient cardiac catheterization services. Accordingly, to access open heart surgery services within the district, residents of the northern four counties must avail themselves of the current programs existent in Palm Beach County. The protestants As heretofore noted, open heart surgery services are currently available at three facilities within District IX; Delray, JFK and Palm Beach Gardens, each of which is located in Palm Beach County. Delray is a 211-bed acute care hospital, sited in the southern portion of Palm Beach County, and located in Delray Beach, Florida. It is a comprehensive hospital providing all services normally available in an acute care facility, with the exception of obstetrics, pediatrics and radiation ontology, and is part of a larger medical campus, operated by the same parent company, that includes a 60-bed inpatient rehabilitation hospital that is physically attached to Delray, a 120-bed psychiatric hospital, and a 120-bed skilled nursing facility. In addition to its other services, Delray provides inpatient cardiac catheterization services and has, since 1986, provided adult open heart surgery services. With a recent addition, Delray has two dedicated open heart operating rooms (ORs) and one back up, as well as three separate intensive care units for coronary care, medical intensive care and surgical intensive care. For calendar year 1989 Delray reported to the local health counsel that it performed 338 open heart cases. Delray is located approximately 11 miles north of Boca, an average drive time of approximately 17 minutes. Between Delray and Boca, there is more than a 50 percent overlap in the medical staffs of the two hospitals, and almost 70 percent overlap in the areas of cardiology and internal medicine. Considering the overlap in the facilities' service areas, it is reasonable to conclude that if Boca's application is approved Delray would lose 122 open heart and 84 angioplasty cares in Boca's first year of operation and 130 open heart and 93 angioplasty cases in Boca's second year of operation. Such losses would translate into a after-tax income loss to Delray of approximately $645,000 in the first year of operation alone. Such loss of revenue and patients could adversely impact Delray's existing program. JFK is a 369-bed community hospital located in Atlantis, Florida; a small town just south of West Palm Beach. It provides a full range of medical- surgical services, with the exception of OB-GYN and nursery services, including cardiac, cancer, orthopedic, and medical/surgical intensive care and coronary care. It established its inpatient cardiac catheterization and open heart surgery program in February 1987, and currently has ten operating rooms, two of which are devoted exclusively to open heart surgery, and a 16-bed cardiac care unit (CCU), 10 beds of which are dedicated to open heart patients. For calendar year 1989, JFK reported to the local health council that it performed 262 open heart cases. As sited, JFK is located just south of West Palm Beach and within 10 miles of St. Mary's. Currently, there is an 83 percent overlap in the MDC-5 service areas (the service area closest to the open heart surgery program) of St. Mary's and JFK, and a substantial overlap between cardiologists on the staffs of both facilities. During the period of January 1988 - May 1990, 43 percent of the patients St. Mary's referred for open heart and angioplasty services were referred to JFK. Assuming St. Mary's could achieve the volumes it projected in its application, it is reasonable to assume that JFK would lose 75 open heart and 83 angioplasty cases in St. Mary's first year of operation, and 91 open heart and 100 angioplasty cases in St. Mary's second year of operation. Such lose in the first year of St. Mary's operation would translate into a net reduction of $1,200,000 in JFK's income. Such loss of revenue and patients could adversely impact JFK's existing program. Palm Beach Gardens is a 205-bed acute care hospital sited in north Palm Beach County. It provides inpatient cardiac catheterization services and has, since 1983, provided open heart surgery services. Currently, Palm Beach Gardens maintains two operating rooms dedicated to open heart surgery, and has a third operating room available for open heart surgery should the demand arise. For calendar year 1989, Palm Beach Gardens was the largest provider of open heart surgery services in the district, having reported to the local health council that it performed 491 open heart cases. Palm Beach Gardens is located approximately 10 miles south of the Palm Beach County/Martin County line or a straight line distance of approximately 25 miles south of Martin and approximately 10 miles north of St. Mary's. During the period of July 1988 - June 1989, 229 residents of St. Mary's primary service area had open heart surgery at Palm Beach Gardens, and 142 residents of Martin's primary service area obtained such services at that facility. If Martin's proposal is approved and its utilization projections realized, Palm Beach Gardens would lose approximately 84 cases in year one of Martin's operation and 101 cases in year two. Such losses in year two would translate into a $1,400,000 pretax reduction in Palm Beach Gardens' net revenues. Such reduction in revenues and patients was not, however, considering Palm Beach Garden's financial condition and open heart surgery volume, shown to have any significant adverse impact to Palm Beach Gardens, or any identifiable program within its facility. Likewise, should St. Mary's application be approved, volumes at Palm Beach Gardens would not be reduced below optimal levels, and it would not suffer any significant adverse impact to existing programs. The parties' stipulation The parties have agreed that the following facts are admitted: Boca, St. Mary's, and Martin Memorial timely filed their Letters of Intent and CON applications at issue in this proceeding. Further, the parties stipulate that the Letter of Intent complied with all statutory and rule requirements. The construction costs of $100,000 as set forth in Table 25 of St. Mary's application is a reasonable construction costs estimate for the renovation of one special procedures room to perform open heart surgery as proposed in St. Mary's schematic plans. The parties admit that adult open heart surgery services are currently available within a maximum automobile travel time of two hours under average travel conditions for at least 90 percent of HRS Service District IX's population. This stipulation is not meant to preclude other relevant evidence regarding travel times within or without District IX. All existing providers of open heart surgery in District IX are JCAHO accredited; all applicants in this proceeding are JCAHO accredited. Each of the applicants, if approved, have the ability to implement and apply circulatory assist devices such as intra-aortic balloon assist and prolonged cardiopulmonary partial bypass for adult open heart surgery. Each of the applicants, if approved, will be capable of fulfilling the requirements of an adult open heart surgery program to provide the following services: medicine, for example, cardiology, hematology, nephrology, pulmonary medicine and infectious diseases; pathology, for example, anatomical, clinical, blood bank and coagulation lab; anesthesiology, including respiratory therapy; radiology, for example, diagnostic nuclear medicine lab; neurology; adult cardiac catheterization laboratory services; non-invasive cardiographics lab, for example, electrocardiography including cardiographics lab, for example, electrocardiography including exercise stress testing, and echocardiography; intensive care; and emergency care available 24 hours per day for cardiac emergencies. This stipulation relates only to the provision of medical services, not that the applicants have sufficient capacity to provide those services in connection with an open heart surgery program. The redesignation of acute care beds from medical/surgical beds to any type of critical care unit beds, except for neonatal intensive care beds, does not require a certificate of need unless the hospital incurs a capital expenditure in excess of the capital expenditure threshold in accomplishing this redesignation. The Department's open heart surgery and methodology and the "fixed need" pool. On August 11, 1989, the Department, pursuant to Rule 10-5.008(2)(a), Florida Administrative Code, published notice of the fixed need pool for open heart surgery programs for the July 1992 planning horizon in the Florida Administrative Weekly. Pertinent to this case, such notice established a net need for zero new adult open heart surgery programs in District IX. There was, however, no publication of any fixed need pool for pediatric open heart surgery. Following publication of the fixed need pool, the Department received protests contending that its calculation of net need was erroneous. Upon review, the Department concluded that its initial calculation was in error, and on September 1, 1989, the Department published a notice of correction in the Florida Administrative Weekly, and established a new net need for one open heart surgery program in District IX. On September 5, 1989, St. Mary's challenged the Department's corrected need assessment, claiming the Department had underestimated the need in District IX for adult open heart surgery services, and on September 8, 1989, Palm Beach Gardens challenged the Department's assessment, claiming the Department had overestimated the need for open heart services in the district. These challenges were forwarded by the Department to the Division of Administrative Hearings, along with a request for the assignment of a hearing officer to conduct all necessary proceedings required under law. Pertinent to the derivation of the fixed need pool, the Department has established by rule an adult and pediatric open heart surgery methodology that must normally be satisfied before any new open heart surgery programs will be approved. That methodology, codified in Rule 10-5.011(1)(f), Florida Administrative Code, forms the premise for the Department's calculation of net need in the instant case. Pertinent to this case, Rule 10-5.011(1)(f), Florida Administrative Code, provides: 2. Departmental Goal. The Department will consider applications for open heart surgery programs in context with applicable statutory and rule criteria. The Department will not normally approve applications for new open heart surgery programs in any service area unless the conditions of Sub-paragraphs 8. and 11., below are met. * * * 8. Need Determination. The need for open heart surgery programs in a service area shall be determined by computing the pro- jected number of open heart surgical pro- cedures in the service area. The following formula shall be used in this determination: Nx = Uc X Px Where: Nx = Number of open heart procedures projected for year X; Uc = Actual use rate (number of procedures per hundred thousand popu- lation) in the service area for the 12 month period beginning 14 months prior to the Letter of Intent deadline for the batching cycle; Px = Projected population in the service area in Year X; and Year X = The year in which the proposed open heart surgery program would initiate service, but not more than two years into the future. * * * 11.a. There shall be no additional open heart surgery programs established unless: the service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year or 130 pediatric heart cases per year; and, the conditions specified in Sub-paragraph 5.d., above, will be met by the proposed program. No additional open heart surgery programs shall be approved which would reduce the volume of existing open heart surgery facilities below 350 open heart procedures annually for adults and 130 pediatric heart procedures annually, 75 of which are open heart. Sub-subparagraph 5d, referenced in subparagraph 11a(II), provides: Minimum Service Volume. There shall be a minimum of 200 adult open heart procedures performed annually, within 3 years after initiation of service, in any institution in which open heart surgery is performed for adults. There shall be a minimum of 100 pediatric heart operations annually, within 3 years of initiation of service, in any insti- tution in which pediatric open heart surgery is performed, of which at least 50 shall be open heart surgery. Essentially, the subject methodology contemplates that three conditions must be satisfied before an application for a new adult open heart surgery program in the district would normally be approved: (1) a calculated net numeric need under the Department's mathematical methodology; (2) a determination that "the service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 open heart surgery cases per year"; and (3) a demonstration that the applicant could perform "a minimum of 200 open heart procedures (cases) annually within 3 years after service is initiated." The first two conditions are utilized by the Department to initially establish the fixed need pool for open heart surgery services. The third condition is, by rule, related to an applicant's ability to provide quality care, and will be discussed infra. As a threshold for calculating need, and the fixed need pool, the Department's mathematical need methodology contains the formula for deriving the gross number of open heart surgical cases anticipated two years into the future. This methodology is based on the actual use rate in the district for the 12- month period beginning 14 months prior to the letter of intent deadline for the batching cycle. The number of cases is then divided by 350, which is consistent with the minimum service volume mandates of subparagraph 11 of the rule, to derive an actual gross need for open heart surgery programs at the horizon year. Existing and approved programs are then substracted to determine if there is a net need for a new open heart surgery program. While there was some dispute among the parties as to what the appropriate underlying data was to drive the Department's numerical need methodology, the parties agreed and the proof demonstrated a fractional need greater than .5, under the formula. 1/ The second step in establishing a need for open heart surgery programs, and the fixed need pool, is a determination, as required by subparagraph 11(2)I of the rule, of whether "each existing and approved open heart surgery program within the service areas is operating at and is expected to continue to operate at 350 adult open heart surgery cases per year." Here, based on the data available to the Department when it established the fixed need pool, the three existing providers had operated at the following case levels for the preceding year: Palm Beach Gardens - 494 cases; Delray - 328 cases; and JFK - 275 cases. Consequently two of the three existing providers were not operating at 350 cases per year. 2/ Based on the foregoing data, the Department initially published a net need for zero new open heart surgery programs in District IX. However, following the receipt of protests to the fixed need pool it had established, the Department, based on the same data, concluded its initial decision was erroneous, and published a notice of correction which established a net need for one new open heart surgery program in the district. This decision was timely challenged. The Department's ultimate decision to publish a need for one new program was based on two factors. First, the Department had historically rounded the numerical need up where fractional need, as calculated by its methodology, was .5 or higher. Second, although of questionable validity at the time, the Department had for several years "interpreted" the 350 case level, referred to in subparagraph (11) of the rule, to require that the average of the existing programs be at 350 before a new program would be approved, as opposed to the literal rule requirement that "each existing and approved open heart surgery program ... [be] ... operating at ... a minimum of 350 adult open heart surgery cases per year." Accordingly, with differing views then pending in the Department, it elected to recalculate the utilization level by applying the averaging approach, as opposed to applying the rule as written which it had done in initially determining zero need, and therefore published a corrected need for one new program. On January 23, 1990, the Department issued final orders in three cases, each of which involved CON applications for open heart surgery services filed in the September 1988 batching cycle, Hillsborough County Hospital Authority v. Department of Health and Rehabilitative Services, 12 FALR 785 (1990), Humana of Florida, Inc. v. Department of Health and Rehabilitative Services, 12 FALR 823 (1990), and Mease Health Care v. Department of Health and Rehabilitative Services, 12 FALR 853 (1990). In each final order the Department's Secretary stated, with regard to the Department's averaging interpretation, that: I conclude that the rule should be applied as written and that numeric need should be found only where each existing and approved open heart surgery program within the service district is operating at a minimum level of 350 open heart cases per year .... I am not unmindful that the conclusion reached here departs from an established practice of interpreting subparagraph 11 of the need rule by averaging the number of cases done by the existing providers and finding subparagraph 11 to be satisfied if the average was 350 cases or more. As previously stated, I am now satisfied that application of the rule as written is more consistent with sound health planning .... Consequently, the averaging practice that resulted in the Department's corrected notice of need for the September 1989 batching cycle at issue in this case was specifically rejected by the Department as being contrary to the rule as written before it published its notice of intent to grant Boca's application. Even though the corrected need published by the Department was erroneous, as being derived contrary to the express language of the rule methodology, the Department and the applicants contend that such error is not subject to correction in this case because of the Department's fixed need pool rule and the Department's incipient policy regarding when it will correct errors in a fixed need pool that has already been published. Such contentions are, however, unpersuasive as a matter of law, discussed infra, and as not supported by any compelling proof. The Department's fixed need pool rule, codified at Rule 10- 5.008(2)(a), Florida Administrative Code, provides: Publication of Fixed Need Pools. The depart- ment shall publish in the Florida Administra- tive Weekly, at least 15 days prior to the letter of intent deadline for a particular batching cycle the fixed need pools for the applicable planning horizon specified for each service ... These batching cycle specific fixed need pools shall not be changed or adjusted in the future regardless of any future changes in need methodologies, popu- lation estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. In this case there has been no change in the Department's need methodology that leads to a different projection of need, as proscribed by the fixed need pool, but, rather, an identified failure of the Department to properly apply its rule when it assessed need. While the Department may have consistently misapplied its rule in the past, such consistency does not cloth it past action with any propriety where, as here, such action is properly challenged or, stated differently, because the rule was misapplied in the past does not lead to the conclusion that its proper application constitutes a change in need methodologies. Accordingly, it is found that the fixed need pool rule does not, under the circumstances of this case, preclude correction of the need established through the Department's publication of its notice of correction. 3/ The Department and the applicants also contend that the Department's policy on how it will treat corrections to a fixed need pool that has already been published, and errors in a published fixed need pool which are discovered after the cycle has begun, precludes any correction of the need published for this batching cycle. Pertinent to this point, the Department points to its policy, which was published in the Florida Administrative Weekly contemporaneously with its initial assessment of zero need, that provides: Any person who identifies any error in the fixed need pool numbers must advise the agency of the error within ten (10) days of publica- tion of the number. If the agency concurs in the error, the fixed need pool number will be adjusted prior to or during the grace period for this cycle. Failure to notify the agency of the error during this ten day period will result in no adjustment to the fixed need pool number for this cycle and a waiver of the person's right to raise the error at subsequent proceedings. Any other adjustments will be made in the first cycle subsequent to identification of the error including those errors identified through administrative hearings or final judicial review. Any person whose substantial interest is affected by this action and who timely advised the agency of any error in the action has a right to request an administrative hearing pursuant to Section 120.57, Florida Statutes. In order to request a proceeding under Section 120.57, Florida Statutes, your request for an administrative hearing must state with specifi- city which issues of material fact or law are in dispute. All requests for hearings shall be made to the Department of Health and Rehab- ilitative Services and must be filed with the agency clerk at 1323 Winewood Blvd. Building 1, Room 407, Tallahassee, Florida 32301. All requests for hearings must be filed with the agency clerk within 30 days of this publication or the right to a hearing is waived. According to the Department, its policy is to correct computational errors in the fixed need pool only if they are brought to its attention during the grace period which is triggered by the filing of a letter of intent, and if there is sufficient time to publish a corrected fixed need pool prior to the CON application deadline so that all potential competing providers will have notice of the changes. Errors brought to the Department's attention after the grace period will only be considered in the development of the subsequent batching cycle's fixed need pool, regardless of the nature or magnitude of the error. Errors brought to the Department's attention during the grace period, but not reviewed by the Department until after the grace period would only be corrected for subsequent batches. Errors identified in administrative hearings or upon judicial review, even though predicated upon a timely notice of error to the Department, would be corrected in subsequent batches, but not for the batch in which the error occurred. The Department's enunciated rational for the foregoing policy is to instill "predictability" in the CON process, which it suggests promotes competition and affords the Department an opportunity to select from a broader field the best qualified applicants to "meet the need." Such rationale lacks, however, any reasonable basis in fact where, as here, there is no need to be met, and affronts sound health planning principles. The 350 minimum procedure level established for existing providers, before a new program can be approved, is an important threshold bearing on quality of care. In this regard, it has been demonstrated that there is a direct relationship between volume of procedures and mortality, with better results being obtained at facilities operating at a minimum level of 200-350 procedures annually. Accordingly, precision in assessing the need for new open heart surgery programs is crucial to assure that any new program could reasonably be expected to achieve a sufficient level of service, and to assure that the level of service provided by existing facilities would not fall below the optimum threshold. The Department's policy ignores this relationship, would recognize a need where none exists and thereby adversely impact existing programs, and would impinge on future planning horizons. As importantly, the Department's policy would supplant its own rule methodology for calculating need, and render illusory any decision based on a balanced review of statutory criteria. Accordingly, it is concluded that the Department has failed to explicate its policy choice in the instant case, and that numeric need under the Department's methodology is a viable issue in these proceedings. The need for the services being proposed in relationship to the district plan and state health plan. Applicable to this case is the 1989 Florida State Health Plan, which contains the following preferences to be considered in comparing applications for open heart surgery programs: Preference shall be given to applicants estab- lishing new open heart surgery programs in larger counties in which the percentage of elderly is higher than the statewide average and the total population exceeds 100,000. Preference for new open heart surgery programs shall be given to applicants clearly demonstra- ting an ability to perform more than 350 adult procedures annually within three years of initiating the program. Quality of care has been demonstrated to be directly related to volume; thus, facilities are expected to perform a minimum of 350 adult procedures annually. Preference shall be given to applicants who will improve access to open heart surgery for persons who are currently seeking the service outside of their HRS district. This will improve accessibility and reduce travel time for the residents in the district. Preference shall be given to an applicant with a history of providing a disproportionate share of charity care and Medicaid patient days in the respective acute care subdistrict. Qualifying hospitals shall meet Medicaid disproportionate share hospital criteria. Priority should be given to an applicant who provides services to all persons, regardless of their ability to pay. Preference shall be given to an applicant that can offer a service at the least expense yet maintain high quality of care standards. The physical plant of larger facilities can usually accommodate the required operating and recovery room specifications with lower capital expendi- tures than smaller facilities. Larger facilities also have a greater pool of the specialized personnel needed for open heart surgical procedures. Preference shall be given to an applicant that performs percutaneous transluminal angioplasty, streptokinase, or other innovative techniques as alternatives to surgery for low-risk patients. The applicant shall include in its application a protocol regarding the selection of patients for surgery or alternative non-surgical therapeutic cardiac procedures. All three applications are reasonably consistent with the state health plan's preference for establishing open heart surgery programs in counties in which the percentage of elderly is higher than the statewide average and the total population exceeds 100,000. In 1989, Palm Beach County had a population of 873,347, 23.4 percent of which were age 65 and over, which was higher than the statewide average of 17.9 percent. The next most populous counties in the district fell within Martin's primary service area, and were St. Lucie County, with a population of 142,440, 18.3 percent of which were age 65 and over, and Martin County, with a population of 96,336, 25.1 percent of which were age 65 and over. In all, the northern four counties had a population of 360,644, 21.2 percent of which were age 65 and over. The state health plan also accords a preference to applicants who clearly demonstrate an ability to perform more than 350 adult procedures within three years of initiating the program. Of the three applicants, Boca is in the best position to achieve the preference based on the number of diagnostic cardiac caths performed at this facility, and the number of patients it has referred for open heart surgery. Comparatively, Martin and St. Mary's are unlikely to achieve such level of service within three years of initiating a program. The third objective of the state health plan accords a preference for the applicant that will more clearly improve access to open heart surgery for persons who are currently seeking the service outside the district. Currently, while there is no access problem in the district, it is apparent that many district residents leave the district for open heart surgery. During the period of July 1988 - June 1989, open heart procedures were performed on 782 people residing in Boca's primary service area. Of those, 316 received treatment in a District IX facility, 383 received treatment in a District X (Broward County) facility, and the balance received treatment elsewhere, but predominately in Dade County (District XI). While there was a substantial outmigration from Boca's primary service area for open heart services, the vast majority of such outmigration, 325 people, was serviced at North Ridge, a mere fifteen mile/nineteen minute trip from the Boca area. With regard to St. Mary's primary service area, the proof demonstrated that during the same period 566 people sought open heart services, with 455 of those people receiving treatment within District IX. Of the 111 who sought service outside the district, 41 received treatment in Broward County and 61 received treatment in Dade County. Finally, with regard to Martin's primary service area, 316 people sought open heart services, with 148 of those people receiving treatment within the district. Of the 168 who sought service outside the district, 90 received treatment in Broward County, 29 in District VII hospitals, and 39 in Dade County. As heretofore noted, access is not a problem within District IX. However, to the extent this preference seeks to address the issue of outmigration, the proof demonstrates that Martin is the superior applicant. Clearly, the 15 mile/19 minute trip from the Boca area to North Ridge is not a barrier to access, and the number of people from St. Mary's primary service area seeking services outside the district are small in comparison to the other applicants. The residents of Martin's primary service area who seek treatment outside the district are, however, disproportionately large when one considers the aggregate travel time they incur when accessing services in the Orlando or Melbourn areas, or Dade and Broward Counties. The fourth objective of the state health plan accords a preference for the applicant with a history of providing a disproportionate share of charity care and Medicaid patient days in the district. Among the applicants, St. Mary's is the only disproportionate share provider and provides the largest number of Medicaid patient days in the district. As between Boca and Martin, the proof demonstrates that Martin is more committed to, and has historically been a greater provider of, care to the medically indigent. The fifth objective of the state health plan accords a preference to the applicant that can offer a service at the least expense yet maintain high quality of care standards. Here, each of the applicants are large facilities, with demonstrated commitments to maintaining high quality of care standards. Martin has, however, demonstrated that it can offer the proposed service at the least expense. 4/ The last objective of the state health plan accords a preference to the applicant that will perform percutaneous transluminal angioplasty, strepokinase, or other innovative techniques as alternatives to surgery. Here, all applicants propose to offer such services. District IX's 1988 Health Plan was in effect at the time the CON applications were at issue in this case were filed; however, that plan had not been adopted as a rule. Accordingly, such plan is not pertinent to this proceeding. Venice Hospital, Inc. v. Department of Health and Rehabilitative Services, Case Nos. 90-2383R, et seg., (DOAH 1990). The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services in the district. Open heart surgery is a specialized, tertiary health care service. A tertiary health service is defined by Section 381.702(20), Florida Statutes, as: ... a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost-effectiveness of such service.... As a tertiary service, planning for open heart surgery services is done on a regional basis and concentrated in a limited number of hospitals to insure the quality, availability and cost effectiveness of the program. Essentially, the concept of regionalization creates a distinction between hospitals; some hospitals offer routine acute care services, while special high risk services are concentrated in a limited number of hospitals. Encompassed within such concept is the expectation that patients will be transferred from one facility to another to obtain tertiary care services. As a touchstone for assessing need within a service district, the Department has adopted the open heart surgery need methodology, discussed supra, that must normally be satisfied before a new open heart surgery program will be approved. Under that methodology, further need for adult open heart surgery programs is determined based on the projected increase in the number of open heart surgery procedures two years into the future and the open heart surgery volume of existing providers. The rule provides that, regardless of the projected growth in the number of open heart procedures, no additional adult open heart programs are granted unless each existing adult open heart program performs a minimum of 350 procedures annually. Application of the rule methodology to the facts of this case projects a growth in the projected number of open heart procedures sufficient to support a fractional need greater than .5, which the Department reasonably rounded to 1. However, two of the existing three providers were not performing a minimum of 350 procedures annually. Therefore, there is no need under the Department's methodology for a new open heart surgery program in District IX. While no need under the Department's methodology, the applicants have advanced several factors which they contend reflect negatively on the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization or adequacy of existing open heart programs in the district, and which they suggest warrant a finding of need based on special or not normal circumstances. Foremost among the factors pressed by the applicants as indicitive of an abnormal circumstance is the high number of District IX residents who seek open heart surgery services outside the district; referred to in this case as outmigration. Outmigration is, however, simply an observation of patient flow patterns and does not, in and of itself, constitute an abnormal circumstance that would demonstrate need in the district. Rather, to demonstrate a not normal circumstance, such outmigration must be demonstrated to be a consequence of some failing of existing programs, i.e., accessibility or quality of care, to be pertinent to any abnormal need assessment. 5/ In this case, there is no such failing in the existing programs. The three existing adult open heart surgery programs in the district are currently available to 90 percent of the population of the district within a maximum automobile travel time of two hours. Under such circumstances there is no geographic access problem within the district. Moreover, only Martin would actually enhance accessibility, were it a problem, because the residents of the four northern counties it proposes to serve must currently travel to Palm Beach County to access services within the district. In contrast, Boca is within approximately 30 minutes travel time of two existing providers in the district and an additional provider in District X. Likewise, St. Mary's is located less than 10 miles from two of the existing providers in the district. As with geographic access, there is likewise no economic access problem in the district. While the Medicaid use rate within the district for calendar year 1989 was .1 percent, well below the statewide average of approximately 2 percent, such raw statistic does not demonstrate that there is a Medicaid access problem in the district. To persuasively demonstrate such fact from use statistics would require a demonstration that Palm Beach County's use rate was significantly lower than counties with similar demographics. Here, there was no such showing. Moreover, St. Mary's, the largest provider of Medicaid services in the district, was only shown to have transferred three Medicaid patients for open heart or angioplasty services from January 1988, through May 1990. Finally, each of the existing providers have contracted with the Palm Beach County Health Care District to provide care to indigent patients, and have not refused service to anyone regardless of their ability to pay. Accordingly, it is concluded that there is no economic access problem within the district. With two of the three existing providers operating below 350 procedures when this cycle commenced, there is clearly excess capacity within the district when one considers the fact that a single operating room has the capacity to handle at least 500 cases annually. In reaching this conclusion, the applicants' assertion that delays may have been encountered in gaining admission to some facilities during the season because of a lack of critical care beds has not been overlooked. However, any such delays were not reasonably quantified in terms of number or duration, and were not shown to be significant. As importantly, existing facilities have increased their critical care bed capacity, and can increase it further by merely redesignating acute care beds from medical/surgical beds to any type of critical care beds needed as the exigency arises. Although two of the three existing providers offer relatively new programs, the proof is compelling that each provides a quality surgical and post surgical open heart surgery program, appropriately staffed, and that there is no want of quality care within the district. The use of agency nurses, as suggested by one applicant, was not persuasively demonstrated to reflect adversely on quality of care. Succinctly, simply because one is an agency nurse does not suggest substandard performance, and the use of agency nurses, as needed, to staff a facility does not, of itself, aversely impact patient care. Here, the staffs of existing facilities are appropriately trained and supervised, and offer their patients a quality program. While there is certainly a significant outmigration from the district for open heart surgery services, such outmigration was not shown to be related to any infirmity in existing programs. Rather, such outmigration is most reasonably attributable to physicians' established referral patterns or patient preference. 6/ Finally, regarding special circumstances, St. Mary's suggests that its designation as a trauma center and the lack of pediatric open heart services to 90 percent of the population within a maximum automobile travel time of two hours warrant approval of its application. Such suggestions are, however, not supported by compelling proof. While it is true that St. Mary's has been selected by the Palm Beach County Health Care District, along with Delray, for designation as a Level II trauma center, such designation has not been contractually finalized and St. Mary's has not applied for such designation with the Department. As importantly, on October 1, 1990, a new law regarding trauma centers became effective which will reopen the county trauma center designation process, and require facilities to be designated by the state as trauma centers. Under such circumstances, it is speculative whether St. Mary's will become a trauma center, and until such event actually occurs such factor is not significant to these proceedings. St. Mary's quest for a pediatric open heart surgery program is premised on special circumstances, not numeric need, and finds it basis on the fact that no pediatric open heart surgery program exists in the district and that such pediatric services are not available to 90 percent of the population within two hours travel time. While such may be the case, St. Mary's application, on balance, fails to support such an award for a number of reasons. First, St. Mary's application projects that it will perform 10 pediatric open heart surgery cases in its first year of operation, and 20 in its second year of operation. It contains no projection for the third year of operation, but St. Mary's consultant, Michael Schwartz, opined that St. Mary's would perform 50 pediatric open heart surgery cases by the third year based on his belief that St. Mary's would capture 80 to 100 percent of the potential pediatric referrals from District IX and the northern portion of District X. Mr. Schwartz's opinions are not, however, credible. During the period July 1, 1988 to June 30, 1989, there were 40 pediatric open heart surgery cases performed on patients residing throughout District IX, with 22 receiving treatment at Jackson Memorial (Dade County), 14 at Miami Children's Hospital, and 4 at Shands in Gainesville. During the same period, there were 24 open heart pediatric patients in northern District X, an area equi-distant in travel time from the Miami facilities and St. Mary's, with 15 receiving treatment at Jackson Memorial, 8 at Miami Children's Hospital and 1 at Shands. Each of these facilities are either teaching hospitals or specialty pediatric hospitals, are among the top four facilities in the state that perform over 100 pediatric open heart surgery cases each year, and each enjoys an excellent reputation for providing quality pediatric care. Given existent referral patterns and the quality of existing pediatric programs, it is improbable that St. Mary's could reach its projected utilization for years one and two, much less attain a level of 50 pediatric open heart surgery cases during its third year of operation. In 1994, the third year of St. Mary's program, there would be approximately 53 pediatric open heart surgery cases performed on patients residing throughout District IX. To attain a level of 50 cases in its third year, St. Mary's would have to attract almost 100 percent of all cases arising within the district, an improbable occurrence. Equally improbable is St. Mary's ability to penetrate the pediatric open heart surgery market in northern Broward County, an area defined by Mr. Schwartz as being equi-distant in travel time from the Miami facilities and St. Mary's, given existent referral patterns and physicians' satisfaction with existing programs. In sum, the proof demonstrates that St. Mary's could not reasonably be expected to perform 50 pediatric open heart surgery cases within three years of initiating service. In addition to its inability to generate sufficient volume to maintain service quality in a pediatric open heart surgery program, St. Mary's also lacks a pediatric cardiac cath program which is required of any facility proposing pediatric open heart surgery services. Notably, with regard to pediatric cardiac services, Rule 10-5.011(1)(e), which relates to cardiac catheterization services, and Rule 10-5.011(1)(f), which relates to open heart services, are mutually dependent. The cardiac catheterization rule, as it relates to pediatrics, provides: 6. Coordination of Services. * * * Pediatric cardiac catheterization programs must be located in a hospital in which pediatric open heart surgery is being performed. * * * 8. Need Determination. * * * f. Pediatric cardiac catheterization programs shall be established on a regional basis. A new pediatric cardiac catheterization program shall not normally be approved unless the numbers of live births in the service planning area, minus the number of existing and approved programs multiplied by 30,000, is at or exceeds 30,000. (Emphasis added) Also pertinent to this issue, the open heart surgery rule provides: 3. Service Availability. * * * c. The following services must be provided in the health care facility within which the open heart surgery program is located and must be capable of fulfilling the requirements of an open heart surgery program: * * * (VI) Cardiac catheterization laboratory.... The Department reasonably interprets the foregoing provisions as mandating that a pediatric cardiac catheterization program or pediatric open heart surgery program may not be approved independent of the other but, rather, they must coexist. Since the proof is clear that St. Mary's only operates and is only approved by the Department to operate an adult cardiac cath program, and it has not applied for a pediatric cardiac cath program, its proposal is deficient. 7/ In view of the foregoing, it is concluded that, while pediatric open heart services are not currently available within District IX and are not available to 90 percent of the population within two hours travel time, that St. Mary's application to initiate such services should be denied. It is further found that the provisions of the open heart surgery rule relating to the two- hour access standard, which does not specifically state whether such standard applies to adult, pediatric or both, is not applicable to pediatrics. Rather, the Department interprets such rule provision to apply only to adult programs, because such standard is not necessarily pertinent to pediatric open heart surgery since it is more specialized or tertiary in nature than adult open heart surgery programs. Given the close relationship between the cardiac cath rule and the open heart surgery rule, the Department's position is reasonable. In this regard, the cardiac cath rule establishes a travel standard for adult programs, but not pediatric. Rather, it provides for establishment of such programs on a "regional basis," and provides that a new pediatric cardiac cath program should not normally be approved unless the number of live births exceeds 30,000. Here, there were only 16,500 live births in District IX in 1988, a number that is insufficient to warrant a pediatric cardiac cath program. Given such fact, and the relationship between the two rules, the Department's interpretation is reasonable and the two-hour travel time standard does not apply to pediatric open heart surgery. Finally, as to adult open heart surgery services, it is concluded that there exist no special circumstances within the district that would warrant approval of a new open heart surgery program, and that existing facilities are providing appropriate quality care that is accessible to all residents of the district regardless of their ability to pay. The ability of the applicant to provide quality of care and the applicant's record of providing quality of care. Each of the applicants in this case has established an excellent record for providing quality care to their patients, and would be generally expected to provide high quality care for open heart surgery patients notwithstanding some failings in their applications. During the course of the proceeding, some protestants contended that because an applicant failed to detail some particular item of equipment essential to an open heart program, that such failing reflected adversely on their ability to provide quality care. While such could be the case in the abstract, it does not, where, as here, the applicants have sound records, with a demonstrated ability to attract quality personnel to staff their programs. Such failings are, however, germane to the feasibility of the applicant's proposals, discussed infra. Other failings pointed to by the protestants, included: St. Mary's proposal to utilize a call team composed of nurses who customarily assist at thoracic surgery and to recover its open heart patients in a mixed intensive care unit; St. Mary's inability to achieve a 200 and 350 case level per year; Martin's inability to achieve a 350 case level per year; and Martin's failure to document in its application the manner in which it could rapidly mobilize an open heart surgery team 24-hours a day, or how it would treat emergency patients within a two-hour period. Again, considering the quality of the applicants, and the quality personnel they will attract, as well as the parties' stipulation, these failings are minor and do not reflect adversely on their proposals with but one exception. 8/ The only significant factor presented that could bear on an applicant's ability to provide quality care is its ability to achieve optimal utilization levels. In this regard, it has been demonstrated that a relationship exists between the volume of open heart surgical procedures performed at a hospital and the quality of care rendered at those facilities, as measured by patient outcomes. Overall, facilities performing more than 350 cases per year experienced the lowest in-hospital death rate, with those performing more than 200 cases per year being next in line. Pertinent to this issue, the Department has adopted Rule 10-5.011(f)5, Florida Administrative Code, which addresses service quality for open heart surgery programs. That rule, as heretofore noted under the findings related to the Department's need methodology, requires that a minimum of 200 adult open heart surgery cases be performed annually within 3 years of initiating the service, and that at least 50 pediatric open heart surgery cases be performed within 3 years of initiating such service. Here, St. Mary's has failed to demonstrate that it can achieve such level of utilization, and its ability to offer a quality program is therefore suspect. As importantly, Rule 10- 5.011(f)11.a.(II) precludes the approval of St. Mary's application under such circumstances. Boca and Martin could reasonably expect to perform at least 200 cases within 3 years. The need in the service district of the applicant for special equipment and services which are not reasonably and economically accessible in adjoining areas, and the needs and circumstances of those entities which provide a substantial portion of their services or resources to individuals not residing in the service district in which the entities are located. As heretofore noted, North Ridge is located in northern Broward County, a mere 15 mile/19 minute drive time from Boca. North Ridge is a 395-bed hospital that provides all services with the exception of obstetric and radiation therapy, and has for 15 years provided open heart surgery services. It currently has two cardiac catheterization laboratories, and two dedicated and two backup open heart operating rooms. At an average of 750 cases per year, over the last few years, North Ridge has additional capacity, and could comfortably accommodate 1,000 cases per year. North Ridge's primary service area is, and has been for sometime, northern Broward County and southern Palm Beach County, although prior to the initiation of other services in Palm Beach County it serviced the entire area. North Ridge markets extensively in southern Palm Beach County, has follow-up activities for its Palm Beach County residents, and has strong ties with the physician community in southern Palm Beach County. Accordingly, North Ridge has an established presence in southern Palm Beach County, with approximately 30-40 percent of its patients coming from that area. North Ridge's mortality statistics, along with its utilization and reputation, mark it as an excellent facility with a quality open heart surgery program. Moreover, its charges for open heart surgery services are significantly below those of Palm Beach County facilities, as well as those proposed by Boca. North Ridge's location makes it easily accessible to the patients of southern Palm Beach County, and physicians have not experienced any significant problems gaining access to that facility. Moreover, Boca's patients have been accorded first priority at North Ridge. With new technology and the development of various drug therapies, it is extremely rare for a patient to have such an urgent need for open heart surgery that transportation becomes a significant issue. When urgently needed, North Ridge, as well as Delray, can adequately serve the needs of southern Palm Beach County. In sum, there is a viable alternative for residents of southern Palm Beach County to Boca's application, and that is their continued referral to North Ridge. That program is easily accessible, reasonably priced, and historically sound. On the other hand, to approve Boca's application would significantly adversely impact North Ridge, since their service areas in southern Palm Beach County and northern Broward County overlap in most material respects. The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures, for project accomplishment and operations. Each applicant has demonstrated that it either has or can obtain all resources, including health manpower, management personnel and funds for capital and operating expenditures. Boca and Martin each have the funds on hand for project accomplishment, and St. Mary's has demonstrated its ability to acquire such funds through donations, as needed, for project accomplishment. Each applicant is a quality provider of acute care services, and has demonstrated through its existing programs its ability to attract and retain appropriate management and health manpower for project accomplishment, notwithstanding the current nursing shortage being experienced locally and nationally. Accordingly, while the cost of skilled personnel to staff their open heart surgery programs may exceed their initial estimates in some cases, any of the applicants should be able to appropriately staff their program through the use of existing staff, national or local recruitment, or a combination thereof. While each applicant has adequate resources, the viability of Boca's application has been challenged based on its failure to provide a complete list of all capital projects in its application, as required by Section 381.707(2)(a), Florida Statutes. In this regard, the proof demonstrates that the only item listed in its application was for an "expansion/upgrade" of the physical plant at a proposed cost of $6.2 million. That information was an accurate financial description of that project at the time, but did not include other items relating to other construction and equipment purchases to which Boca was committed. In this regard, as of September 1989, Boca had committed itself to an additional $1,261,400 for projects relating to its 1989 fiscal year and $1,380,039 for projects relating to its 1990 fiscal year, for a total of $2,641,439. All of these items will be capitalized by Boca, and it could have provided a list or summary of such projects at the time of filing its application in September 1989. Boca's failure to do so, failed to comply with section 381.707(2)(a), and prevented the Department from having a complete picture of Boca's financial resources to complete the project. The extent to which the proposed services will be accessible to all residents of the service district, and the applicant's past and proposed provision of health care service to Medicaid patients and the medically indigent. Of the proposed programs, only those advanced by St. Mary's and Martin would be reasonably accessible to all residents of the service district. In this regard, the geography and population densities of the district demonstrate that Palm Beach County, at 1,993 square miles, is the single most populous county in the district, with a 1989 population of 873,347. The northern four counties are geographically larger than Palm Beach County, at 2,404 square miles, and contained a 1989 population of 360,664, nearly one-third of the total population of the district. The most dense population in the northern four counties is the Martin County/Port St. Lucie area. The district itself measures 100 miles in length, north to south, in a straight line. Martin is located approximately 60 miles from the southern boarder of the district, St. Mary's is approximately 30 miles, and Boca is 2.1 miles Considering Boca's geographic location, it would not be readily accessible to all residents of the district. Martin and St. Mary's are, on the other hand, sited such that they could, geographically, address the needs of the district as a whole. However, St. Mary's, like Boca, is proximate to a number of open heart surgery providers and would not improve geographic accessibility within the district, as would Martin. Further bearing on the issue of accessibility, is the applicants' commitment to service Medicaid and the medically indigent. In this regard, the proof demonstrates that Boca has not been an historic provider of Medicaid or indigent care, and for its fiscal 1989 dedicated less than 1 percent of its total admissions to Medicaid and indigent care. On the other hand, St. Mary's patient mix has included 15 percent Medicaid and 5 percent indigent, and it is the highest Medicaid provider in the district. Martin has, although to a lesser degree than St. Mary's, also demonstrated a commitment to the underserved by historically serving 5 1/2 percent Medicaid and indigent patients. In its application, Boca "committed" to provide at least 2 percent of gross revenue generated by the open heart surgery program for the provision of charity or indigent care on an annual basis. Considering Boca's nominal historic commitment to indigent care, its location in an affluent area of Palm Beach County, and its closed staff, Boca could not reasonably achieve such level of care, and would not increase accessibility for underserved groups. Comparatively, St. Mary's and, to a lesser extent, Martin, would increase accessibility for underserved groups should the need exist. Here, St. Mary's has projected that 7 percent of its total patient days will be devoted to Medicaid patients and 3 percent to indigent patients, and Martin has projected 5 percent Medicaid and indigent. The costs and methods of the proposed construction. In its application, Boca estimated a total project cost of $7,499,856 to construct and equip a new addition to house its open heart surgery program. That figure included a $6,147,900 construction fund and $783,056 for equipment costs to complete the two operating suites, recovery areas and ten-bed surgical intensive care unit proposed. Its estimates were, however, deficient. Boca's equipment budget, as it appeared in its application, was prepared by an individual who had no expertise in this area, and was deficient in terms of the actual equipment listed and its cost. To properly equip and furnish the two operating room suites, recovery room areas and a ten-bed surgical intensive care unit proposed by Boca would require an expenditure in excess of $1,690,000. Adding necessary instrumentation and a backup pump could add an additional $50-60,000. At hearing, Boca sought to minimize the significance of its underestimation by offering the testimony of an expert in medical equipment planning, cost estimating and procurement. That expert, Richard Drinkwine, was most credible and found, upon review of the Boca proposal that it was wanting in both equipment and cost. In his opinion a more reasonable cost to purchase moverable equipment would be $1,027,267, and a reasonable estimate for the furniture needs of Boca would be $92,257. This estimate was based on the assumption that Boca would not initially equip its second operating room, exam rooms or recovery rooms. To do so, would add an additional cost of $411,329 (movable and fixed equipment) for the second operating room and $160,000 to equip the recovery areas. Adding needed instrumentation and a back up pump would bring Boca's equipment costs to over $1,740,000. 9/ While Boca underestimated its equipment costs, the proof demonstrates that its construction estimate of $6,147,900 was overstated. The major factor which accounts for the overstatement by Boca in its application was an over estimate of the cost to construct the first floor of its addition, which is a covered parking area. In fact, Boca will be able to construct its proposed addition for approximately $5,226,397, or $921,503 less than it estimated in its application. Although Boca could realize a significant savings on construction costs, and those savings would be adequate to almost offset the deficiencies in its equipment budget, the restructuring of its application at this time is not appropriate under the Department's Rule 10-5.010(2)(b). Notably, while the total cost figures might be the same, the additional equipment that is needed to equip Boca's program, and that was omitted from its application, is significant. In addition to Boca's failure to demonstrate the reasonableness of its cost proposal, it is also found that Boca's proposal is oversized and overpriced to meet any demands Boca could reasonably expect to fulfill at any time in the foreseeable future. First, each of the two operating rooms proposed by Boca are over 1,100 square feet in size. Such size is more than twice the size reasonably needed to accommodate open heart surgery. Second, areas in the central core and lounges are also larger then needed. More significantly, Boca is proposing a four-bed recovery area and ten dedicated SICU beds. Even assuming there is a need for an additional open heart surgery program in the district, Boca could never reasonably expect to capture sufficient market share to justify the capital expenditure necessary to warrant a 10-bed SICU. Ten SICU beds could handle between 900 and 1400 open heart patients in a year. There are no programs anywhere in South Florida, no matter how mature or well respected, that have achieved utilization close to that level, and it is not reasonable for Boca to expect to achieve such volumes. Significantly, a portion of the capital cost for Boca's project would, under the present system, be passed along to the federal government by the capital cost pass through. By this mechanism, over $3,500,000 of Boca's project would ultimately be reimbursed to the hospital in the form of Medicare payments. Compared to Boca's cost proposal, St. Mary's is modest. Here, the schematics submitted by St. Mary's with its application and omissions response depict the existing surgical suites at St. Mary's and the minor renovations necessary to convert an existing room into the proposed open heart surgery suite. As proposed, St. Mary's program would have a dedicated open heart surgery suite, as well as a backup operating room. Recovery would be accommodated in its existing 16-bed ICU. In its application, St. Mary's estimated a maximum project cost of $850,000 to remodel its existing facility and equip its proposed open heart surgery program. That figure included up to $100,000 for remodeling costs, and up to $700,000 for equipment costs. St. Mary's estimates are reasonable and cost effective whether its program is dedicated to adult and pediatric open heart surgery service or simply adult services. Significantly, the equipment needed to perform open heart surgery on adults and pediatrics is the same except for some special instruments. That cost, at less than $25,000, is nominal and does not affect the reasonableness of St. Mary's estimates. As proposed in its application, Martin would construct 2,800 square feet of new space at its facility for the purpose of implementing an open heart surgery program. The location of the project is the hospital's first floor adjacent to both the cardiac catheterization laboratory and the existing surgical suites. This location will provide rapid access for cardiac catheterization emergencies requiring open heart intervention and will share common areas with the existing surgical suites, minimizing additional construction and project cost. It is also proximate to a 9-bed surgical intensive care unit. Of the eight existing operating rooms at Martin, two are large enough to serve as backup open heart operating rooms in the event of an emergency, but Martin has not proposed to establish, or budgeted the necessary equipment to establish, a backup operating room. Martin, like St. Mary's, proposes a modest expenditure, compared to Boca, for the initiation of its open heart surgery program. In this regard, Martin's application estimates its total project cost at $1,239,029. That figure includes a total construction cost budget of $796,669, and an equipment budget at $375,360. Martin's costs and methods of proposed construction are reasonable. While the proof demonstrates that approximately $411,000 is a reasonable cost to equip an open heart surgery suite, it also demonstrated that Martin currently has on hand some necessary equipment, such as cell-savers and heating-cooling machines. Under such circumstances, Martin could reasonably equip its program within its $375,360 budget. It could not, however, equip a backup operating room within such budget, and without a backup operating room could not reasonably expect to be able to handle 500 open heart cases a year, as required by rule 10-5.011(f)3d, given the need to back up its cardiac cath program. The immediate and long-term financial feasibility of the proposal. To assess the financial feasibility of the project, Boca's pro forma of income and expense, contained within its application, projects 192 patients during the first year of operation of its open heart surgery program and 211 patients during the second year. Projected charges for both years are based on $55,430 for DRG 104 and $41,942 for DRG 106 with an average length of stay of 10 days. Payor class mix is estimated to be as follows: Medicare 70 percent, Medicaid 0 percent (nominal), insurance 25 percent, other 3 percent, and indigent 2 percent. Net revenue over expenses for year one is projected to be $1,303,312, and for year two to be $1,597,959. Boca's proposed charges, utilization levels, and payor mix are reasonable. However, its pro forma contained unreasonable assumptions regarding average length of stay, total deductions and expenses. 10/ At hearing, Boca made no effort to defend the unreasonable assumptions it had presented to the Department through the pro forma contained in its application. Rather, conceding the unreasonableness of its assumptions, it sought to minimize their import through the testimony of Rufus Harris, an expert in health care finance and accounting. Such objective was not, however, attained. Mr. Harris, employed during the course of these proceedings, actually prepared a completely new pro forma for the Boca program. That pro forma significantly changed Boca's average length of stay from 10 to 16 days; significantly reduced the number of full time equivalents (FTEs) in open heart surgery, recovery and the surgical intensive care unit (SIC) from 39.3 to 24.1; increased the number of support FTEs from 25 to 30 or 32; increased the cost per FTE in the open heart surgery program by $800; increased the cost for each support FTE by $14,000; included the indigent care assessment ($68,000), utility cost ($108,000) and malpractice insurance cost ($17,000) that had been omitted from the application; increased the supply cost by $618,000; and reduced deductions from revenue by $186,000. But for the charges, utilization levels, and payor mix, Mr. Harris' pro forma is a complete revision of Boca's application pro forma, and demonstrates that such pro forma was not based on reasonable assumptions. Although not based on reasonable assumptions, Mr. Harris opined that such failing is not material since Boca's pro forma, like his pro forma, calculated a profit. Mr. Harris' opinion is rejected. The bottom line profit he derived was based on a substantial change in Boca's proposed program. Such slight of hand does not address the financial feasibility of the program Boca proposed in its application. Boca's proposal, developed through the testimony of its construction, equipment and financial experts, bears little resemblance to its initial application, and must be rejected as an impermissible amendment. Boca's application proposed two operating rooms. As such, Boca could facially handle at least 500 open heart surgery cases per year. As amended, with one operating room, Boca could not reasonably expect to attain such level of operations, given the need to back up its cardiac catheterization program, contrary to Rule 10- 5.011(1)(f)3d. As proposed, Boca's open heart surgery program would include recovery areas and a 10-bed SICU, fully staffed. As amended, the SICU would be staffed with one FTE and other staffing substantially reduced. Through downsizing, Boca would presume to significantly alter its proposal, and thereby demonstrate the reasonableness of its cost and financial feasibility projections. Such was not, however, the proposal submitted to the Department for review, and it cannot be permitted, at this stage of the proceedings, to amend its proposal in such material respects. Accordingly, based on the record, Boca has failed to demonstrate the financial feasibility of its proposal. 11/ St. Mary's pro forma of income and expenses projects 200 adult and 10 pediatric open heart surgery cases during its first year of operation, and 240 adult and 20 pediatric during its second year of operation. Separate pro formas describe the adult and pediatric parts of St. Mary's proposal. Actual charges proposed by St. Mary's will vary by DRG, as will average length of stay. The weighted average charges are, however, projected to be $38,000 for adult services and $43,025 for pediatric services during its first year of operation, and $39,900 for adult services and $45,176 for pediatric services during its second year of operation, based on a 10 day average length of stay. Payor class mix for adults is estimated as follows: Medicare 50 percent, Medicaid 7 percent, self pay/commercial 40 percent, and indigent 3 percent. Payor class mix for pediatrics is estimated to be as follows: Medicare 0 percent, Medicaid 50 percent, self pay/commercial 40 percent, and indigent 10 percent. Net revenue over expenses for its adult program is projected, on an incremental cost basis, to be $2,297,566 for year one, and $2,885,102 for year two. Net revenue for its pediatric program is projected, on an incremental cost basis, to be $62,326 for year one, and $224,797 for year two. St. Mary's proposed charges, average length of stay, utilization levels, payor mix, as well as its assumptions regarding total deductions and expenses are not reasonable. St. Mary's proposed charges were not shown to be reasonably achievable. Rather, where, as here, a facility's charge structure is based on consumption of services, the increased costs associated with an open heart program, discussed infra, would translate into significantly higher charges than those proposed by St. Mary's. St. Mary's application contains no data to reasonably support its conclusions that it will achieve 200 adult cases in year one and 240 adult cases in year two, nor did the proof it offered at hearing demonstrate such potential. Rather, the persuasive proof demonstrated that St. Mary's could not reasonably expect to attract more than 80 adult open heart cases in its first year of operation, and that it would not even be able to attract 200 open heart cases during its third year of operation. Notably, the area St. Mary's proposes to serve is currently adequately served by two open heart surgery programs. St. Mary's pro forma contains several other serious flaws. First, its gross patient revenues are driven by an average length of stay of 10 days. Such assumption is unreasonable, and St. Mary's could more reasonably expect an average length of stay of 15-17 days, with significantly higher expenses associated with the greater consumption of resources occasioned by such increased length of stay. Second, St. Mary's payor mix is significantly understated for Medicare. Here, the proof demonstrates that St. Mary's could reasonably expect to achieve a 68-70 percent Medicare utilization rate, as opposed to the 50 percent it projected. Such increase would significantly reduce its self pay/commercial, assuming its Medicaid and indigent utilization levels are to be accorded any credence, and significantly increase its deductions from revenue. Third, St. Mary's pro forma significantly understated expenses, primarily with regard to supplies and FTEs. Had St. Mary's reasonably calculated its average length of stay at 15-17 days, its expenses for supplies and FTEs would have been substantially higher. Additionally, St. Mary's application only addresses the need to tap incremental FTEs in the nursing area, whereas initation of an open heart program would have a tremendous impact on all services in the hospital, such as lab, pharmacy and social services, with attendant higher costs. Based on the opinion of Richard Cascio, an expert in health care finance, which is credited, St. Mary's proposal is not financially feasible in the long term. 12/ Regarding St. Mary's pediatric open heart program, the proof, as heretofore found, fails to support is utilization projection of 10 cases in year one and 20 cases in year two. Therefore, St. Mary's has failed to demonstrate the long term financial feasibility of that program operated, as proposed, concurrently with an adult program. As a stand alone program, neither St. Mary's application nor the proof at hearing reasonably address such a prospect. However, since the pediatric program was not shown to be financially feasible with the adult program bearing a significant portion of operating expenses, it must also be concluded that the pediatric program would not be financially feasible were it to carry all operating expenses. Martin's pro forma of income and expenses is predicated upon 148 adult open heart surgery cases during its first year of operation, and 195 cases during its second year of operation. Actual charges proposed by Martin will vary by DRG, as will average length of stay. Projected average charges are, however, projected to be $41,000 during its first year of operation and $43,080 during its second year of operation, based on a 15.7 day average length of stay. Payor class mix is estimated as follows: Medicare 63.0 percent, Medicaid 2.5 percent, private pay/commercial insurance 32.5 percent, and free care 2 percent. Net revenue over expenses is projected to be $260,000 for year one and $337,000 for year two. Martin's utilization levels, proposed charges, payor mix, and average length of stay are reasonable. Martin's pro forma did, however, contain some unreasonable assumptions regarding expenses, primarily staffing costs. 13/ Martin's pro forma estimates staffing costs based on the manpower requirements (FTEs) and salaries set forth in Table 11 of its application. It further calculates fringe benefits at 20 percent of salaries. Notably, however, the number of people needed to staff a program at a given FTE level is significantly higher than the raw FTE number. Accordingly, since Martin projected its salary expense and fringe benefits based on FTE's, its expenses associated with those items are understated. Further, the salaries Martin proposed in Table 11 for its operating room nurses are entry level salaries and Martin could not reasonably expect to recruit experienced open heart surgery personnel at such rates. Nor is its projected salary for a perfusionist, at $59,551 reasonable. A more reasonable figure would be in excess of $75,000. Even though the proof offered in opposition to Martin's application did demonstrate that Martin's assumptions regarding salary expenses were understated, it failed to demonstrate that Martin could not meet current market demands and still be profitable. Rather, Martin's proposal, while generating a lower bottom line, will still be profitable if such increased expenses are considered, and it is financially feasible in the long term. While each of the applicant's have demonstrated the immediate financial feasibility of their projects, by demonstrating the availability of funds for project accomplishment and operation, only Martin has demonstrated the long term financial feasibility of its proposal. Other criteria bearing on capital expenditure proposals for the provision of new health services to inpatients. In cases of capital expenditure proposals for the provision of new health services to inpatients, Section 381.705(2), Florida Statutes, requires that the Department reference each of the following in its findings of fact: That less costly, more efficient, or more appropriate alternatives to such inpatient services are not available and the development of such alternatives has been studied and found not practicable. That existing inpatient facilities pro- viding inpatient services similar to those proposed are being used in an appropriate and efficient manner. In the case of new construction, that alternatives to new construction, for example, modernization or sharing arrangements, have been considered and have been implemented to the maximum extent practicable. That patients will experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service. In the instant case, none of the foregoing criteria can be answered in the affirmative. Rather, the proof demonstrates that less costly, more efficient or more appropriate alternatives currently exist through increased utilization of existing facilities. It further demonstrates that two of the existing three providers have not yet attained a 350 case per year level of operation, and that their services are therefore not yet being used at an appropriate level. Existing utilization levels and capacity further demonstrate that patients will not experience any serious problems in accessing such services. Finally, the applicants further failed to demonstrate that they had considered alternatives to new construction and had implemented them to the maximum extent possible. In the case of all applicants' there is no proof of any effort to initiate sharing arrangements. On the matter of Boca's complaints regarding delays experienced in effecting patient transfers by ambulance, as well as the inadequacy of such ambulances and their breakdowns, it offered no proof that it had investigated other ambulance services or its ability to operate its own service and found them impractable. Notably, such services are an item over which Boca has significant control, and its failure to investigate alternatives in this regard evidences the insignificance of any such problem. The criteria on balance. In evaluating the applications at issue in this proceeding, none of the criteria established by Section 381.705, Florida Statutes, or Rule 10- 5.011(1)(f), Florida Administrative Code, has been overlooked. The applicants' failure to demonstrate need, either numeric or not normal circumstances, as well as their failure to demonstrate compliance with Section 381.705(2), Florida Statutes, is, however, dispositive of their applications, and such failure is not outweighed by any other or combination of any other criteria. Further, even were the fixed need pool accorded the deference suggested by the Department, the other indicators of need subsumed within other criteria would dispel such illusion, and again compel the conclusion that there is no need in this case. Had numeric need been demonstrated, and the need requirements encompassed within section 381.705(2) satisfied, the proof would still fail to support an award to Boca or St. Mary's. Rather, among the competing applicants, Martin was shown to best satisfy the pertinent review criteria on balance and would, under such circumstances, be the favored applicant.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that a final order be entered denying the applications of Boca, St. Mary's and Martin for a certificate of need to establish an open heart surgery program in District IX. RECOMMENDED in Tallahassee, Leon County, Florida, this 15th day of March 1991. WILLIAM J. KENDRICK 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 15th day of March 1991.
The Issue This proceeding concerns applications for certificates of need (CON) for open heart surgery programs at Central Florida Regional Hospital and Winter Park Memorial Hospital. It must be determined whether those applications meet applicable statute and rule criteria and should be approved by the Department of Health and Rehabilitative Services. By stipulation, filed on June 20, 1989, the parties agree that the following criteria have either been met or are not at issue in this proceeding: Section 381.705(1)(c), F.S., regarding quality of care, only as to the applicants' record of providing quality of care in currently existing programs, and not as to the provision of open heart services. Section 381.705(1)(f), F.S., regarding the need for special equipment and services in the district which are not reasonably and economically accessible in adjoining areas. Section 381.705(1)(j), F.S., regarding the special needs and circumstances of health maintenance organizations. Section 381.705(2)(e), F.S., regarding nursing home beds. Rule 10-5.O11(1)(f)3.c., F.A.C., regarding the applicants' ability to provide a specified range of services in the facility if granted their certificates of need.
Findings Of Fact The Parties Applicant, Central Florida Regional Hospital (CFRH) is a 226-bed private, for profit hospital in Sanford, Seminole County Florida. CFRH was a county-owned hospital until 1980, when it was purchased by Central Florida Regional Hospital, Inc., a wholly-owned subsidiary of Hospital Corporation of America (HCA). CFRH currently provides a wide range of diagnostic and treatment services, including cardiology, neurology surgery, special imaging, and nuclear cardiology. Its in-patient cardiac catheterization services were initiated in April, 1988. Applicant, Winter Park Memorial Hospital (WPMH), is a 301-bed acute care, not-for-profit hospital located in Winter Park, Orange County, Florida. It was opened in 1955, and is governed by a board of directors comprised of business and civic leaders in the central Florida area. WPMH also currently offers diagnostic cardiac catheterizations services with medical/surgical, pediatric/obstetric, and a broad range of outpatient services. The Department of Health and Rehabilitative Services (HRS) is the agency responsible for administering sections 381.701 through 381.715. F.S., the "Health Facility and Services Development Act", the statute describing the certificate of need (CON) process. Petitioner, Humana of Florida, Inc., is the corporate owner of Humana Hospital Lucerne (Humana), a 267-bed hospital facility in downtown Orlando, Orange County, Florida. Along with its broad range of existing services, Humana provides open heart surgery and a full range of diagnostic and therapeutic cardiac catheterizations. It maintains two operating rooms (ORs) dedicated for open heart surgery. Petitioner, Adventist Health Systems/Sunbelt, Inc. is the corporate owner and licensee of a number of hospitals, including Florida Hospital. Florida Hospital is a private not-for-profit tertiary care hospital with over 1100 beds on three campuses in central Florida: Orlando, Apopka, and Altamonte Springs. Florida Hospital's open heart surgery program, the largest in HRS District 7, and one of the largest in the southeast United States, is conducted at the Orlando facility in Orange County. It has four ORs dedicated to open heart surgery. Florida Hospital has an active cardiac catheterization program with a full range of diagnostic and therapeutic procedures, such as angioplasty and valvuloplasty. The Applications CFRH proposes to add its open heart surgery program at a total cost of $4,322,702.00, including construction costs, equipment and financing costs. CFRH intends to start with a single furnished OR and with shelled-in space for a second OR. These and a recovery area will be located on the first floor adjacent to the existing surgical department. Twelve existing general medical/surgery beds will be converted to intensive care beds on the second floor, accessible by means of an elevator dedicated to the exclusive use of open heart surgery patients. CFRH's primary service area is described as north Seminole and southwest Volusia counties, an area containing no other open heart surgery programs. It anticipates it will draw its open heart surgery patients primarily from that service area, and projects 200 surgeries by the end of the first year, with 288 surgeries during the second year. WPMH proposes to add two dedicated ORs and related operating suite rooms for open heart surgery, at a cost of $1,470,000.00. One of the ORs will be kept available for emergency open heart surgery cases. The application does not include additional intensive care or critical care unit beds. Because it is slowly phasing in additional progressive care beds, the applicant anticipates that the current bottleneck created by patients waiting to leave critical care to go to progressive care, will be relieved by the time the open heart surgery program generates a demand for critical care and intensive care beds. Like CFRH, WPMH claims a relatively local primary service area, east Orange and south Seminole Counties, and proposes that its open heart surgery program will serve that same area. WPMH projects a case load of 117 open heart surgery patients the first year, 173 the second year, and is confident that it will meet the minimum requirement of 200 adult open heart procedures annually by the end of the third year of service. Neither CFRH nor WPMH are projecting pediatric open heart surgery. Numeric Need and the "350 Standard" HRS Rule 10-5.011(1)(f)8., Florida Administrative Code, provides the formula for determining a threshold numeric need for open heart surgery programs in a service area, defined for purposes of the rule as the entire HRS district. District 7 is comprised of Orange, Seminole, Osceola, and Brevard Counties, on Florida's east central coast. The formula is stated as follows: 8. Need Determination. The need for open heart surgery programs in a service area shall be determined by computing the projected number of open heart surgical procedures in the service area. The following formula shall be used in this determination: Nx - Uc X Px Where: Nx = Number of open heart procedures projected for Year X; Uc = Actual use rate (number of procedures per hundred thousand population) in the service area for the 12 month period beginning 14 months prior to the Letter of Intent deadline for the batching cycle; Px = Projected population in the service area in Year X; and, Year X = The year in which the proposed open heart surgery program would initiate service, but not more than two years into the future. Elizabeth Dudek is a health facilities and services consultant supervisor in HRS' Office of Regulation and Health Facilities. She was the Department's authorized representative at the hearing and was qualified, without objection, as an expert in health planning. The State Agency Action Report (SAAR), reflecting HRS' review of the CON proposals, applies the formula above as explained by Ms. Dudek. The planning horizon for the project under consideration is July, 1990, which, based on data from the Executive Office of the Governor, has a projected population of 1,492,327. The use rate of 202.53 per hundred thousand population for District 7 was derived from volume data provided by the local health council and from population data from the Executive Office of the Governor. The result of the formula is a projected number of 3022 procedures in the planning horizon. While the rule does not specify what is done with this figure, HRS looks to the 350 minimum number of procedures required in subsection 11. of the rule and divides 350 into the projected number of procedures, to derive a theoretical number of programs which could operate in the district. HRS found a need for 8.6 programs, rounded to 9. Since District 7 has four existing programs, this meant that 5 additional programs could be approved. HRS approved three, the two applicant parties in this proceedings and Wuesthoff, in central Brevard County. There is little, if any, dispute with HRS' application of its rule to this point. The parties do vigorously dispute the application of the following portions of Rule 10-5.011(1)(f), F.A.C.: 11.a. There shall be no additional open heart surgery programs established unless: the service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year or 130 pediatric heart cases per year, and, the conditions specified in Sub- subparagraph 5.6., above, will be met by the proposed program. b. No additional open heart surgery programs shall be approved which would reduce the volume of existing open heart surgery facilities below 350 open heart procedures annually for adults and 130 pediatric heart procedures annually, 75 of which are open heart. The volume of procedures performed at existing programs during the period, July 1987 to June 1988, was: Florida Hospital-Orlando 1612 Holmes Regional 333 Humana Lucerne 440 Orlando Regional 368 2753 At the time of this batching cycle, there were only "existing" and no "approved" (not yet operating) programs in District 7. Holmes Regional did not meet the 350 minimum, as reflected above. HRS, however, has consistently and over a period of years, interpreted the requirement of 11.a (I) to be that an average of 350 cases be performed by existing and approved programs, not that each program actually perform that minimum, annually. Under this interpretation, which assumes that all programs have equal capacity, there are sufficient procedures being generated in the district to allow for the existing programs to average over 688 procedures. Quality of Care Part of the rationale for the 350 minimum procedures per year is the widely-accepted view that mortality rates are lower when an open heart program experiences volume at a minimum level of 200-350 procedures annually. Dr. Harold Luft is a professor of Health Economics employed at the University of California in San Francisco, who has conducted extensive research into the correlation between volume of open heart surgery cases and quality of care. In his findings published in the Journal of the American Medical Association in 1987, in-house deaths were 5.2%, 3.9%, 4.1% and 3.1% in facilities conducting 20-100, 101-200, 201-350, and more than 350 annual operations, respectively. A strong correlation was also found between volume and "poor outcome", defined as patients who either died in the hospital or who stayed beyond 15 days in the hospital (the 90th percentile post operative length of stay). Poor outcomes occurred in 21.7%, 15.5%, 11.8% and 12% of the patients in facilities performing 20-100, 101-200, 201- 350, and more than 350 annual procedures, respectively. The correlations are even more dramatic for patients who received non-scheduled ("emergency") surgery, ranging from 7.7% deaths in hospitals performing less than 100 operations, to 4.6% deaths in hospitals performing more than 350 operations annually, and from 27.9% poor outcomes in the lowest volume hospitals to 16.3% poor outcomes in the highest volume hospital. Both applicants argue the advantages of having the open heart surgery in-house to avoid the trauma of transfer of an emergency patient from their facility to another existing open heart surgery program. Dr. Luft's study cited above suggests that, despite the trauma of transfer, an unscheduled case might still expect a better outcome in a higher volume facility. While it is sometimes necessary to transfer a patient from one hospital to another for coronary angioplasty or open heart surgery, those patients are most frequently medically stable and have been scheduled for the procedure. Where a patient in need of a diagnostic cardiac catheterization has a history placing him in a high risk category, the patient will generally be referred at the outset to a facility with full service back-up to avoid the chance of an emergency transfer. Emergency cases are rare in open heart surgery, and when they have occurred, they have been accommodated at existing programs, with little, if any, delay. The applicants presented ample hypothetical examples of elderly heart patients anxiously enduring emergency transfers by helicopter or ambulance with dangling IV tubes, balloon pumps or other support devices. No actual data was presented as to how many cases are transferred in this manner or to the mortality rates attributable to such transfers. Florida Hospital enjoys an excellent reputation for the quality of its large open heart surgery program. It regularly draws patients from areas beyond the boundaries of district 7. No evidence was produced to suggest that the other existing programs are of questionable quality. Quality of care in the district will not be enhanced by approval of these applications. Access: Geographic and Economic Rule 10-5.011(1)(f)4.a., F.A.C. requires that open heart surgery be available within a maximum automobile travel time of two hours under average travel conditions for at least 90% of a service area's population. It is uncontroverted that this standard is met by existing providers. The average driving time from Florida Hospital to CFRH is 29 minutes, and from Florida Hospital to WPMH is just over 15 minutes. Although CFRH would be the only program in Seminole County, the population is concentrated at the lower end of the county, closer to Orlando and closer to Florida Hospital than to CFRH at the northeast end of the county. It would undoubtedly be convenient for patients and their physicians to be able to administer and receive all medical services in a neighborhood center, but no one is suggesting that every community hospital should have an open heart surgery program. Open heart surgery and its associated services are expensive. These services are not used by many indigent or Medicaid patients and no data is available regarding the level of need by this group or the impediments to access. WPMH has a reputation of providing low cost medical services and CFRH has a commendable history of commitment to public health, but the numbers of medicaid patients and indigents proposed to be served do not alone-weigh in favor of approval of their applications. Availability of Staff A single seven-physician, open heart surgery group performs virtually all of the open heart surgery in District 7, at Orlando Regional Medical Center (ORMC), Humana and Florida Hospital. The group has also committed to providing services at Winter Haven Hospital, an applicant in District 6; Wuesthoff; and CFRH and WPMH. In addition to surgery, the group provides in-house back up to facilities performing coronary angioplasty in their catheterization labs. When new programs come on line the open heart surgeon must spend substantial time training and working with the new surgery team at the hospital. This would further strain a busy practice. There are already delays at existing facilities in obtaining back-up surgery coverage. The group has stated that it will expand, if the new programs are approved, but it is unreasonable to assume that the expansion will be timed to fully accommodate existing demand and the demand of three new programs. The shortage of critical care unit nurses nationwide and in central Florida, is widely acknowledged, and Dr. Meredith Scott, an eminent cardiac surgeon otherwise enthusiastically supporting the new programs, cautions that the dilution of a pool of highly qualified nurses detracts from his support. When hospitals are unable to recruit sufficient nursing staff they are left with reliance on temporary agency personnel, a less preferable alternative in terms of costs and quality of care. Financial Feasibility Both applicants have the funds required for capital expenditures and start-up costs. CFRH's parent corporation, HCA, has committed that it will fund the project costs and has the resources to do so. The interest expenses allocated by HCA are appropriately included in the applicant's pro forma projection of revenue and expenses. The pro formas of both applicants, reflecting no more than a best guess, are reasonable. To the extent that expenses are understated, the charges will no doubt be adjusted, and they will also rise in the event that use rates do not reach expectations. Open heart surgery is a highly profitable health care service. Competition/Need/Impact on Existing Programs District 7 has four existing providers and a fifth approved provider, Wuesthoff, for a total of 11 dedicated ORs for open heart surgery, ranging from 4 at Florida Hospital to one at Holmes. Competition in the market already actively exists and was not a notable factor in HRS' decision to approve the applications. Wuesthoff's projected average charge for the first year at $30,400.00 is $4-5,000.00 less than that projected by WPMH and CFRH. A single OR has a capacity of 500 cases per year. HRS Rule 1O- 5.O11(1)(f)3.d, F.A.C. requires that each open heart surgery program be able to provide 500 operations per year. Same programs, as Holmes, and as CFRH's proposed program, have only one OR, evidencing acceptance of that capacity principle. Eleven existing and approved ORs translate into a capacity of 5500 cases. The horizon year volume is projected at a mere 3,022 cases. Assuming, for argument's sake, and as proposed by the applicants, that the need methodology of Rule 10- 5.O11(1)(f)8., F.A.C. under-states utilization rates and, therefore, need; or that the number of "cases" should be more properly adjusted by a multiplier to derive the number of "procedures"; ample capacity still exists. In the period of July 1987 through June 1988, existing providers performed 2753 surgeries. The projected 3,022 cases will generate 269 additional surgeries - enough to support Wuesthoff, the approved provider, (assuming no increase by existing providers) - but inadequate to justify the approval of two additional programs in the same cycle. It is obvious from the above that the applicants, in order to achieve their projected utilizations, will draw heavily from existing providers. At 1589 cases in 1988, (more than half the cases performed that year in District 7), Florida Hospital is a leviathan, a mega-center. Approximately half of its patients come from counties outside of District 7. Among the in- district patients, substantial numbers of referrals are from CFRH and WPMH. In a 13-month period ending in April 1989, CFRH referred 82 open heart surgery cases to Florida Hospital and one case to Humana. In 1987 and 1988, WPMH referred 70 and 84 open heart surgery patients, respectively, to Florida Hospital and 4 and 5 patients to Humana Hospital. Whether population growth or increased utilization rates will make up those losses is a matter of conjecture. Utilization rates have remained relatively stable since 1983, gaining 13 cases per thousand in that period, from 196 in 1983, to 209 in 1988. New technology is making it possible to avoid open heart surgery by removing obstructions from the heart vessel, rather than bypassing them. Ultrasound and laser techniques are being tested, and drug treatments and more efficient use of balloon angioplasty are reducing the incident of by-pass operations. Consequently, it is the sicker patients who receive the more invasive open heart surgery. And, typically, the sicker patients are referred to the larger, longer- established programs, driving up their costs when the new programs are able to skim the more profitable cases. Size alone does not cushion the impact on a facility such as Florida Hospital. The cardiology program accounts for one-third of its revenue. It helps support a research center and extensive education programs . Loss of revenue will effect these programs, as they, rather than direct services to patients, will be cut to the detriment of the health care community at large. Impact on Humana and the other smaller facilities is likely to be more direct. Humana's open heart surgery program was set back recently when a group of cardiologists left its staff in a dispute over administration. Volume has dropped and Humana reasonably projects 250 surgeries or less in 1991 and 1992 if WPMH and CFRH are approved. Both Humana and ORMC lost volume and market share when Holmes began to operate, since these facilities rely heavily on in-district patients. Like Florida Hospital, Humana derives one-third of its revenue from its cardiology program. State and Local Health Plans Both applications are consistent with the State Health Plan's objective of maintaining an average of procedures per open heart surgery program in the district, although as demonstrated above, actual maintenance of such an average would decimate the program at Florida Hospital. The plan's primary goal of ensuring the availability and accessibility of open heart services is not advanced by these applications. The most current State Plan is dated 1985-87; it is effective through 1987. Although widely referred to in CON proceedings because of statutory and rule requirements for consistency, the utility of an out-of-date plan for health planning purposes is questionable. The District 7 local health plan, approved by the local health council in June 1988, is internally inconsistent. It provides: District VII existing open heart programs appear to be performing well both from the standpoint of volume efficiency and quality, and clearly, there is sufficient, accessible capacity in these programs to handle additional growth. Consider, too, that new open heart programs are being developed in surrounding districts, and these programs, once operational, will begin to draw back their local patient bases from this district's open heart providers. Lately, as angioplasty, laser and drug technology evolve, there is little doubt that the percentage of patients requiring open heart surgery to correct blockage problems will drop. In view of these aforementioned facts, the approval of any additional open heart programs in District VII is discouraged. (Florida Hospital Exhibit #9, P. AC- 45.) emphasis added. At the same time, the plan provides four recommendations for tertiary services, including open heart surgery: specifically, that priority be given to CON applications from teaching hospitals or regional health care centers (defined as non-teaching hospitals) of at least 300 acute-care beds, that priority be given to applicants which commit to serve patients regardless of ability to pay, that applications be reviewed on a districtwide or regional basis, and that review priority be given to open heart surgery applicants which provide clear documentation of the impact of their proposal on other similar service providers in the district and in adjourning districts serving the same geographical area. (Florida Hospital Exhibit #9, P. 11-67) As discussed above, these recommendations are only marginally met by the applicants, if at all, and CFRH is clearly not a regional health center. "Balancing the Criteria" and Summary of Findings Additional open heart surgery programs are not needed in District 7. The expenditure of approximately $5.8 million in construction and start-up costs, the dilution of scarce staffing resources, the real potential that existing programs will suffer substantial financial losses, the real risk that declining volume at existing programs will lead to poorer quality of care or that the new programs will fail to achieve their hoped for volume, are not outweighed by enhanced convenience to patients, their families and physicians. Access to good quality open heart surgery is not currently a problem and, as advocated by Dr. Ron Luke, the more prudent health planning course would be to wait to see what happens in the district with the additional two open heart surgery operating rooms at Wuesthoff.
Recommendation Based on the foregoing, it is hereby, RECOMMENDED: That a final order be issued denying CON number 5695 for Winter Park Memorial Hospital and number 5696 for Central Florida Regional Hospital. DONE AND RECOMMENDED this 12th day of December, 1989, in Tallahassee, Leon County, Florida. MARY CLARK 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 12th day of December, 1989. APPENDIX The following constitute rulings on the findings of fact proposed by each party: CENTRAL FLORIDA REGIONAL HOSPITAL This party's proposal includes 68 separately numbered lengthy paragraphs combining argument with multiple findings. The arguments are well articulated and well organized. However, the format makes it impossible to accord a paragraph by paragraph ruling. The description of the parties, the description of HRS' application of its rule and the conclusions regarding financial feasibility of the CFRH application are accepted generally and substantially, or in summary form, have been adopted in this recommended order. Otherwise, the findings are rejected as unnecessary, immaterial or contrary to the weight of evidence. WINTER PARK MEMORIAL HOSPITAL Adopted in paragraph 2. Addressed in the Preliminary Statement. Adopted in paragraph 2. 4-6. Rejected as unnecessary. 7. Adopted in Statement of the Issues. 8-10. Rejected as unnecessary. Adopted in paragraph 9. Rejected as unnecessary. 13-17. Adopted generally in paragraph 9. 18 and 19. Rejected as unnecessary. 20-31. The current staffing at the facility and the level of staffing projected as necessary for the open heart program are not materially at issue. The issue is whether necessary staffing will be available and whether competition for existing staff will impact costs and quality of care. Rejected as contrary to the weight of evidence. See 20-31, above. Rejected as contrary to the evidence. There are delays in getting back-up surgery teams. The description of the group and its commitment is adopted in paragraph 30. That quality of care will not be affected was not established by the weight of evidence. 36-38. Rejected as unnecessary. 39-47. Adopted generally in paragraphs 34 and 35, except as to the finding that there is sufficient growth to assure 200 cases in the third year for all three applicants. This is rejected as contrary to the evidence. 48 and 49. Rejected as unnecessary. 50. Rejected as contrary to the weight of evidence. 51-53. Addressed in paragraph 23, otherwise rejected as immaterial. 54-58. Addressed in paragraph 28, otherwise rejected as immaterial. Adopted in substance in paragraph 29. Adopted in paragraph 14. 61 and 62. Adopted in paragraph 12. 63. Adopted in paragraph 14. 64 and 65. Rejected as unnecessary. 66. Adopted in paragraphs 16 and 17, except that the application meets the requirements of the rules, only as applied by HRS. 67-83. Rejected generally as contrary to the weight of evidence or immaterial. 84. Rejected as argument. 85-89. Rejected as immaterial or argument. 90. The comparison of Florida Hospital's mortality rate to that of Ormand Beach Hospital's is immaterial. There is no analysis of case mix and even Dr. Luft concedes that there may be isolated examples of high mortality rates with high volume or low rates in a low volume hospital. 91-93. Rejected as unnecessary or unsupported by the weight of evidence. Rejected as unnecessary. That the application meets the objectives of the local health plan is rejected as contrary to the evidence. The remaining portion of the paragraph is subordinate Rejected as unnecessary. Adopted in cart in paragraph 44, otherwise rejected as contrary to the evidence. Rejected as cumulative and unnecessary. 99-115. Rejected as unnecessary. That competition already exists is adopted in paragraph 36 otherwise rejected as unnecessary. Rejected as contrary to the evidence. THE DEPARTMENT OF HRS 1-3. Addressed in Preliminary Statement. 4 and 5. Adopted in substance in paragraph 12. 6-8. Adopted in paragraph 14. 9. Adopted in paragraph 45. 10 and 11. Rejected as unnecessary. Rejected as contrary to the weight of evidence. Adopted, as to the "averaging" method, in paragraph 44, otherwise rejected as unnecessary. Rejected as contrary to the weight of evidence, except as to the finding regarding drive time, which is adopted in paragraph 26. The quality of care stipulation is addressed in the statement of issues. The remaining finding regarding 200 procedures within 3 years is rejected as contrary to the weight of evidence. 16 and 17. Adopted, as to financial feasibility, in paragraphs 34 and 35, otherwise rejected as contrary to the weight of evidence. 18. Rejected as contrary to the weight of evidence. 19 and 20. Rejected as immaterial or unnecessary. HUMANA OF FLORIDA, INC. Adopted in substance in paragraph 9. Rejected as unnecessary. The original lack of pro forma is addressed in conclusions of law. Rejected as unnecessary. Adopted in paragraphs 6 & 7. 5 and 6. Adopted in Preliminary Statement. Adopted in paragraphs 14 & 16. Rejected as unnecessary. Adopted in Preliminary Statement. 10-12. Adopted in paragraph 4. Rejected as unnecessary. Rejected as subordinate. Adopted in substance in paragraph 30. 16 and 17. Adopted in paragraph 46. Adopted in paragraph 15. Adopted in paragraph 19. 20 and 21. Rejected as unnecessary. 22. Adopted in paragraph 14 and in conclusions of law. 23-25. Rejected as unnecessary. 26 and 27. Adopted in paragraph 38. Adopted in paragraph 37. Adopted in substance in paragraph 46. 30 and 31. Adopted in substance in paragraphs 26 and 27. 32-35. Rejected as unnecessary. 36. Adopted in substance in paragraph 41. 37 and 38. Rejected as unnecessary. 39 and 40. Adopted in paragraph 46. 41-44. Rejected as cumulative and unnecessary. 45-49. Adopted in substance in paragraphs 44 and 45. 50 -60. Rejected as contrary to the weight of evidence or unnecessary. 61-63. Adopted in substance in paragraph 36. 64-70. Rejected as cumulative or unnecessary. 71. Adopted in paragraph 24. 72 and 73. Adopted in paragraph 25. 74. Adopted in paragraph 19. 75-77. Rejected as unnecessary. 78-82. Adopted in substance in paragraphs 30-32. 83 and 84. Adopted in paragraph 33. 85-90. Rejected as unnecessary, except as adopted in paragraph 22. 91-1OO. Rejected as unnecessary. Adopted in paragraph 29. Rejected as unnecessary. 109-123. Rejected as contrary to the weight of evidence. 124-125. Rejected as unnecessary. 126-134. Adopted in summary in paragraph 43. 135-138. Rejected as cumulative. 139-143. Rejected as contrary, to the weight of evidence or unnecessary. FLORIDA HOSPITAL Adopted in paragraphs 1 & 2. Adopted in paragraph 4. Adopted in paragraph 5. Adopted in paragraph 16. 5-12. Rejected as unnecessary. Adopted in paragraph 12. Adopted in paragraph 14. Addressed in Preliminary Statement. Adopted in paragraph 17. Adopted in paragraph 38. Rejected as unnecessary. Adopted in paragraph 41. 20 and 21. Rejected as unnecessary. 22 and 23. Adopted in paragraph 45. Rejected as unnecessary. Adopted in paragraph 19. Adopted in paragraph 20. Rejected as cumulative and unnecessary. Adopted in paragraph 26. Adopted in paragraph 27. Adopted in paragraph 22. 31 and 33. Rejected as unnecessary. 34-39. Rejected as argument or unsupported by the record. 40. Adopted in summary in paragraph 33. 41 -46. Rejected as unnecessary. Rejected as immaterial. Rejected as contrary to the evidence or immaterial. Addressed in Conclusions of Law. Adopted in paragraph 39. 51-57. Rejected as unnecessary. 58-76. Impact is addressed in summary in paragraphs 42 and 43. 77. Adopted in paragraph 30. Adopted in paragraph 29. Rejected as unnecessary. COPIES FURNISHED: Jeffery A. Boone, Esquire Robert T. Klingbeil, Jr., Esquire P.O. Box 1596 Venice, FL 34284 James C. Hauser, Esquire P.O. Box 1876 Tallahassee, FL 32302 Richard A. Patterson, Esquire Ft. Knox Executive Center 2727 Mahan Drive Tallahassee, FL 32308 John Radey, Esquire Elizabeth McArthur, Esquire Monroe Park Tower Suite 1000 Tallahassee, FL 32314 Kenneth F. Hoffman, Esquire 2700 Blairstone Road Tallahassee, FL 32314 Gregory L. Coler, Secretary Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 John Miller, General Counsel Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 R. S. Power, Agency Clerk Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 =================================================================
The Issue The issue in this case is whether Venice Hospital, Inc., (Venice) meets the statutory and rule criteria for a Certificate of Need (CON) to operate an open heart surgery program, and therefore, whether the Department of Health and Rehabilitative Services (Department) should approve its CON Application Number 5715.
Findings Of Fact The Parties 1. Venice is a 342 bed general hospital located in Venice, Florida, which is in south Sarasota County and is a part of the Department's Service District There are no subdistricts in District 8 for open heart surgery. The majority of patients served by Venice are from 50-55 years of age or older, and 22%-25% of patients admitted to Venice have a primary diagnosis of heart disease. If patients with heart disease as a secondary diagnosis are considered along with those who have this as their primary diagnosis, the total represents over 40% of all patients admitted at Venice. Of the cardiac catheterization patients treated at Venice in 1988, 78% were Medicare patients. Venice is a Medicaid provider, projecting 1.6% of its total revenue from Medicaid. It has a critical care center with 32 beds capable of invasive monitoring, multi-infusion of medications, pacemakers, Swans Ganz catheters, and care of post- catheterization patients. A separate 8-bed unit has been designated for use by open heart patients, with the same monitoring capability as the remainder of the unit. Memorial is an acute care hospital located in Sarasota, Florida, and is governed by the Sarasota County Public Hospital Board, which is elected to provide health care services to all residents of Sarasota County. It provides a full range of services, including an open heart surgery program, and is the largest provider of services to medically indigent and Medicaid patients in Sarasota County. Medical Center is a 208 bed not-for-profit hospital located in Punta Gorda, Florida, which has provided cardiac catheterization since 1985, and has been approved to initiate an open heart surgery program which is scheduled to open in late 1989. It has a 5% Medicaid payor mix. The primary service area for Medical Center is Charlotte County. Its secondary service area includes south Sarasota County. Both Memorial and Medical Center are also located in District 8, with Venice located between these facilities. Venice is approximately 35 miles to the north of Medical Center, and about 25 miles to the south of Memorial. There are two existing open heart programs in District 8, one at Memorial and the other at Southwest Regional Medical Center in Ft. Myers. In addition, there are two approved, but not yet operational, open heart programs, one at Medical Center and the other at Lee Memorial in Ft. Myers. The Department 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 the Department. The Application On or about September 27, 1988, Venice filed an application with the Department for a CON to implement an open heart surgery program at its hospital in Venice, Florida, with a capital expenditure of $665,500. This application was designated as CON Application Number 5715. The Department reviewed this application, and in October, 1988, forwarded an omissions letter to Venice. Venice responded to the omissions letter, and addressed not only the items noted by the Department in its omissions letter, but also provided additional materials, information, and corrections not requested in the omissions letter. Effective on November 14, 1988, the Department deemed Venice's application complete. A public hearing was held on this application at the request of Memorial on November 18, 1988. Thereafter, the Department reviewed and considered all material received from the applicant, as well as the information received at the public hearing, and prepared its State Agency Action Report (SAAR) noticing its intent to grant CON 5715. Memorial and Medical Center timely filed petitions to challenge the Department's notice of intent to issue this CON. Venice is relying upon its application which was deemed complete and reviewed by the Department in its SAAR, and not upon its original application that was filed prior to the omissions letter. Additionally, the applicant is not relying upon a "not normal circumstance" justification for its application, but rather urges that it meets the statutory and rule criteria for the issuance of this CON. The Department's CON Manual HRSM 235-1, dated October 1, 1988, is irrelevant to this proceeding since it has not been adopted by, or incorporated in, a rule, and was not applied in the batching cycle in which Venice's application was filed, or in the subsequent batch. It has not yet been applied to any hospital CON application. Therefore, the matters contained within this Manual concerning what is a permissible response to an omissions letter have not been considered. As part of its originally filed application, Venice included a document prepared by Ernst & Whinney entitled, "Audited Financial Statements and Other Financial Information, Venice Hospital, Inc., June 30, 1987." Through a clerical error in the copying process, page one of this twenty-four page document was omitted. At the time it filed its omissions response, Venice included this missing first page which is signed on behalf of Ernst & Whinney, and which states that the examinations contained therein were made in accordance with generally accepted auditing standards. It expresses the opinion that these financial statements present fairly the financial position of the applicant. An auditor's opinion letter is an essential part of the audited financial statement which must be included with the CON application. However, Venice provided this inadvertently missing page prior to its application being deemed complete. Thus, it was available to, and was reviewed by, the Department in the preparation of the SAAR on this application. Venice's application did raise concerns which it was seeking to address concerning availability and accessibility by addressing the current practice of transferring patients requiring open heart surgery to other facilities. Patient costs for such transport, as well as patient risk, inconvenience and comfort for the patient and family members, were all referenced in the application. Additionally, testimony at the public hearing held on November 18, 1988, which the Department considered in the preparation of its SAAR, dealt with concerns and problems arising from patient transport, including delay, risks to the patient from ambulance or helicopter transfers, and adverse effects which may occur on quality of care through this practice which is inconsistent with the concept of a continuum of care. The SAAR specifically notes that Venice contends its proposal will improve geographic access in its immediate service area, and that from July, 1987 through June, 1988, it transferred 144 of its cardiac patients from its facility for open heart surgery and an additional 125 were transferred for angioplasty procedures. The application did not specifically address or identify any adverse impact which its approval would have on existing providers. However, evidence on this issue is admissible at hearing since it is relevant to the issue of the standing of Memorial and Medical Center, and also because it is relevant to establish whether approval of this application would be consistent with statutory and rule review criteria, and provisions of the Local Health Plan that require assessment of any such impact. The SAAR notes that Venice did contend that approval of this CON will not affect the economy or quality of existing services in the District. Stipulations The parties stipulated that: The project is financially feasible in the short term; Venice has a record of providing quality care and this record is not an issue in this case; Other than for open heart services, other facilities are adequate and available to act as alternatives; The size and cost of construction for Venice's proposal are appropriate; Open heart surgery programs currently exist within a two hour drive time under average driving conditions for at least 90% of the District's population; The type and cost of equipment in the application are reasonable; If approved, Venice will provide the services required by Rule 10- 5.011(1)(f)3a and 3b, Florida Administrative Code, and does provide the services shown at paragraph 3c of said Rule. State Health Plan Objective 4.2 of the State Health Plan applicable to this application is to "maintain an average of 350 open heart surgery procedures per program in each district through 1990." (Emphasis Supplied.) The goal set forth in the State Plan relative to open heart surgery programs is to ensure the appropriate availability of such services at reasonable costs. Venice's application is not consistent with Objective 4.2. If Venice's application were to be approved, there would be five programs in the District. The number of procedures projected for 1990 is 1683, and if 1683 is divided by 5 programs, the result is an average of only 337 procedures per program. The two existing providers in District 8 are currently performing over 1600 procedures annually, and as is discussed below, it does not appear that Venice itself will be able to achieve an acceptable level of service at any time established by the record in this case. Approval of this application will also significantly and adversely impact the ability of the two approved programs to achieve an acceptable level of service. In the State Health Plan narrative, it is recognized that "quality of patient care is a primary concern in open heart surgery programs due to the potential consequences to the patient of poorly trained and/or skilled staff.11 In order to ensure quality, and in recognition of the relationship between the volume of open heart surgery procedures and quality, the State Plan references the Department's requirement, set forth by Rule, that a minimum of 200 adult procedures be performed within 3 years of initiation of an open heart program. The narrative also notes that a broad range of services must be provided to fulfill the requirements of an open heart surgery program. Venice's application is partially consistent with these narrative statements in the State Health Plan since the parties have stipulated that it has a record of providing quality care, and it offers a complete range of services with departments within the hospital where a broad range of diagnostic techniques and expertise are available. However, it was not established that a minimum of 200 adult open heart surgical procedures will be performed at Venice within three years of initiation of this program. Local Health Plan Even though an applicant does not include within its application every element in a Local Health Plan which is relevant to its application, the Department itself will look at the applicable Local Plan to determine if an application is consistent therewith. The applicable District 8 Health Plan recommends that "existing facilities should be afforded the opportunity for expansion before developing a new cardiac surgical center." However, if a numeric need for an additional program is shown, and if existing facilities do not seek to expand their existing programs to meet such need, an application for a new program would not be inconsistent with this portion of the Local Health Plan. Under the facts of this case where there are no competing applications from hospitals with existing open heart surgery programs, and where a numeric need for one additional program in District 8 is projected by the Department's need methodology, Venice's application is consistent with this recommendation. The Local Plan also recommends that preference be given to applications for new or expanded programs which clearly document the impact of the proposed new service on existing providers in the District and adjacent Districts. As found above, Venice did not specifically address any adverse impact its proposal would have on existing providers, and therefore, its application is not consistent with this recommendation. The Department's Need Methodology and the "35O Rule" Rule 10-5.011(1)(f)8, Florida Administrative Code, sets forth the Department's methodology for calculating the numeric need for additional open heart surgery programs It provides a formula by which the number of open heart procedures for the horizon year, in this case 1990, are to be estimated. Pursuant to the formula, there are projected to be 1683 open heart surgery procedures performed in 1990 in District 8. This number of projected procedures is then divided by 350 procedures in order to determine the number of programs which will be needed. See Rule l0-5.011(1)(f)11b. Using this methodology, the Department has identified the need for 4.8, rounded to 5, programs in the District in the horizon year. Since there are currently 2 existing and 2 approved programs in District 8, the Department and Venice have concluded that there is a projected numeric need for Venice's additional program in 1990. There is a direct relationship between the volume of open heart surgery procedures performed at a facility and the quality of care provided at such facility, with lower mortality rates generally at hospitals with higher volumes than those with low volumes. Therefore, in addition to its numeric need calculation, the Department has also developed a "350 standard" to address patient safety and quality of care concerns by ensuring that each existing and approved open heart surgery program achieves a volume sufficient to assure quality and efficiency prior to approval of a new program. Rule 10- 5.011(1)(f)11aI, Florida Administrative Code, prohibits the establishment of new open heart surgery programs unless: the service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart cases per year. Memorial and Medical Center urge an interpretation and application of the 350 standard in a manner which would require each existing and approved program to actually operate at the level of 350 cases per year. Since approved programs are not yet operational, and therefore cannot operate at the 350 level, they argue that the intent of this standard, as set forth in the above-cited Rule, is to preclude the approval of any additional programs while there are approved programs, or existing programs which are not meeting the 350 standard. To the contrary, the Department and Venice urge that the 350 standard be applied by averaging the actual number of cases at existing programs, and the number of cases which are reasonably projected to be performed at approved programs. Under this interpretation, as long as the average between cases which are performed at existing, and which are reasonably projected to be performed at approved programs exceeds 350, then the further approval of an additional program is not prohibited. Having considered the testimony and evidence presented by the parties, and in particular the testimony of Eugene Nelson and Elizabeth Dudek, which is found to be more credible, consistent, and reasonable than the testimony of Michael Carroll and Harold Luft, it is found that the Department's interpretation and application of the 350 standard is reasonable and consistent with the terms of Rule 10- 5.011(1)(f)11aI. It is also noted that if the interpretation urged by Memorial and Medical Center were to be followed, it is inexplicable how there could presently be two approved, but not operational, open heart programs in District 8. The Department has consistently applied this 350 standard since its adoption in 1983 by averaging caseloads at existing programs and reasonably projected caseloads for approved programs. To interpret this standard as urged by Memorial and Medical Center would impose a moratorium on new open heart surgery programs while there is an already approved, but not operational, program in a District, or while a newly operational program has not yet attained the 350 standard. There is no basis for this prohibitory interpretation which would not only reduce competition, but would also be inconsistent with sound health planning and the State Health Plan Objective 4.2, as discussed above. Quality of Care Venice is accredited by the Joint Commission on Accreditation of Health Care Facilities for special care units, and it has been stipulated that it has a record of providing quality care in its existing programs and departments. On average, hospitals performing greater than 200 open heart procedures per year have superior surgical outcomes than hospitals doing less than 200 procedures. Mortality rates are significantly lower at hospitals performing more than 200 procedures annually than at those performing less. It was established that there is a direct relationship between volume of open heart surgical procedures and quality of care at facilities with open heart surgery programs. Therefore, the existence of more open heart programs than are truly needed in an area may result in some existing programs not achieving sufficient volume to assure patient safety and quality of care. Certainly, not every hospital should have an open heart program, but as long as there is sufficient volume to assure quality, the competition among programs will encourage quality care, and result in an overall increase in the quality of care provided at all departments in a hospital with an open heart program. Rule 10-5.011(1)(f)5d, Florida Administrative Code, was adopted by the Department in order to set forth the minimum volume deemed necessary to assure quality of care, and provides, in part: There shall be a minimum of 200 adult open heart procedures performed annually, within 3 years after initiation of service, in any institution in which open heart surgery is performed for adults. Although Venice urges that it will be able to meet this threshold level within three years, it failed to establish by competent substantial evidence that it would actually attract the patients necessary to perform either the number of open heart procedures projected in its application, or this minimum number of 200 procedures required by the Department to assure quality of care in its third year of operation, given the current pattern of physician referrals in the area, its market share in relation to those of Memorial and Medical Center, and actual utilization levels for the existing District 8 programs at Memorial and Southwest Regional Medical Center, as is more fully discussed below. Without the assurance of sufficient volume to meet the 200 procedure threshold established by the Department by Rule, the validity of which is not at issue in this case, Venice has failed to show that it will be able to achieve and maintain a patient volume in its proposed program which will assure quality of care in its proposed open heart surgery program. Availability and Access While the addition of the Venice program would obviously increase the availability of services in the District, open heart surgery services are already reasonably available in District 8, especially in view of there being two approved programs which will become operational before 1990, the horizon year in this case, in addition to the two existing programs. The two hour travel time standard is already being met in District 8, as stipulated to by the parties. Geographic accessibility will not be appreciably or significantly increased by this proposal since Venice's facility lies approximately midway between Memorial and Medical, which are sixty miles apart. There is significant excess capacity in existing and approved open heart surgery programs in District 8 during most of the year, especially at Memorial. Therefore, there is ready access to, and availability of open heart surgery services to patients in the District. Venice did not establish that approval of its application would enhance access to open heart surgery services for the medically indigent. Despite its assertion in its application that its program would be available to the underserved, there is no definite commitment to serve charity care patients as a percentage of total patient days or of total revenue. Venice has proposed to serve Medicaid patients at the level of 1.5% of total patient days, but Medicaid patients are currently receiving services through existing programs at substantially higher levels of commitment. The applicant has reserved the right to refuse non-emergency care to indigents. While it was established that unstable patients who have to be transferred from one hospital to another face increased risks, and that members of the medical staff at Venice feel that there are unacceptable delays in transferring patients who need open heart surgery from Venice to other facilities due to an asserted lack of available beds, it was not shown that such delays have actually jeopardized the safety of patients or resulted in a reduction in the quality of care received by patients to an unacceptable level. A delay in transferring a patient from one facility to another of from 6 to 8 hours is reasonable, and in line with experience nationally. The anecdotal evidence presented by Venice on this point was not competent and substantial, and in fact shows that the number of delays exceeding 8 hours has increased only slightly from 1986 to 1988, a condition that may be addressed in any event when the two approved programs become operational. Additionally, the applicant never formally shared any concerns about transfer delays with existing facilities in an effort to reduce such delays or to document extreme cases of delay. Transfer delays are exacerbated by seasonal increases in population in District 8, but there continues to be a reasonable likelihood that patient transfers can be accommodated, even during seasonal population increases, without adverse impacts to patient care. However, a large majority of open heart surgery cases are non- emergency that can be scheduled for surgery within 6 to 48 hours after diagnosis without any compromise in patient care. Emergency patients are given priority, and there are sufficient available beds to accommodate emergency patients, regardless of seasonal delays. Recent studies have shown that even emergency patients benefit from a delay of up to 24 hours in order to stabilize their condition rather than rushing them to surgery. In any event, such seasonal delays do not establish that there is a lack of available beds in District 8 which would require the approval of this application, especially with two approved programs already in the District which will become operational by 1990. Alternatives Considered Venice did not fully explore alternatives, including less costly alternatives, to a new program at its facility, such as a joint or shared program with an existing provider. In fact, a consultant retained by Venice recommended on September 8, 1988, that Venice pursue a joint program with Memorial, but Venice never approached Memorial to ascertain if its administrators or medical staff would be interested in such a joint effort, even though these two hospitals have previously cooperated in providing joint services in obstetrics, shared nursing services, and jointly provided emergency services to the Town of North Port. Memorial previously loaned Venice 24 nursing full time equivalent positions (FTE) to fully staff a 35 bed unit at Venice during a critical nursing shortage. There are existing or approved open heart surgery programs at Tampa General Hospital, Manatee Memorial Hospital in Bradenton, Memorial, Medical Center, and Southwest Regional Medical Center in Ft. Myers. In addition, there are additional approved programs at HCA Blake Memorial Hospital in Bradenton and at Lee Memorial in Ft. Myers. Venice did not consider these existing and approved programs as alternatives to its proposed new program. It was not established that Venice has attempted, or proposed to establish a joint open heart surgery program with any of these facilities, or to secure staff privileges for its cardiologists at Memorial, or any of these other hospitals. Regionalization of health care services for open heart surgery patients is being encouraged and reviewed by the Medicare program. Under this concept, primary care hospitals would treat common diagnoses and offer common treatments, while regional referral hospitals would provide specialized care and offer more complex services referred to as tertiary level services. Open heart surgery is a specialized, tertiary care service. Venice did not consider regionalization or establish why it would not be appropriate in District 8. Personnel Availability and Costs There has been a long-term shortage of nurses, particularly in intensive care and open heart surgery, which even Venice's expert in nursing administration recognized and acknowledged. This shortage is present in Sarasota County not merely for nursing staff, but also for technical support staff, and is particularly acute in operating room and critical care personnel. While Venice does have nursing staff with open heart surgery experience, it would have to recruit additional nurses to fully staff this new program. It is not always possible to fill open heart surgery or critical care nursing positions with trained personnel. Memorial presently has 32 registered nursing vacancies, including 5 open heart surgery and 3 open heart critical care RN positions, despite a full-time nurse recruiter and an aggressive recruiting program. Because of this critical shortage, Memorial has been forced to use "traveler" or temporary nurses in its open heart surgery unit. In contrast to Venice's lack of actual experience in attracting and training open heart surgery and critical care nurses, Memorial established that in Sarasota County, it takes 6 to 8 months and costs $15,000 to $16,000 to train open heart surgery nurses, and 6 to 8 weeks to- train open heart critical care nurses. Venice will compete with Memorial and Medical Center in attracting open heart surgery nursing and technical staff. There has been a recent instance of a nurse leaving Venice to join Memorial, being trained as an open heart surgery nurse at Memorial, and then leaving to return to Venice. With the limited pool of available, trained open heart surgery nurses, and in view of the two approved open heart surgery programs in District 8 which need to be staffed and become operational prior to 1990, the implementation of the Venice program will have an adverse impact on the ability of existing and approved programs to attract and maintain trained open heart surgery nursing and technical staff, and can reasonably be expected to increase personnel costs for these providers. Venice proposes to add two cardiovascular surgeons to its medical staff prior to opening its open heart surgery program, and to retain a consulting firm to assist in recruiting these physicians. However, the consulting firm contacted by Venice has not agreed to accept this recruiting assignment. Memorial has been trying to recruit an additional open heart surgeon for over a year, without success. Venice has been trying to recruit a neurosurgeon, neurologist or cardiologist for almost a year, without success. It is, therefore, reasonable to infer that Venice will have difficulty recruiting two cardiovascular surgeons in less that one year. The salaries and benefits in Venice's application are generally reasonable, including the proposed salary for a perfusionist, although it did slightly underproject open heart surgery nursing salaries. However, its estimate of the number of additional positions, or FTE, which would be required throughout the hospital to accommodate the workload resulting from an open heart surgery program is incomplete. For example, an additional 3.5 FTE that would be needed for the clinical lab and donor center is not reflected in the application, although the costs associated therewith are included. Venice does have a record of successfully staffing critical care services, such as its open heart catheterization and thoracic surgery programs, without attracting staff from other hospitals in the District. It does propose to have a training program for open heart surgery personnel, and has an affiliation with nurse training programs at four universities. Financial Feasibility In its application, Venice projects that it will perform 125 open heart surgery procedures in its first year of operation, 175 in its second year, and 211 in its third year of operation. However, it is specifically found that these projections are not reasonable, based upon the testimony and evidence received. The testimony and exhibits prepared by Mark Richardson and Michael Carroll, who were accepted as experts in health planning, as well as the testimony offered by Rick Knapp, an expert in health care finance, was more credible and persuasive than, and outweighs the testimony and exhibits prepared by Eugene Nelson, an expert in health care planning, Dr. Henry W. Zaretsky, an expert in health care economics and planning, and Michael Rolph, who was accepted as an expert in health care finance and accounting. Initially, Venice relies upon the Department's Rule for determining the numeric need for additional programs, discussed above, and divides the Department's number of projected procedures in District 8 (1683) by 350 to arrive at the need for an additional program in 1990 by rounding 4.8 up to 5. However, Venice has conducted no analysis of market share or physician referral patterns to test the reliability of this projected need. Thus, this projection of numeric need is made in a vacuum, without any reference to the actual number of procedures already being performed, or actual market shares and referral patterns which are critical to an understanding of patient and physician preferences which have existed, and are likely to continue to be experienced, in the future. Venice's administration and members of its medical staff consider Memorial's open heart surgery program to be excellent and convenient to Venice's patients. It is unlikely that all five of Venice's cardiologists will refer all of their open heart surgery patients to Venice, and in fact, a member of Venice's medical staff who supports this application testified that he would only refer about half of his patients to Venice. Since most open heart patients are referred, and since there is no apparent dissatisfaction with the quality of Memorial's program, existing market share and referral patterns would likely continue and should have been considered in any meaningful analysis presented by the applicant. For the July, 1990 horizon in District 8, the Department's numeric need methodology projects that there will be 1683 open heart surgery procedures. With referral patterns in place and two existing providers with operational and well regarded programs, it is unlikely that Venice will have an automatic, equal share of the District's pool of open heart patients, or even that it will perform the 125 procedures in its first year, and 175 procedures shown on its pro forma for the second year of operation. In fact, the two existing providers, Memorial and Southwest Regional Medical Center, already performed 1637 procedures in 1988, leaving fewer than 50 procedures projected through the Department's numeric need methodology for the two already approved programs and Venice, if it were to be approved. Memorial has been performing over 600 procedures per year from 1986 through 1988, and has the capacity to perform up to 1,000 procedures annually. Thus, the existing and approved programs have more than sufficient capacity to absorb growth in open heart surgery volumes which are being projected. A second method Venice uses to justify its projected number of open heart procedures is to quantify the population of Venice's service area, and then apply the Department's open heart surgery use rate to that population. This assumes that virtually all of Sarasota County's population growth will occur in the south county area, which is an inaccurate assumption, and also assumes that Venice will capture all of the open heart surgeries in its service area, which is unreasonable given existing market shares and referral patterns. Memorial presently has a 42% market share of District 8 open heart surgery patients. To perform 200 procedures in its third year of operation, Venice would have to capture an 83% market share, and there is no basis to find that it would be successful in attracting this unreasonably high market share in its primary service area. In fact, Venice projects that it will only achieve a 45% and 61% market share in the first and second year of operation, respectively. Applying these percentages, Venice will perform 99 procedures in its first year, not 125, and 140 in its second year, not 175. It must be noted that Venice's consultant, which had recommended that it explore a joint or shared program with Memorial, had projected market shares of only 29% in the first year, 35% in the second year, and 45% in year three. Using these figures, Venice would only perform 63 procedures in its first year of operation, 81 in the second year, and 102 in the third. Given this level of operation in its second year of operation (81 procedures), the Venice program would lose $334,000 in its second year, and therefore, not be financially feasible. The third method used by the applicant to support its projection of the number of procedures it will perform, which is the basis of its assertion of financial feasibility, is based upon its assessment of cardiac catheterization volumes and applies a conversion factor to determine the number of open heart surgery procedures that will result. This analysis again assumes that it would receive a 100% market share, and does not take into account referral patterns and satisfaction with existing programs. In addition, while the growth of Venice's cardiac cath volume has stabilized, and may even be decreasing, this analysis incorrectly uses a l5%-16% annual growth rate in cardiac caths through 1990, which is unrealistic and not supported by the record. Venice relies upon the expert testimony of Eugene Nelson to establish that the use rate for open heart surgery has been increasing since 1985, and will continue to increase. The use rate increased over 53% between 1985 and 1988, and Nelson projects a continued 15.3% annual increase in the use rate through 1991. Under his projections the use rate per 100,000 population will be 235.79 in 1990, and 257.97 in 1991. Nelson's projected continued annual increase in the use rate of over 15%, and the use rates he projects for 1990 and 1991, are unreasonable. He has ignored the fact that annual increases in the use rate have been steadily decreasing from 17.5% between 1985 and 1986, to 13% between 1987 and 1988, as testified to be all health planners, and as even he acknowledged. Applying this decrease in the annual use rate increase, it would be increasing only 9% in 1990, and this would result in a total of 2108 procedures that could be projected to be performed in 1990. With the two existing programs in District 8 already performing 1600 procedures, a figure that will reasonably grow by 1990, there will be less than 444 procedures for the two already approved programs and Venice, if it were to be approved. Given this fact, which is even acknowledged by Venice, it is unlikely that Venice will be able to reach its projected number of cases in its first two years of operation in order to achieve financial feasibility. As recognized by Harold Urschel, Jr., M.D., who was called by Venice as an expert in cardiovascular surgery and open heart surgery programs, for the next five years open heart surgery volumes nationally will be "stable", although they "probably" will go up some. Open heart use rates have plateaued on a national level, with an average national use rate of l80~per 100,000 population. This use rate compares favorably with the Department's current use rate of 183 for District 8, and further questions the reasonableness of Nelson's projected use rates of almost 236 and 258 in 1990 and 1991, respectively. These use rates have stabilized and shown a marked decrease in their rates of increase due to the development of acceptable alternatives to open heart surgery, and close review of the necessity of this treatment by third party payors. As testified to by Nelson, there is a danger that an excess of open heart surgery programs in an area will exacerbate an already stabilized or flattened use rate, and may cause it to decline. He cited both the Miami and Jacksonville areas as examples of Districts in which there appear to be an excess of programs, with a resulting decline in the District's use rate, and inability of a substantial number of programs to even achieve the requisite level of 200 procedures per year to maintain quality of care. When it comes to open heart surgery programs, more is not necessarily better and may actually result in less, according to Nelson. Even applying Nelson's inflated use rate of 236 per 100,000 population in 1990 to the Venice service area population, the applicant will not achieve its projected number of procedures when the market share of 29% in 1990 predicted by Venice's consultant is considered. Applying its consultant's projected market shares, Venice will realize only 81 procedures in the first year, 98 in year two, and 126 procedures in the third year. Since Venice's pro forma bases its assessment of financial feasibility upon its projections of 125 procedures in year one, and 175 in year two, and since the applicant has not established the reasonableness of these projections, the long- term financial feasibility of this project has not been shown. Further, Venice has also failed to establish that it can reasonably be expected to achieve the level of 200 procedures in its third year, and therefore, it has also failed to show that it can achieve that minimum level which the Department, by Rule, requires to ensure quality of care. In other respects, the assumptions used by Venice in its pro forma are reasonable, including its 2% inflation factor for income, bad debt, payor mix and utilization by class of pay, projected charges, expenses, and depreciation. Effect on Competition and Costs There will not be a significant difference between the charges proposed by Venice and the actual charges at Memorial. The applicant projects that 80% of its open heart surgery will be reimbursed through Medicare, which reimburses on a fixed fee basis to which hospital charges have no direct relevance. Therefore, there would be no appreciable impact on costs in the health care community if this application is approved. As previously discussed, there would be greater competition among existing and approved programs in District 8 for trained open heart surgery and critical care nurses, which are in short supply. While Venice has projected open heart surgery nurses' salaries at a somewhat unrealistically low level, it can reasonably be expected that greater competition for trained personnel who are in short supply will eventually result in higher salaries and health care costs. If this application is approved, the cost to transport patients who require open heart surgery from Venice to another facility would be eliminated. This would mean that patients could avoid a $235 to $250 ambulance charge for transfer to Memorial, a $450 charge for ambulance transport to Tampa General, or a $1,000 to $1,300 helicopter charge for transport to Tampa General Hospital. This savings is not significant when compared to total charges for open heart surgery procedures. Impact on Existing and Approved Programs As discussed above, approval of the Venice application will adversely affect the ability of existing providers to attract and retain trained open heart surgery and critical care RNs due to the already existing shortage of personnel to fill these positions, and the fact that two already approved programs will become operational prior to Venice's program, if it were to be approved. Although Memorial has the capacity to perform 1,000 open heart surgery procedures annually, Venice's expert, Eugene Nelson, projects that if the Venice program is approved, Memorial will experience only a 12% growth between 1988 to 1991, and will only perform 771 cases in 1991. Curiously, he then concludes that this represents no impact on Memorial. The proposed primary service area for the Venice program and Memorial's primary service area completely overlap, and they are, therefore, competing for the same open heart surgery patients. Venice has been referring 85%-87% of its patients who require open heart surgery to Memorial. If Venice had its own open heart surgery program, the need for transfer and referral would be obviated. In the second year of operation, Venice projects on its pro forma that it will perform 175 cases. Using its own projection of 85%, 149 to 150 of these cases would have been transferred to Memorial, but for the Venice program. If the more realistic number of 81 procedures in the second year of operation for the Venice program is used, 69 cases which would have otherwise been transferred to Memorial would stay at Venice. Rick Knapp, who was accepted as an expert in health care finance, provided a reasonable estimate of financial impact upon Memorial, given these projected losses in patient referrals. He concluded that Memorial would experience a net income reduction of approximately $1.4 million if Venice's projection of 175 cases in its second year is correct, and Memorial lost 149 to 150 referrals. Even Michael Rolph, who was called as an expert in health care finance by Venice, testified that Memorial would loose $2 million in net revenue if it lost 100 open heart surgery patients. If the more realistic figure of 81 cases in the second year were used, there would also be a net income loss for Memorial, but more importantly for purposes of this case, it was established through Knapp's testimony that Venice's program would lose $334,000, and not be financially feasible. It is, of course, recognized that Memorial would still experience a growth in its absolute number of open heart procedures due to population increases and increases in the use rate. However, any such increase in the absolute number of procedures performed at Memorial through growth does not obviate the fact that the total number of procedures it would have performed will be significantly reduced by the loss of referrals from Venice, if this application is approved. This is particularly noteworthy given its excess capacity. Memorial's most recent annual gross income was $160 million, with an operating margin (profit) of between $3.5 and $3.9 million. Therefore, losses which would result from the Venice program would not threaten the financial viability of Memorial, but would be significant in terms of its open heart surgery program. Jerry Sommerville, an expert in hospital finance, estimated that 9% of Medical Center's open heart surgery cases would come from the Venice area, which is included in Medical Center's secondary service area. If these cases are lost to Medical Center with the opening of the Venice program, Medical Center's projected 150 cases in 1990 would be reduced by 13.5, and in 1991 its projection of 200 cases would be reduced by 18. These reductions would result in a net revenue loss for Medical Center of $254,000 with a gross marginal loss of $62,800 in 1990, and a net revenue loss of $329,500 with a gross marginal loss of $95,200 in 1991. This represents a significant reduction in income for this open heart surgery program in its first years of operation. Medical Center's most recent annual profit margin was approximately $1 million.
Recommendation Based upon the foregoing, it is recommended that the Department enter a Final Order which: (l) Denies Memorial's Motion for Summary Adjudication; Dismisses Medical Center as a party due to a lack of standing; and Denies Venice's CON Application Number 5715. DONE AND ENTERED this 28th day of September, 1989 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 28th day of September, 1989. APPENDIX (DOAH CASE NOS. 89-1412 & 89-1413) Rulings on the Petitioners' Proposed Findings of Fact: Adopted in Finding 6. Adopted in Findings 6, 17. Adopted in Finding 6. Adopted in Finding 9. Adopted in Findings 6, 9. Rejected as a conclusion of law. 7-8. Adopted in Finding 1. Adopted and Rejected in part in Finding 12. Adopted in Finding 15; Rejected in Finding 16. Adopted in Finding 17. Rejected in Finding 41, as otherwise as irrelevant. Adopted and Rejected in part in Findings 41, 42. Rejected as irrelevant. 15-18. Adopted and Rejected in part in Finding 42. 19. Adopted in Finding 43. 20-21. Rejected in Finding 43. Adopted in Finding 38. Adopted and Rejected in Finding 53. Adopted and Rejected in Finding 57. Rejected in Finding 57. Rejected in Finding 55. Adopted and Rejected in Findings 55, 56. Adopted in Finding 57. Rejected in Finding 57. Adopted and Rejected in Finding 57. Rejected as irrelevant. Adopted in Findings 12, 20 and 39; Rejected in Findings 53, 55 and 56. Adopted in part in Finding 27, but otherwise Rejected as unnecessary. Rejected as irrelevant and unnecessary. Rejected in Finding 44. Adopted in Finding 44. Adopted in Finding 37; Rejected in Findings 38-47. Rejected in Finding 41. Rejected in Finding 25. Rejected as irrelevant and unnecessary. Rejected in Finding 26. Adopted in Finding 21. Adopted in Finding 43. Adopted in Finding 34, but otherwise rejected as unnecessary. Rejected in Finding 24. Adopted in Finding 6. Adopted in Finding 11. Adopted in Finding 35. Adopted and Rejected in part in Findings 34, 35. 50-54. Adopted in Finding 48. 55-61. Adopted in Finding 11. Adopted in Finding 1. Adopted in Finding 31. Adopted and Rejected in part in Finding 35. Adopted in Finding 36; Rejected in Finding 35 and otherwise as irrelevant and unnecessary. Adopted in Finding 36; Rejected in Finding 33. Adopted in Finding 35. Rejected as cumulative and unnecessary. Adopted in Finding 36. Adopted in Finding 31. Adopted in Finding 6. Rejected as unnecessary. 73-75. Rejected in Finding 27 and otherwise as irrelevant. Adopted in Finding 27. Adopted in Finding 22. Rejected in Finding 27 and otherwise as unnecessary. Adopted in Finding 51. 80-81. Rejected in Findings 28, 29. 82-85. Rejected in Finding 49 and otherwise as irrelevant. 86. Rejected as not based on competent substantial evidence. 87-94. Rejected in Finding 49 and otherwise as irrelevant. 95. Adopted in Finding 22. 96-97. Rejected as irrelevant and unnecessary, and simply a summation of and argument on the evidence. 98. Adopted in Finding 11; Rejected in Finding 24. Rulings on the Respondents' Proposed Findings of Fact: Adopted in Finding 1. Adopted in Finding 6. Adopted in Finding 2. Adopted in Finding 3. Adopted and Rejected in part in Finding 17. Adopted in Finding 17. 7-9. Adopted in Finding 18. 10. Adopted in Findings 18, 22. 11-12. Adopted in Finding 22. 13-14. Rejected in Finding 20. 15-17. Rejected as irrelevant and unnecessary. 18. Adopted in Finding 18. 19. Adopted in Finding 22; Rejected in Finding 20. 20. Adopted in Finding 30. 21. Adopted in part in Finding 13, but otherwise Rejected as irrelevant and unnecessary. 22-23. Adopted in Findings 15, 16. 24. Adopted in Findings 4, 25. 25. Adopted in Findings 25, 39. 26. Adopted in Finding 26. 27-34. Adopted in Finding 27. 35. Adopted in Findings 22, 23 and 24. 36. Adopted in Findings 28, 29. 37. Rejected as unnecessary. 38-43. Adopted in Findings 28, 29. 44. Adopted in Findings 31, 32. 45. Rejected as unnecessary. 46-49. Adopted in Finding 34. 50. Adopted in Finding 24. 51. Adopted in Findings 24, 37. 52-55. Adopted in Finding 38. 56. Adopted in Finding 39. 57-61. Adopted in Finding 40. 62-64. Adopted in Finding 41. 65-66. Adopted in Findings 42, 43. 67. Adopted in Finding 44. 68-69. Adopted in Finding 46. 70. Adopted in Finding 47. 71. Rejected in Finding 48. 72. Adopted in Finding 40. 73. Adopted in Finding 47. 74-75. Adopted in Finding 49. 76. Adopted in Findings 55, 57. 77. Adopted in Findings 50, 52. 78. Adopted in Findings 31, 50 and 52. 79-82. Adopted in Finding 32. 83. Adopted in Findings 33, 50 and 52. 84. Adopted in Finding 33. 85. Adopted in Finding 32. 86-87. Adopted in Findings 33, 50 and 52. 88. Adopted in Findings 28, 29. 89. Adopted in Findings 24 through 27. 90. Adopted in Finding 6. 91-92. Rejected in Finding 7. 93. Adopted and Rejected in Finding 8. 94. Rejected in Finding 14 and otherwise as unnecessary. 95. Adopted in Findings 15, 16. 96. Rejected in Findings 14, 15. 97-99. Adopted and Rejected in Findings 12, 13. 100. Rejected in Finding 9. 101. Adopted in Findings 6, 9. COPIES FURNISHED: Theodore C. Eastmoore, Esquire A. Lamar Matthews, Jr., Esquire P. O. Box 3258 Sarasota, FL 33577 Robert A. Weiss, Esquire The Perkins House 118 North Gadsden Street Tallahassee, FL 32301 Charles A. Stampelos, Esquire P. O. Box 2174 Tallahassee, FL 32316 Richard A. Patterson, Esquire Fort Knox Executive Center 2727 Mahan Drive Tallahassee, FL 32308 Kenneth F. Hoffman, Esquire P. O. Box 6507 Tallahassee, FL 32314 R. S. Power, Agency Clerk 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Miller, General Counsel 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Gregory Coler, Secretary 1323 Winewood Boulevard Tallahassee, FL 32399-0700
The Issue Whether proposed rule amendments to Rule 59C- 1.033(7)(c) and (7)(d), Florida Administrative Code, published in the Notice of Change on June 15, 2001, constitute an invalid exercise of delegated legislative authority. Whether the proposed rule is invalid due to the absence of a provision specifying when the amendments will apply to the review of certificate of need applications to establish open heart surgery programs.
Findings Of Fact The Agency is responsible for administering the Health Facility and Services Development Act, Sections 408.031-408.045, Florida Statutes. The goals of the Act are containment of health care costs, improvement of access to health care, and improvement in the quality of health care delivered in Florida. AHCA initiated the rulemaking process by proposing amendments to existing Rule 59C-1.033, Florida Administrative Code, the rule for determining the need for adult open heart surgery (OHS)1 services, which currently provides, in part, that: Adult Open Heart Surgery Program Need Determination. a new adult open heart surgery program shall not normally be approved in the district if any of the following conditions exist: There is an approved adult open heart surgery program in the district. One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool; or One or more of the adult open heart surgery programs in the district that were operational for less than 12 months during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than an average of 29 adult open heart surgery operations per month. Provided that the provisions of paragraphs (7)(a) and (7)(c) do not apply, the agency shall determine the net need for one additional adult open heart surgery program in the district based on the following formula: NN =((Uc x Px)/350)) -- OP>=0.5 Where: NN = The need for one additional adult open heart surgery program in the district projected for the applicable planning horizon. The additional adult open heart surgery program may be approved when NN is 0.5 or greater. Uc = Actual use rate, which is the number of adult open heart surgery operations performed in the district during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool, divided by the population age 15 years and over. For applications submitted between January 1 and June 30, the population estimate used in calculating Uc shall be for January of the preceding year; for applications submitted between July 1 and December 31, the population estimate used in calculating Uc shall be for July of the preceding year. The population estimates shall be the most recent population estimates of the Executive Office of the Governor that are available to the department 3 weeks prior to publication of the fixed need pool. Px = Projected population age 15 and over in the district for the applicable planning horizon. The population projections shall be the most recent population projections of the Executive Office of the Governor that are available to the department 3 weeks prior to publication of the fixed need pool. OP = the number of operational adult open heart surgery programs in the district. Regardless of whether need for a new adult open heart surgery program is shown in paragraph (b) above, a new adult open heart surgery program will not normally be approved for a district if the approval would reduce the 12 month total at an existing adult open heart surgery program in the district below 350 open heart surgery operations. In determining whether this condition applies, the agency will calculate (Uc x Px)/(OP+1). If the result is less than 350 no additional open heart surgery program shall normally be approved. Based on the issues raised by the Petitioner, Bethesda, and the factual evidence presented on these issues, AHCA must demonstrate that its proposed amendments to the existing OHS rule are valid exercises of delegated legislative authority or, more specifically, that it (a) followed the statutory requirements for rule-making, particularly for changing a proposed rule; (b) considered the statutory issues necessary for the development of uniform need methodologies; (c) acted reasonably to eliminate potential problems in earlier drafts of the proposed rule; (d) used appropriate proxy data to project the demand for the service proposed; (e) appropriately included county considerations for a tertiary service with a two-hour travel time standard; and (f) was not required to include a provision advising when CON applications would be subject to the new provisions. Rule challenges and rule development process The existing rule was challenged by IRMH on June 27, 2000, in DOAH Case No. 00-2692RX. Martin Memorial intervened in that case, also to challenge the rule. Like IRMH, Martin Memorial was an applicant for a certificate of need (CON), the state license required to establish certain health care services, including OHS programs, in Florida. Both are located in AHCA health planning District 9, as is the Petitioner in this case, Bethesda. AHCA entered into a settlement agreement with IRMH and Martin Memorial on September 11, 2000, which was presented when the final hearing commenced on September 12, 2000. Prior to the rule challenge settlement agreement, staff at AHCA had been discussing, over a period of time, possible amendments to the OHS rule to expand access and enhance competition. Issues raised by AHCA staff included the continued appropriateness of OHS as a designated tertiary service and the anti-competitive effect of the 350 minimum volume of OHS cases required of existing providers prior to approval of a new provider in the same district. The staff was considering whether the rule was too restrictive and outdated given the advancements in technology and the quality of OHS programs. The relationship of volume to outcomes was considered as various studies and CON applications were received and reviewed, as was the increasing use of angioplasty also known as percutaneous coronary angioplasty, referred to as PTCA or simply, angioplasty, as the preferred treatment for patients having heart attacks. Angioplasty can only be performed in hospitals with backup open heart services. During an angioplasty procedure, a catheter or tube is inserted to open a clogged artery using a balloon-like device, sometimes with a stent left in the artery to keep it open. Discussions of these issues took place at AHCA over a period of years, during the administrations of the two previous Agency heads, Douglas Cook and Reuben King-Shaw. In August 2000, AHCA published notice of a rule development workshop to consider possible changes to the OHS rule. Because it could not get the parties to settle DOAH Case No. 00-2692RX at the time, rather than proceed with the workshop while defending the existing rule, AHCA cancelled the workshop. As a result of the September 11, 2000, settlement agreement, on October 6, 2000, AHCA published a proposed rule amendment and notice of a workshop, scheduled for October 24, 2000. That version of a proposed rule would have changed Subsection (7)(a) of the OHS Rule to allow approval of "additional programs" rather than being limited to approval of one new program at a time in a district. The October proposal would have also eliminated OHS from the list of tertiary health services in Rule 59C-1.002(41). Tertiary health services are defined, in general, in Subsection 408.032(17), Florida Statutes, as follows: "Tertiary health service" means a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost-effectiveness of such service. Examples of such services include, but are not limited to, organ transplantation, specialty burn units, neonatal intensive care units, comprehensive rehabilitation, and medical or surgical services which are experimental or developmental in nature to the extent that the provision of such services is not yet contemplated within the commonly accepted course of diagnosis or treatment for the condition addressed by a given service. The agency shall establish by rule a list of all tertiary health services. With this statutory authority, AHCA adopted Rule 59C- 1.002(41), Florida Administrative Code, to provide a more specific and complete list of tertiary services: The types of tertiary services to be regulated under the Certificate of Need Program in addition to those listed in Florida Statutes include: Heart transplantation; Kidney transplantation; Liver transplantation; Bone marrow transplantation; Lung transplantation; Pancreas and islet cells transplantation; Heart/lung transplantation; Adult open heart surgery; Neonatal and pediatric cardiac and vascular surgery; and Pediatric oncology and hematology. As an additional assurance that tertiary services are subject to CON regulation, the tertiary category is specifically listed in the projects subject to review in Subsection 408.036, Florida Statutes. The October 2000 version included a proposal to increase the divisor from 350 to 500 in the formula in Subsection (7)(b), to represent the average size of existing OHS programs, but to decrease from 350 to 250, the minimum number required of an existing provider prior to approval of a new program in Subsection (7)(a)2. The definition of OHS would have been amended to add an additional diagnostic group, DRG 109, to delete DRG 110 and to eliminate the requirement for the use of the heart-lung by-pass machine during the surgery. Most controversial in the October version was a separate county- specific need methodology for counties which have hospitals but not OHS programs, in which residents are projected to have 1,200 annual discharges with a principal diagnosis of ischemic heart disease. On October 24, 2000, AHCA held a workshop on the proposed amendments. At the workshop, AHCA Consultant, John Davis, outlined the proposed changes. As a practical matter, eight Florida counties are not eligible to provide OHS because they have no hospitals. When Mr. Davis applied the county-specific need methodology, as if it were in effect for the planning horizon of January 2003, six Florida counties demonstrated a need for OHS: Hernando, Martin, Highlands, Okaloosa, Indian River, and St. Johns. Two of these, Martin and Indian River are in AHCA District 9. AHCA has already approved an OHS program for Martin County, at Martin Memorial. Mr. Davis also presented a simplified methodology for reaching the same result. In support of the proposed rule, AHCA received data, although not adjusted by the severity of cases, showing better outcomes in hospitals performing from 250 to 350 OHS, as compared to larger providers. Although the majority of heart attack patients are treated with medications, called thrombolytics, for some it is inappropriate and less effective than prompt, meaning within the so-called "golden hour," interventional therapies. In these instances, angioplasty is considered the most effective treatment in reducing the loss of heart muscle and lowering mortality. Opposing the proposed rule at the October workshop, Christopher Nuland, on behalf of the FSTCS, testified that OHS is still a highly complex procedure, that it requires scarce resources, equipment and personnel, and should, therefore, be available in only a limited number of facilities. In general, however, the opponents complained more about process rather than the substance of the proposal. Having petitioned on October 13, 2000, for a draw-out proceeding instead of the workshop, those Petitioners noted that AHCA had obligated itself to predetermined rule amendments based on the settlement agreement, regardless of information developed in the workshop. The draw- out Petitioners were the Florida Hospital Association, Association of Community Hospitals and Health Systems of Florida, Inc., Delray, Lakeland Regional Medical Center, Punta Gorda HMA, Charlotte Regional Medical Center, JFK, HCA Health Services of Florida, Inc., d/b/a Regional Medical Center Bayonet Point; Tampa General and the FSTCS. While agreeing that OHS is complex and costly, supporters of the proposed rule, particularly the declassification of OHS as a tertiary service, noted that many cardiologists are now trained to do invasive procedures. In support of fewer restrictions on the expansion of OHS programs in Florida, other witnesses at the October workshop discussed delays and difficulties in arranging transfers to OHS providers, possible complications from deregulated diagnostic cardiac catheterizations at non-OHS provider hospitals, and hardships of travel on patients and their families, especially older ones. On December 22, 2000, AHCA published another proposal, which retained most of the October provisions, continuing the elimination of OHS from the list of tertiary services, the addition of DRG 109, the deletion of DRG 110, the elimination of the requirement for the use of a heart-lung by-pass machine, and the authorization for approval of more than one additional OHS program at a time in the same district. The minimum number of OHS performed by existing providers prior to approval of a new one continued from the October 2000 version, to be decreased from 350 to 250, and the divisor in the numerical need formula continued to be increased from 350 to 500. As in the October version, the requirement that existing providers be able to maintain an annual volume of 350 OHS cases after approval of a new program was stricken. The separate need methodology for counties without an OHS program was simplified, as proposed by Mr. Davis, and was as follows: Regardless of whether need for additional a new adult open heart surgery programs is shown in paragraph (b) above, need for one a new adult open heart surgery program is demonstrated for a county that meets the following criteria: None of the hospitals in the county has an existing or approved open heart surgery program; Residents of the county are projected to generate at least 1200 annual hospital discharges with a principal diagnosis of ischemic heart disease, as defined by ICD-9- CM codes 410.0 through 414.9. The projected number of county residents who will be discharged with a principal diagnosis of ischemic heart disease will be determined as follows: PIHD = (CIHD/CoCPOP X CoPPOP) Where: PIHD = the projected 12-month total of discharges with a principal diagnosis of ischemic heart disease for residents of the county age 15 and over; CIHD = the most recent 12-month total of discharges with a principal diagnosis of ischemic heart disease for residents of the county age 15 and over, as available in the agency's hospital discharge data base; CoCPOP = the current estimated population age 15 and over for the county, included as a component of CPOP in subparagraph 7(b)2; CoPPOP = the planning horizon estimated population age 15 and over for the county, included as a component of PPOP in subparagraph 7(b)2; If the result is 1200 or more, need for one adult open heart surgery program is demonstrated for the county will not normally be approved for a district if the approval would reduce the 12 month total at an existing adult open heart surgery program in the district below 350 open heart surgery operations. In determining whether this condition applies, the agency will calculate (Uc X Px)/(OP + 1). If the result is less than 350 no additional open heart surgery program shall normally be approved. County-specific need identified under paragraph (c) is a need occurring because of the special circumstances in that county, and exists independent of, and in addition to, any district need identified under the provisions of paragraph (b). A program approved pursuant to need identified in paragraph (c) will be included in the subsequent identification of approved and operational programs in the district, as specified in paragraph (a). On January 17, 2001, a public hearing was held to consider the December amendments. Opponents complained that the proposals resulted from a private settlement agreement rather than a public rule development workshop as required by law. They noted that declassification of OHS as a tertiary service is contrary to the recommendations of AHCA's CON advisory study group and the report of the Florida Commission on Excellence in Health Care, co-chaired by AHCA Secretary Reuben King-Shaw, created by the Florida Legislature as a part of the Patient Protection Act of 2000. The risk of inadvertently allowing some OHS procedures to become outpatient services was also raised, because of the statute that specifically states that tertiary services are CON-regulated. The reduction from 350 to 250 in the annual volume required at existing programs prior to approval of new ones was criticized for potentially increasing costs due to shortages in qualified staff, including surgical nurses, perfusionists, recovery and intensive care unit nurses, who are needed to staff the programs. The potential for approval of more than one program at a time, under normal circumstances, was viewed as an effort to respond to the needs of two geographically large districts out of the total of eleven health planning districts in Florida. That, in itself, one witness argued demonstrated that more than one approval at a time should be, as it currently is, a not- normal circumstance. The combination of the district-wide and county- specific need methodologies was criticized as double counting. The district formula which relied on the projected number of OHS, overlapped with the county formula, which used projected ischemic heart disease discharges, to the extent that the same patient hospitalization could result in first, the diagnosis, and then the OHS procedure. Approximately, eighteen percent of diagnosed ischemic heart disease patients in Florida go on to have OHS. The county-specific methodology was also characterized as inappropriate health planning based on geo- political boundaries rather than any realistic access barriers. Although 500, the average size of existing programs was the proposed divisor in the formula, and 250 was the threshold number existing providers, the proposal included the deletion of any provision assuring that existing programs maintain some minimum annual volume, which is 350 in subsection 7(e) of the current rule. AHCA representatives testified that the proposal to delete a minimum adverse impact was inadvertent. The combined effect of a district-wide need methodology, an independent but overlapping county need methodology, and the absence of an adverse impact provision, created concern whether approvals based on county need determinations could reduce volumes at providers in adjacent counties to unsafe levels. Some health planners predicted that, as a consequence of adopting the December draft, like the October version, a number of new OHS programs could be coming into service at one time, seriously draining already scarce resources. One witness, citing an article in the Journal of the American Medical Association, testified that higher volume OHS providers, those over 500 cases, do have better outcomes, and that the relationship persists for angioplasties, including those performed on patients having heart attacks. Florida has 63 or 64 OHS programs. Of those, 25 to 30 percent have annual OHS volumes below 350 surgeries a year. The demand for OHS is increasing slowly and leveling off. AHCA was warned, at the January public hearing by, among others, Eric Peterson, Professor of Cardiology, Duke University Medical Center (by videotaped presentation); and Brian Hummel, M.D., a Cardiothoracic Surgeon in Fort Myers, President of the Florida Society of Thoracic and Cardiovascular Surgeons, that simultaneously easing too many provisions of the OHS rule was a risk to the quality of the programs and the safety of patients. Among other specific comments made at the January public hearing related to the December proposal were the following: This change would authorize a county- specific methodology to support approving a program on the theory that that county needs better access to open heart surgery program. Yet there is no inquiry under the proposed provision into how accessible adjacent programs are or, indeed, how low the volumes of adjacent programs are. Most blatantly, the county provision requires double counting and double need projections. (AHCA Ex. 7, p. 14, by Elizabeth McArthur). The proposed rule creates an exemption for counties that are currently without open heart surgery programs. One can only surmise that the purpose of this exemption is to improve access, and certainly improving access is an appropriate goal and it is possible that there are few situations around the state where access to open heart surgery is a concern, but the proposed rule is completely inadequate and a thoroughly inappropriate way to identify which situations those are . . . (AHCA Ex. 7, p. 26, by Carol Gormley). With the county exemption provision, the Agency has stumbled on an entirely new method for estimating need. In fact, the only good thing about this provision is that it demonstrates that the Agency actually can look at some alternative ways to estimate need, and the use of data about incidence of ischemic heart disease might be one of those. Certainly it should be explored if there is ever a valid planning process that addresses open heart surgery. However, the proposed rules cobble together the county- based epidemiology with the district-wide demand based formula, and I believe that this method is not applicable for evaluating access to care. It is not applicable because the provision only considers the population's rate of ischemic heart disease and does not even attempt to assess the extent to which county residents with ischemic disease are, in fact, already receiving open heart surgery. Therefore, a determination that county residents generate at least 1,200 ischemic heart disease discharges annually does nothing to indicate whether or not they experience any barriers to obtaining that needed service. * * * Another problem with county exemption permission [sic: provision] is that the addition of this assessment, quote "regardless of the results of the district need formula," end quote, constitute double counting of a need in districts where counties without programs are located. (AHCA Ex. 7, p. 27-30, by Carol Gormley). * * * As further evidence of the benefits of limiting open heart surgery to a few high volume programs, the Society would like to place into record the following articles. The first one you've heard on several occasions is the Dudley article, "Selective referral to high volume hospitals." The second, from Farley and Osminkowski, is, "Volume-outcome relationships and in- hospital mortality: Effective changes in volume over time," from Medicare in January of 1992. There's another article from Grumbach, et al., "Regionalization of cardiac surgery in the United States and Canada," again from JAMA. Another article from Hannon, et al., "Coronary artery bypass surgery: The relationship between in-hospital mortality rate and surgical volume after controlling for clinical risk factors," Medical Care. Hughes, et al., "The effects of surgeon volume and hospital volume on quality care in hospitals," again from Medical Care; finally, Riley and Nubriz, "Outcomes of surgeries among Medicare aged: Surgical volume and mortality." Each of these scholarly articles comes to the same inevitable conclusion: outcomes improve as the volume of cardiac surgeries in any given program and hospital increases, therefore increasing the number of hospitals in which these services are provided inevitably will lead to an increase in morbidity. (AHCA Ex. 7, p. 83-84, by Christopher Nuland). * * * On or before the January public hearing, AHCA also received the following written comments: Martin Memorial supports the exception provision for Counties that do not have an open heart surgery program and have a substantial number of residents experiencing cardiovascular disease. This provision ensures an even dispersion of programs, and that adequately sized communities are not denied open heart surgery. (Martin Memorial Ex. 6, Letter of 10/24/2000, from Richard M. Harman, Chief Executive Officer, Martin Memorial, to Elizabeth Dudek) * * * Adding new open heart surgery programs to counties that currently lack programs will increase geographic access to coronary angioplasty services as well as open heart surgery. Primary angioplasty is now the treatment of choice for a significant percentage of patients presenting in the emergency department with acute myocardial infarction (patients who would otherwise be treated with thrombolytic drugs to dissolve blood clots in occluded coronary arteries). Thus, the provision of the proposed regulations that addresses the need for open heart surgery at a county level will also increase access to life-saving invasive cardiology services. The effect of the proposed rule changes is to slightly broaden the circumstances in which the Agency would see presumed need for new programs. Initially, the increase in the number of programs presumed to be needed would be only five. These potential new approvals would be in counties which currently have no programs. This is consistent with the reasoning that supports removing open heart surgery from the list of tertiary procedures. All else equal, distributing new programs to counties where they already exist is reasonable in light of the goal of improving geographic accessibility of advanced cardiology services. As with the other draft proposed rule changes, there is no certainty that any programs will be approved on the basis of the county-specific need formula in (7)(c). These proposed programs would still have to meet the statutory and rule criteria. As discussed above, a number applications for programs have been ultimately denied even when presumed need was shown by the need formula. We recommend adoption of this additional formula for demonstrating need. (IRMH Ex. 1, p. 25, Comments of Ronald Luke, J.D., Ph.D., 10/24/2000) In what could be interpreted as an admission that the process resulting in the development of the earlier drafts was flawed, Jeff Gregg, Chief of the AHCA CON Bureau, concluded the January public hearing by saying, . . . in terms of the analysis that the Agency did about the proposed rule, I would simply have to tell you that CON staff was not involved in that analysis, and that's CON staff including myself. So I cannot elaborate on what went into it. But having said that, I do want to assure you that CON staff will be involved in further analysis and we will do our best to consider all the points that have been made and present them as clearly and concisely as we can in assisting the Agency to formulate its response to this hearing. (AHCA Ex. 7, p. 86). The December draft was also challenged by a number of Petitioners in DOAH Case No. 01-0372RP, filed on January 26, 2001, and ten other consolidated cases. In response to the criticism that the adverse impact provision should not have been deleted and because that omission was unintended, AHCA published another proposed amendment to the OHS rule, on May 4, 2001, reinstating a minimum adverse impact volume, this time set at 250 OHS operations, down from 350 in the existing rule. On May 31, 2001, AHCA and the other parties to DOAH Case No. 01-0372RP and the consolidated cases entered into another settlement agreement, which provided: that in an effort to avoid further administrative proceedings, without conceding the correctness of any position taken by any party, and in response to materials received in to the record on or before the public hearing, the Agency for Health Care Administration agrees to publish and support . . . The Notice of Change . . . (Bethesda Ex. 34, p. 2-3). In upholding that agreement, AHCA superseded or revised all prior drafts and published a notice of change on June 15, 2001. In this final version, AHCA limited normal approval of a new OHS program to one at a time, used 500 as the numeric need formula divisor, increased the required prior-to-approval OHS minimum volume at mature existing providers from 250 in the October version to 300 (down from 350 in the existing rule) and for non- mature programs from a monthly average of 21 in the October draft to 25 (down from 29 in the existing rule), retained the classification of OHS as a tertiary service, and altered the separate, independent county need methodology to make it a county preference. The June 15th version, containing Subsections 7(c) and 7(d), which are challenged in this case is as follows: Adult Open Heart Surgery Program Need Determination. An additional open heart surgery programs shall not normally be approved in the district if any of the following conditions exist: There is an approved adult open heart surgery program in the district; One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 300 adult open heart surgery operations during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool; One or more of the adult open heart surgery programs in the district that were operational for less than 12 months during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than an average of 25 adult open heart surgery operations per month. * * * Provided that the provisions of paragraphs (7)(a) do not apply, the agency shall determine the net need for an additional adult open heart surgery programs in the district based on the following formula: NN=[(POH/500)-OP]> 0.5 where: NN = the need for an additional adult open heart surgery programs in the district projected for the applicable planning horizon. The additional adult open heart surgery program may be approved when NN is 0.5 or greater. POH = the projected number of adult open heart surgery operations that will be performed in the district in the 12-month period beginning with the planning horizon. To determine POH, the agency will calculate COH/CPOP x PPOP, where: COH = the current number of adult open heart surgery operations, defined as the number of adult open heart surgery operations performed in the district during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool. CPOP = the current district population age 15 years and over. PPOP = the projected district population age 15 years and over. For applications submitted between January 1 and June 30, the population estimate used for CPOP shall be for January of the preceding year; for applications submitted between July 1 and December 31, the population estimate used for CPOP shall be for July of the preceding year. The population estimates used for COP and PPOP shall be the most recent population estimates of the Executive Office of the Governor that are available to the agency 3 weeks prior to publication of the fixed need pool. OP = the number of operational adult open heart surgery programs in the district. In the event there is a demonstrated numeric need for an additional adult open heart surgery program pursuant to paragraph (7)(b), preference shall be given to any applicant from a county that meets the following criteria: None of the hospitals in the county has an existing or approved open heart surgery program; and Residents of the county are projected to generate at least 1200 annual hospital discharges with a principal diagnosis of ischemic heart disease, as defined by ICD-9- CM codes 410.0 In the event no numeric need for an additional adult open heart surgery program is shown in paragraphs (7)(a) or (7)(b) above, the need for enhanced access to health care for the residents of a service district is demonstrated for an applicant in a county that meets the criteria of paragraph (7)(c)1. and 2. above. An additional adult open heart surgery program will not normally be approved for the district if the approval would reduce the 12 month total at an existing adult open heart surgery program in the district below 300 open heart surgery operations. Bethesda objects to Subsections 7(c) and 7(d) as invalid. It challenges the rule promulgation process as a sham, having resulted from settlement negotiations rather than from statutorily mandated considerations and processes. That charge was, in effect, conceded by AHCA, as related to the October draft. That version carried over into the December draft, essentially unchanged, but did gain support at the October workshop. The October and December versions are not at issue in this proceeding. The proposed rule amendments at issue in this proceeding must have been supported by information provided to AHCA before or during the January public hearing. The proposal at issue differs substantially from the terms of the September settlement agreement, but is precisely what was attached to the May 31, 2001, settlement agreement. For example, the settlement agreement of September 11, 2000, included a proposal to reduce the prior minimum volume of cases at existing OHS providers from 350 to 250, but in May and June, that number was set at 300. AHCA, in the September settlement agreement, was to eliminate any limitation on the number of additional programs approved at a time, but the May and June version retains the one-at-a-time provision of the existing rule. AHCA agreed to determine county numeric need independent of and in addition to district numeric need, in September, but that provision is, in the May 31st and June 15th version, a preference. In September 2000, AHCA agreed to delete adult OHS from the list of tertiary services in Rule 59C-1.002(41), but it is a tertiary service in the May and June version. Bethesda is correct that the records of the October workshop and January public hearing contained criticisms of the county need methodology but no specific proposal to modify it into a preference. The first draft of that concept is the May 31, 2001, settlement agreement. (See Findings of Fact 26 and 27). Statutory rule-making issues Subsection 408.034(3), Florida Statutes, provides that: The Agency shall establish, by rule uniform, need methodologies for health care services and health facilities. In developing uniform need methodologies, the agency shall, at a minimum, consider the demographic characteristics of the population, the health status of the population, service use patterns, standards and trends, geographic accessibility, and market economics. As required by statute, AHCA considered the demographics and health status of the population and examined, as a part of the rule adopting process, age-specific calculations of ischemic heart disease. AHCA relied on statistical evidence of the relationship of ischemic heart disease and OHS. In 1999, for example, there were 33,027 OHS in Florida, and 25,257 of those patients had a primary diagnosis of ischemic heart disease. Consideration of service use patterns, and standards and trends related to OHS led AHCA to increase the divisor in the numeric need formula to maintain the average size of 500 surgeries for existing providers. The availability of more reliable data than that collected when the existing rule was promulgated allowed AHCA to propose reliance on residential use rates. The trend towards the use of angioplasty, as a preferred treatment for heart attack patients, and the need for timely geographical access to care are major factors for AHCA's proposal to consider a county services within the normal need analysis or as a not normal indication of a need for enhanced access when a county has a critical mass of heart disease patients. Geographical accessibility is also addressed in the travel time standard in the existing rule, which the proposal would not change. AHCA received testimony on the issue of market economics and health status, related to care for indigent and minority patients in not-for-profit, county-funded hospitals, and related to reimbursement formulas. The record demonstrates that AHCA was provided with evidence on the effect of scare resources on the costs of operating OHS programs. County-specific need methodology in earlier drafts as compared to the county preference in 7(c) and the need for enhanced access in 7(d) Bethesda alleges that the county preference in the June version is essentially another need methodology, like the county-specific need methodology in the earlier versions of the proposed rule. Bethesda also contends that a preference for a hospital because it is in a county which does not have an open heart program over a reasonably accessible facility in an adjoining county in the same district is irrational health planning which could lead to a maldistribution of programs. The county-specific need methodology was first included in the September settlement agreement, and the preference in 7(c) and need for access in 7(d), originated after the January 17, 2001, public hearing. During the public hearing, counsel for the Florida Hospital Association complained that the county-specific need methodology precluded any inquiry into accessibility and volumes at adjoining programs. Another representative of the Florida Hospital Association surmised that the goal of the county exemption was improved access but explained that it was an inappropriate means to identify access concerns. For example, while Hernando County would qualify for need with the separate methodology, most of its residents, 97 percent receive OHS services at a hospital in another district which is only 13 miles from the population center. (See Finding of Fact 26). The preference under normal circumstances in Subsection 7(c) and finding of need for enhanced access in Subsection 7(d), must be supported by evidence that county boundaries, in general, do create valid access issues. On or before the January workshop, information provided to AHCA indicated that some special inquiry into access issues related to CON applications for programs in counties without OHS programs is warranted. See Finding of Fact 27). AHCA found correctly that counties matter for several reasons. First is the fact that emergency services are funded and organized by counties, in general, and operated by municipal and county agencies. Approximately 60 percent of heart attack patient discharges in Florida are admitted through emergency rooms. Emergency heart attack patients who live in counties with OHS programs are twice as likely to be taken to a hospital with OHS as those who live in counties without an OHS provider. Second, whether a patient is taken to an OHS provider affects the care received. The probability of having an angioplasty performed is almost 50 percent greater for residents of counties with OHS programs as compared to those in counties without an OHS program. Third, some health care reimbursement plans and health care districts are operated within counties, limiting financial access to out-of-county hospitals. AHCA has always considered whether or not a county has an OHS program as a part of access issues. The issue of greater access to OHS was the basis for AHCA's initial consideration of the possibility of easing the OHS rule. With the May and June draft, it has codified and specified when that policy will apply. AHCA's deputy secretary noted that geographic access in the absence of numeric need was the basis for approvals of OHS CONs for Marion County, and for hospitals located in Naples and Brandon. In each instance, the applicants argued a need for enhanced access. AHCA has experience in applying preferences as a part of balancing and weighing criteria from statutes, rules and local health plans, particularly to distinguish among multiple applicants. In the totality of the review process, other factors which Bethesda's expert testified should be considered, including financial, racial and other potential access barriers, are not precluded. Preferences related to specific locations within health planning areas are included in CON rules governing the need for nursing home beds and hospices. Bethesda noted that these are not tertiary services, suggesting that a county location preference is inappropriate for tertiary services, but similar preferences for OHS exist in some of the local health plans. In AHCA District 1, the CON allocation factors for OHS and cardiac catheterization services include a preference for applicants proposing to locate in a county which does not have an existing OHS program. In District 4, the preference favors an applicant located in a concentrated population area in which existing programs have the highest area use rates. District 5 is similar to District 4, supporting OHS projects in areas of concentrated population with the highest use rates. The District 8, like District 1, preference goes to the applicant located in a county without an OHS program. There is no evidence that the existing preferences have been difficult to apply within the context of other CON criteria for the review of OHS applications. In effect, the proposed amendments establish an uniform state-wide county preference which is more concrete in terms of the requirements for a potential patient base. Bethesda has questioned the rationale for standards which are, in effect, different in Subsection 7(c) as compared to Subsection 7(d). The lower requirement, according to Bethesda, 1200 ischemic heart diagnoses, in 7(d), applies when there is no numeric need. But, the 500 divisor and 300 minimum at existing providers, when combined with 1200 ischemic heart diagnoses is a heavier burden to meet in 7(c), although under normal circumstances. Bethesda did not adequately explain reasons for this objection to the proposed rule. In addition, it is not inconsistent logically for AHCA to require applicants to demonstrate lower numeric need in situations in which AHCA has determined that these will be, in general, a greater need for enhanced access. Bethesda also raised a concern for the eventual maldistribution of programs as a result of the county preference. In 1999, Palm Beach county residents received 2700 OHS, or an average of 900 cases for each of the three programs. The total for District 9 was 3800 cases in 1999. When 500 St. Lucie County resident cases, in which Lawnwood is an OHS provider, are combined with 2700 Palm Beach resident cases, that leaves only 650 resident cases from Okeechobee, Indian River and Martin Counties. If programs are approved in all three, then the total will be inadequate for each to reach 300 cases, while, presumably, the demand in Palm Beach could be increasing disproportionately and not be met adequately. Disproportionate need, the appropriate dispersion of programs, and the benefits of enhanced competition are among the factors which AHCA can consider along with county need when choosing among competing applicants. 1200 ischemic heart disease discharges The proposed amendments require a projection that residents will reach a threshold of 1200 cases of ischemic heart disease discharges as a condition for the entitlement to the numeric need preference or to demonstrate a not normal need for enhanced access. In general, ischemic heart disease, which is also known as coronary heart disease, is characterized by blocked arteries which, in turn, limit blood to heart muscles causing first the onset of angina from acute coronary syndrome, progressing on to acute myocardial infarction, or a heart attack. The use of heart disease as a proxy for OHS utilization is consistent with AHCA's use of live births in pediatric open heart surgery and pediatric cardiac catheterization rules, deaths in the hospice rule, and related diagnoses in organ transplantation rules rather than actual utilization. It was supported by information received during or before the January workshop (See Finding of Fact 26 and 27). Bethesda's criticism of the use of a proxy per se is also not well-founded because any single statistical approach could be misleading. For example, historic use rates can understate future use with a growing service or an artificially imposed access limit. Using heart disease data in a preference or a need for enhanced access as opposed to a need formula or conclusive finding allows more flexibility in determining need in conjunction with other significant factors. One of Bethesda's expert health planners was also critical of the use of 1200 ischemic heart disease diagnoses as inadequate for projecting OHS cases, and for not equating to approximately 300 annual OHS cases, the minimum required of existing providers in Subsection 7(a) and the minimum adverse impact allowed in Subsection 7(e). Based on actual historical Florida data, 1200 ischemic heart disease diagnoses on average resulted in 207 OHS in 1997, 203 in 1998, and 203 in 1999. Ischemic heart disease has approximately an 18 to 20 percent conversion rate to OHS, and results in a total of 76 to 80 percent of all OHS cases. OHS cases from other diagnoses added statistically another 54 OHS in 1997, 59 in 1998, and 61 in 1999, to those from ischemic heart disease, giving, in each year a total less than 300. Bethesda presented evidence of wide variations in the ischemic heart disease to OHS conversion ratios from county-to- county. For example, only 14 percent of Bradford County ischemic heart diseases converted to OHS, and only 11 percent of the 700 cases in Columbia County converted to OHS. In Columbia County, the average state conversion rate of 20 percent yields 140 cases but, in reality, there were only 78 OHS cases from Columbia County in 1999. Bethesda's expert concluded that conversion ratio discrepancies resulting in the approval of a program that cannot achieve 300 OHS, as required in Subsection 7(a)2. and 7 (e), of the proposed rule, could bar the approval of new programs when needed in the district and would not be of minimum required quality. Bethesda also proved that the accuracy of projected OHS cases can also be affected by patterns of patient migration for health care, particularly if in- and out-migration do not offset each other. In counties with OHS programs, the average out-migration for acute care is 10.7 percent, varying widely from 3.8 percent in Alachua County to 70 percent in Seminole County. In counties without an OHS provider, average out- migration for acute care is 44 percent, but ranges from 17.6 percent in Indian River County to 98 percent in Baker County. An average of 18 percent of the residents of Florida counties with OHS programs have their surgeries performed elsewhere. Like out-migration, in-migration for acute care, for ischemic heart disease care, and for OHS varies from county to county in Florida. Counties without OHS programs have acute care in-migration from lows of 5.3 percent for Flagler County up to highs of 40 percent for Columbia County. In counties with OHS, in-migration for acute care is as low as 8 percent for Brevard and Polk, and as high as 60 percent for Alachua County. Similarly, in-migration, as determined by ischemic heart disease discharges averages 19.4 percent in counties without OHS programs and approximately 25 percent in those with OHS. In-migration for OHS, averages 35.7 percent for the state, but that is derived from a range from 9.2 percent in Pinellas County to 74 percent in Alachua and Leon Counties. Bethesda demonstrated, patterns of migration for health care vary throughout Florida, but there are trends due to the presence of OHS programs. Average net in-migration to counties with OHS is 29 percent, and is positive in sixteen of the twenty-four counties with OHS programs. All of these differences can be considered within the regulatory scheme proposed by AHCA. The issue of whether 1200 residential ischemic heart disease diagnoses is, in fact, the critical mass of prospective OHS patients needed or is deceptive due to migration patterns, due to access to alternative providers or any other review criteria listed in rule or statutes can be considered on a case-by-case basis with the proposed amendments. Bethesda's specific concern is that Indian River with well over 1200 ischemic heart disease discharges could be approved even though that represented only 255 OHS cases, and that if Indian River is approved under the county preference provision, then Bethesda would not be approved under normal circumstances until Indian River achieved and was projected to maintain 300 OHS cases a year. That Bethesda may be delayed in meeting the requirements for normal need is likely, but that appears to be a function of its location as compared to existing providers as much as it is the result of the county preference. Bethesda is not precluded, however, under either the existing or proposed rules from demonstrating not normal circumstances in District 9 for the issuance of an OHS CON to Bethesda. Bethesda's assumption that 300 is the minimum volume required for adequate quality is not supported by studies from various professional societies. The American College of Cardiology, the American Heart Association, and the Society of Thoracic Surgeons set minimums of 200 to 250 annual hospital cases as the volumes necessary to maintain the skills of the staff. The American College of Surgeons, in 1996, published their opinion that 100 to 125 cases per hospital is sufficient for quality, while at least 200 cases a year are needed for the economic efficiency of a program. AHCA has never used the required and protected volumes as the volume which must also be projected for a new programs. In the current OHS rule, the volume required is 350 a year for existing programs but that has not been required of applicants. In the recent approval of an OHS CON for Brandon Regional Hospital, the applicant projected reaching 287 cases in the third year of operation. County preference, tertiary classification and travel time Bethesda argued that the tertiary classification, suggesting a regional approach, is inconsistent with having a county access provision. Bethesda correctly noted that the county provision first appeared in a draft which included the elimination of OHS from the list of tertiary services. But AHCA proposes to establish the county preference and to maintain OHS on the list of tertiary services under Rule 59C-1.002(41), and to maintain the two-hour drive time standard in Rule 59C- 1.033(4)(a). Substantial information, mostly from medical doctors and studies linking morbidity to low volume, supports the view that OHS continues to be a complex service. Obviously, those services in the tertiary classification range in complexity and availability from OHS at the lower level to organ transplantation at the upper level. The tertiary classification is justified to assure AHCA's continued closer scrutiny of OHS CON applications. It is also consistent with the increase in the need formula divisor to 500, which together serve as restrains on the approval of additional programs. AHCA reasonably concluded, based on case law and precedents with local health plan that it is not inconsistent to apply county preferences to OHS while it is classified a tertiary service. The two-hour travel time standard, is as follows: Adult open heart surgery shall be available within a maximum automobile travel time of 2 hours under average travel conditions for at least 90 percent of the district's population. The counties most likely qualify for the preference, based on meeting or exceeding 1200 residential ischemic heart disease diagnoses, are Citrus, Martin, Hernando, St. Johns, Highlands, Indian River, and Okaloosa. The population centers in each of these counties are well within two hours of an existing provider. Citrus County, in which there is an approved but not yet operational OHS program, is about an hour's drive from Marion County. Hernando is approximately 25 minutes from the Pasco County provider. The population center of St. Johns County is approximately 40 minutes away from Duval County OHS providers. Okaloosa County is approximately a one-hour drive away from Escambia County OHS providers. In District 9, Indian River is approximately a 30- minute drive from the Lawnwood OHS program. Martin Memorial, is an approved provider, is approximately 20 miles or 35 minutes from Lawnwood and 30 miles or 40 minutes from Palm Beach Gardens, another existing OHS provider. In the next three to five years, it is foreseeable that Okeechobee County in northwestern District 9 could qualify for the county preference. Adjacent to Okeechobee, Highlands County's population can drive either an hour and thirty minutes to a Charlotte County OHS program or an hour and twenty minutes to a Polk County facility. The evidence related to travel times, according to one of Bethesda's experts, demonstrates that the county preference is not needed to assure access which is already provided for each and every likely qualifying county. But the population centers in the entire state of Florida are all within the two- hour travel standard, and there has been no suggestion that Florida cease approval of new OHS programs. Bethesda's contention that no need exists for enhanced access if the travel time standard is met, and its claim that the rule is internally inconsistent with a county preference and two-hour drive time are rejected. Two hours is, as the rule clearly states, a "maximum" not a bar, and has never been interpreted by AHCA as a bar, to more proximate locations. Any other interpretation is an impossibility considering the numerous counties across the state with multiple programs, including Dade, Broward, Palm Beach, Hillsborough, Pinellas, Orange, Volusia, Duval, and Escambia, among others. AHCA can appropriately and consistently establish reasonable guidelines for choosing among applicants to enhance access within the maximum travel standard. There is no language in the proposed rule indicating when it will take effect. Although the issue was raised in Bethesda's petition, it failed to provide evidence or legal arguments at hearing or subsequently to support its objection to the omission. AHCA's deputy secretary testified that the agency reviews applications using need methodology rules in effect when the applications are filed. Before new rules are applied, applicants are given the opportunity to reapply to address new provisions in a rule.
The Issue Whether the Certificate of Need application (CON 9239) of Galencare, Inc., d/b/a Brandon Regional Hospital ("Brandon") to establish an open heart surgery program at its hospital facility in Hillsborough County should be granted?
Findings Of Fact District 6 District 6 is one of eleven health service planning districts in Florida set up by the "Health Facility and Services Development Act," Sections 408.031-408.045, Florida Statutes. See Section 408.031, Florida Statutes. The district is comprised of five counties: Hillsborough, Manatee, Polk, Hardee, and Highlands. Section 408.032(5), Florida Statutes. Of the five counties, three have providers of adult open heart surgery services: Hillsborough with three providers, Manatee with two, and Polk with one. There are in District 6 at present, therefore, a total of six existing providers. Existing Providers Hillsborough County The three providers of open heart surgery services ("OHS") in Hillsborough County are Florida Health Sciences Center, Inc., d/b/a Tampa General Hospital ("Tampa General"), St. Joseph's Hospital, Inc. ("St. Joseph's"), and University Community Hospital, Inc., d/b/a University Community Hospital ("UCH"). For the most part, Interstate 75 runs in a northerly and southerly direction dividing Hillsborough County roughly in half. If the interstate is considered to be a line dividing the eastern half of the county from the western, all three existing providers are in the western half of the county within the incorporated area of the county's major population center, the City of Tampa. Tampa General Opened approximately a century ago, Tampa General has been at its present location in the City of Tampa on Davis Island at the north end of Tampa Bay since 1927. The mission of Tampa General is three-fold. First, it provides a range of care (from simple to complex) for the west central region of the state. Second, it supports both the teaching and research activities of the University of South Florida College of Medicine. Finally and perhaps most importantly, it serves as the "health care safety net" for the people of Hillsborough County. Evidence of its status as the safety net for those its serves is its Case Mix Index for Medicare patients: 2.01. At such a level, "the case mix at Tampa General is one of the highest in the nation in Medicare population." (Tr. 2452). In keeping with its mission of being the county's health care safety net, Tampa General is a full-service acute care hospital. It also provides services unique to the county and the Tampa Bay area: a Level I trauma center, a regional burn center and adult solid organ transplant programs. Tampa General is licensed for 877 beds. Of these, 723 are for acute care, 31 are designated skilled nursing beds, 59 are comprehensive rehabilitation beds, 22 are psychiatry beds, and 42 are neonatal intensive care beds (18 Level II and 24 Level III). Of the 723 acute care beds, 160 are set aside for cardiac care, although they may be occupied from time-to-time by non-cardiac care patients. Tampa General is a statutory teaching hospital. It has an affiliation with the University of South Florida College of Medicine. It offers 13 residency programs, serving approximately 200 medical residents. Tampa General offers diagnostic and interventional cardiac catheterization services in four laboratories dedicated to such services. It has four operating rooms dedicated to open heart surgery. The range of open heart surgery services provided by Tampa General includes heart transplants. Care of the open heart patient immediately after surgery is in a dedicated cardiovascular intensive care unit of 18 beds. Following stay in the intensive care unit, the patient is cared for in either a 10-bed intermediate care unit or a 30- bed telemetry unit. Tampa General's full-service open heart surgery program provides high quality of care. St. Joseph's Founded by the Franciscan Sisters of Allegheny, New York, St. Joseph's is an acute care hospital located on Martin Luther King Boulevard in an "inner city kind of area" (Tr. 1586) of the City of Tampa near the geographic center of Hillsborough County. On the hospital campus sit three separate buildings: the main hospital, consisting of 559 beds; across the street, St. Joseph's Women's Hospital, a 197-bed facility dedicated to the care of women; and, opened in 1998, Tampa Children's Hospital, a 120-bed free-standing facility that offers pediatric services and Level II and Level III neonatal intensive care services. In addition to the women's and pediatric facilities, and consistent with the full-service nature of the hospital, St. Joseph's provides behavioral health and oncology services, and most pertinent to this proceeding, open heart surgery and related cardiovascular services. Designated as a Level 2 trauma center, St. Joseph's has a large and active emergency department. There were 90,211 visits to the Emergency Room in 1999, alone. Of the patients admitted annually, fifty-five percent are admitted through the Emergency Room. The formal mission of St. Joseph's organization is to take care of and improve the health of the community it serves. Another aspect of the mission passed down from its religious founders is to take care of the "marginalized, . . . the people that in many senses cannot take care of themselves, [those to whom] society has . . . closed [its] eyes . . .". (Tr. 1584). In keeping with its mission, it is St. Joseph's policy to provide care to anyone who seeks its hospital services without regard to ability to pay. In 1999, the hospital provided $33 million in charity care, as that term is defined by AHCA. In total, St. Joseph's provided $121 million in unfunded care during the same year. Not surprisingly, St. Joseph's is also a disproportionate Medicaid provider. The only hospital in the district that provides both adult and pediatric open heart surgery services, St. Joseph's has three dedicated OHS surgical suites, a 14-bed unit dedicated to cardiovascular intensive care for its adult OHS patients, a 12-bed coronary care unit and 86 progressive care beds, all with telemetry capability. St. Joseph's provides high quality of care in its OHS. UCH University Community Hospital, Inc., is a private, not-for-profit corporation. It operates two hospital facilities: the main hospital ("UCH") a 431-bed hospital on Fletcher Avenue in north Tampa, and a second 120-bed hospital in Carrollwood. UCH is accredited by the JCAHO "with commendation," the highest rating available. It provides patient care regardless of ability to pay. UCH's cardiac surgery program is called the "Pepin Heart & Vascular Institute," after Art Pepin, "a 14-year heart transplant recipient [and] . . . the oldest heart transplant recipient in the nation alive today." (Tr. 2841). A Temple Terrace resident, Mr. Pepin also helped to fund the start of the institute. Its service area for tertiary services, including OHS, includes all of Hillsborough County, and extends into south Pasco County and Polk County. The Pepin Institute has excellent facilities and equipment. It has three dedicated OHS operating suites, three fully-equipped "state-of-the-art" cardiac catheterization laboratories equipped with special PTCA or angioplasty devices, and several cardiology care units specifically for OHS/PTCA services. Immediately following surgery, OHS patients go to a dedicated 8-bed cardiovascular intensive care unit. From there patients proceed to a dedicated 20-bed progressive care unit ("PCU"), comprised of all private rooms. There is also a 24-bed PCU dedicated to PTCA patients. There is another 22-bed interventional unit that serves as an overflow unit for patients receiving PTCA or cardiac catheterization. UCH has a 22-bed medical cardiology unit for chest pain observation, congestive heart failure, and other cardiac disorders. Staffing these units requires about 110 experienced, full-time employees. UCH has a special "chest pain" Emergency Room with specially-trained cardiac nurses and defined protocols for the treatment of chest pain and heart attacks. UCH offers a free van service for its UCH patients and their families that operates around the clock. As in the case of the other two existing providers of OHS services in Hillsborough Counties, UCH provides a full range of cardiovascular services at high quality. Manatee County The two existing providers of adult open heart surgery services in Manatee County are Manatee Memorial Hospital, Inc., and Blake Medical Center, Inc. Neither are parties in this proceeding. Although Manatee Memorial filed a petition for formal administrative hearing seeking to overturn the preliminary decision of the Agency, the petition was withdrawn before the case reached hearing. Polk County The existing provider of adult open heart surgery services in Polk County is Lakeland Regional Medical Center, Inc. ("Lakeland"). Licensed for 851 beds, Lakeland is a large, not-for- profit, tertiary regional hospital. In 1999, Lakeland admitted approximately 30,000 patients. In fiscal 1999, there were about 105,000 visits to Lakeland's Emergency Room. Lakeland provides a wide range of acute care services, including OHS and diagnostic and therapeutic cardiac catheterization. It draws its OHS patients from the Lakeland urban area, the rest of Polk County, eastern Hillsborough County (particularly from Plant City), and some of the surrounding counties. Lakeland has a high quality OHS program that provides high quality of care to its patients. It has two dedicated OHS surgical suites and a third surgical suite equipped and ready for OHS procedures on an as-needed basis. Its volume for the last few years has been relatively flat. Lakeland offers interventional radiology services, a trauma center, a high-risk obstetrics service, oncology, neonatal intensive care, pediatric intensive care, radiation therapy, alcohol and chemical dependency, and behavioral sciences services. Lakeland treats all patients without regard to their ability to pay, and provides a substantial amount of charity care, amounting in fiscal year 1999 to $20 million. The Applicant Brandon Regional Hospital ("Brandon") is a 255-bed hospital located in Brandon, Florida, an unincorporated area of Hillsborough County east of Interstate 75. Included among Brandon's 255 beds are 218 acute care beds, 15 hospital-based skilled nursing unit beds, 14 tertiary Level II neonatal intensive care unit ("NICU") beds, and 8 tertiary Level III NICU beds. Brandon offers a wide array of medical specialties and services to its patients including cardiology; internal medicine; critical care medicine; family practice; nephrology; pulmonary medicine; oncology/hematology; infectious disease; neurology; psychiatry; endocrinology; gastroenterology; physical medicine; rehabilitation; radiation oncology; pathology; respiratory therapy; and anesthesiology. Brandon operates a mature cardiology program which includes inpatient diagnostic cardiac catheterization, outpatient diagnostic cardiac catheterization, electrocardiography, stress testing, and echocardiography. The Brandon medical staff includes 22 Board-certified cardiologists who practice both interventional and invasive cardiology. Board certification is a prerequisite to maintaining cardiology staff privileges at Brandon. Brandon's inpatient diagnostic cardiac catheterization program was initiated in 1989 and has performed in excess of 800 inpatient diagnostic cardiac catheterization procedures per year since 1996. Brandon's daily census has increased from 159 to 187 for the period 1997 to 1999 commensurate with the burgeoning population growth in Brandon's primary service area. Brandon's Emergency Room is the third busiest in Hillsborough County and has more visits than Tampa General's Emergency Room. From 1997- 1999, Brandon's Emergency Room visits increased from 43,000 to 53,000 per year and at the time of hearing were expected to increase an additional 5-6 percent during the year 2000. Brandon has also recently expanded many services to accommodate the growing health care needs of the Brandon community. For example, Brandon doubled the square footage of its Emergency Room and added 17 treatment rooms. It has also implemented an outpatient diagnostic and rehabilitation center, increased the number of labor, delivery and recovery suites, and created a high-risk ante-partum observation unit. Brandon was recently approved for 5 additional tertiary Level II NICU beds and 3 additional tertiary Level III NICU beds which increased Brandon's Level II/III NICU bed complement to 22 beds. Brandon is a Level 5 hospital within HCA's internal ranking system, which is the company's highest facility level in terms of service, revenue, and patient service area population. Brandon has been ranked as one of the Nation's top 100 hospitals by HCIA/Mercer, Inc., based on Brandon's clinical and financial performance. The Proposal On September 15, 1999, Brandon submitted to AHCA CON Application 9239, its third application for an open heart surgery program in the past few years. (CON 9085 and 9169, the two earlier applications, were both denied.) The second of the three, CON 9169, sought approval on the basis of the same two "not normal" circumstances alleged by Brandon to justify approval in this proceeding. CON 9239 addresses the Agency's January 2002 planning horizon. Brandon proposes to construct two dedicated cardiovascular operating rooms ("CV-OR"), a six-bed dedicated cardiovascular intensive care unit ("CVICU"), a pump room and sterile prep room all located in close proximity on Brandon's first floor. The costs, methods of construction, and design of Brandon's proposed CV-OR, CVICU, pump room, and sterile prep room are reasonable. As a condition of CON approval, Brandon will contribute $100,000 per year for five years to the Hillsborough County Health Care Program for use in providing health care to the homeless, indigent, and other needy residents of Hillsborough County. The administration at Brandon is committed to establishing an adult open heart surgery program. The proposal is supported by the medical and nursing staff. It is also supported by the Brandon community. The Brandon Community in East Hillsborough County Brandon, Florida, is a large unincorporated community in Hillsborough County, east of Interstate 75. The Brandon area is one of the fastest growing in the state. In the last ten years alone, the area's population has increased from approximately 90,000 to 160,000. An incorporated Brandon municipality (depending on the boundaries of the incorporation) has the potential to be the eighth largest city in Florida. The Brandon community's population is projected to further increase by at least 50,000 over the next five to ten years. Brandon Regional Hospital's primary service area not only encompasses the Brandon community, but further extends throughout Hillsborough County to a populous of nearly 285,000 persons. The population of Brandon's primary service area is projected to increase to 309,000 by the year 2004, of which approximately 32,000 are anticipated to be over the age of 65, making Brandon's population "young" relative to much of the rest of the State. The community of Brandon has attracted several new large housing developments which are likely to accelerate its projected growth. According to the Hillsborough County City- County Planning Commission, six of the eleven largest subdivisions of single-family homes permitted in 1998 are located nearby. For example, the infrastructure is in place for an 8,000-acre housing development east of Brandon which consists of 7,500 homes and is projected to bring in 30,000 people over the next 5-10 years. Two other large housing developments will bring an additional 5,000-10,000 persons to the Brandon area. The community of Brandon is also an attractive area for relocating businesses. Recent additions to the Brandon area include, among others, CitiGroup Corporation, Atlantic Lucent Technologies, Household Finance, Ford Motor Credit, and Progressive Insurance. CitiGroup Corporation alone supplemented the area's population with approximately 5,000 persons. The community of Brandon has experienced growth in the development of health care facilities with 5 new assisted living facilities and one additional assisted living facility under construction. The average age of the residents of these facilities is much higher than of the Brandon area as a whole. Existing Providers' Distance from Brandon's PSA Brandon's primary service area ("PSA") is comprised of 12 zip code areas "in and around Brandon, essentially eastern Hillsborough County." (Tr. 1071). Using the center of each zip code in Brandon's primary service area as the location for each resident of the zip code area, the residents of Brandon's PSA are an average of 15 miles from Tampa General, 16.4 miles from St. Joseph's, 17.3 miles from UCH and 24.6 miles from Lakeland Regional Medical Center. In contrast, they are only 7.7 miles from Brandon Regional Hospital. Using the same methodology, the residents of Brandon's PSA are an average of more than 40 miles from Blake Medical Center (44.9 miles) and Manatee Memorial (41 miles). Numeric Need Publication Rule 59C-1.033, Florida Administrative Code (the "Open Heart Surgery Program Rule" or the "Rule") specifies a methodology for determining numeric need for new open heart surgery programs in health planning districts. The methodology is set forth in section (7) of the Rule. Part of the methodology is a formula. See subsection (b) of Section (7) of the Rule. Using the formula, the Agency calculated numeric need in the District for the January 2002 Planning Horizon. The calculation yielded a result of 3.27 additional programs needed to serve the District by January 1, 2002. But calculation of numeric need under the formula is not all that is entailed in the complete methodology for determining numeric need. Numeric need is also determined by taking other factors into consideration. The Agency is to determine net need based on the formula "[p]rovided that the provisions of paragraphs (7)(a) and (7) (c) do not apply." Rule 59C-1.033(b), Florida Administrative Code. Paragraph (7)(a) states, "[a] new adult open heart surgery program shall not normally be approved in the district" if the following condition (among others) exists: 2. One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool; . . . Rule 59C-1.033(7)(a), Florida Administrative Code. Both Blake Medical Center and Manatee Memorial Hospital in Manatee County were operational and performed less that 350 adult open heart surgery operations in the qualifying time periods described by subparagraph (7)(a)2., of the Rule. (Blake reported 221 open heart admissions for the 12-month period ending March 31, 1999; Manatee Memorial for the same period reported 319). Because of the sub-350 volume of the two providers, the Rule's methodology yielded a numeric need of "0" new open heart surgery programs in District 6 for the January 2002 Planning Horizon. In other words, the numeric need of 3.27 determined by calculation pursuant to the formula prior to consideration of the programs described in (7)(a)2.1, was "zeroed out" by operation of the Rule. Accordingly, a numeric need of zero for the district in the applicable planning horizon was published on behalf of the Agency in the January 29, 1999, issue of the Florida Administrative Weekly. No Impact on Manatee County Providers In 1998, only one resident of Brandon's PSA received an open heart surgery procedure in Manatee County. For the same period only two residents from Brandon's PSA received an angioplasty procedure in Manatee County. These three residents received the services at Manatee Memorial. Of the two Manatee County programs, Manatee Memorial consistently has a higher volume of open heart surgery cases and according to the latest data available at the time of hearing has "hit the mark" (Tr. 1546) of 350 procedures annually. Very few residents from other District 6 counties receive cardiac services in Manatee County. Similarly, very few Manatee county residents migrate from Manatee County to another District 6 hospital to receive cardiac services. In 1998, only 19 of a total 1,209 combined open heart and angioplasty procedures performed at either Blake or Manatee Memorial originated in the other District 6 counties and only two were from the Brandon area. Among the 6,739 Manatee County residents discharged from a Florida hospital in calendar year 1998 following any cardiovascular procedure (MDC-5), only 58(0.9 percent) utilized one of the other providers in District 6, and none were discharged from Brandon. Among the 643 open heart surgeries performed on Manatee County residents in 1998, only 17 cases were seen at one of the District 6 open heart programs outside of Manatee County. There is, therefore, practically no patient exchange between Manatee County and the remainder of the District. In sum, there is virtually no cardiac patient overlap between Manatee County and Brandon's primary service area. The development of an open heart surgery program at Brandon will have no appreciable or meaningful impact on the Manatee County providers. CON 9169 In CON 9169, Brandon applied for an open heart surgery program on the basis of special circumstances due to no impact on low volume providers in Manatee County. The application was denied by AHCA. The State Agency Action Report ("SAAR") on CON 9169, dated June 17, 1999, in a section of the SAAR denominated "Special Circumstances," found the application to demonstrate "that a program at Brandon would not impact the two Manatee hospitals . . .". (UCH Ex. No. 6, p. 5). The "Special Circumstances" section of the SAAR on CON 9169, however, does not conclude that the lack of impact constitutes special circumstances. In follow-up to the finding of the application's demonstration of no impact to the Manatee County, the SAAR turned to impact on the non-Manatee County providers in District The SAAR on CON 9169 states, "it is apparent that a new program in Brandon would impact existing providers [those in Hillsborough and Polk Counties] in the absence of significant open heart surgery growth." Id. In reference to Brandon's argument in support of special circumstances based on the lack of impact to the Manatee County providers, the CON 9169 SAAR states: [T]he applicant notes the open heart need formula should be applied to District 6 excluding Manatee County, which would result in the need for several programs. This argument ignores the provision of the rule that specifies that the need cannot exceed one. (UCH No. 6, p. 7). The Special Circumstances Section of the SAAR on CON 9169 does not deal directly with whether lack of impact to the Manatee County providers is a special circumstance justifying one additional program. Instead, the Agency disposes of Brandon's argument in the "Summary" section of the SAAR. There AHCA found Brandon's special circumstances argument to fail because "no impact on low volume providers" is not among those special circumstances traditionally or previously recognized in case law and by the Agency: To demonstrate need under special circumstances, the applicant should demonstrate one or more of the following reasons: access problems to open heart surgery; capacity limits of existing providers; denial of access based on payment source or lack thereof; patients are seeking care outside the district for service; improvement of care to underserved population groups; and/or cost savings to the consumer. The applicant did not provide any documentation in support of these reasons. (UCH No. 6, p. 29). Following reference to the Agency's publication of zero need in District 6, moreover, the SAAR reiterated that [t]he implementation of another program in Hillsborough County is expected to significantly [a]ffect existing programs, in particular Tampa General Hospital, an important indigent care provider. (Id.) Typical "not normal circumstances" that support approval of a new program were described at hearing by one health planner as consisting of a significant "gap" in the current health care delivery system of that service. Typical Not Normal Circumstances Just as in CON 9169, none of the typical "not normal" circumstances" recognized in case law and with which the Agency has previous experience are present in this case. The six existing OHS programs in District 6 have unused capacity, are available, and are adequate to meet the projected OHS demand in District 6, in Hillsborough County ("County"), and in Brandon's proposed primary service area ("PSA"). All three County OHS providers are less than 17 miles from Brandon. There are, therefore, no major service geographic gaps in the availability of OHS services. Existing providers in District 6 have unused capacity to meet OHS projected demand in January 2002. OHS volume for District 6 will increase by only 179 surgeries. This is modest growth, and can easily be absorbed by the existing providers. In fact, existing OHS providers have previously handled more volume than what is projected for 2002. In 1995, 3,313 OHS procedures were generated at the six OHS programs. Yet, only 3,245 procedures are projected for 2002. The demand in 1995 was greater than what is projected for 2002. Neither population growth nor demographic characteristics of Brandon's PSA demonstrate that existing programs cannot meet demand. The greatest users of OHS services are the elderly. In 1999, the percentage in District 6 was similar to the Florida average; 18.25 percent for District 6, 18.38 percent for the state. The elderly percentage in Hillsborough County was less: 13.21 percent. The elderly component in Brandon's PSA was less still: 10.44 percent. In 2004, about 18.5 percent of Florida and District 6 residents are projected to be elderly. In contrast, only 10.5 percent of PSA residents are expected to be elderly. Brandon's PSA is "one of the younger defined population segments that you could find in the State of Florida" (Tr. 2892) and likely to remain so. Brandon's PSA will experience limited growth in OHS volume. Between 1999 - 2002, OHS volume will grow by only 36. The annual growth thereafter is only 13 surgeries. This is "very modest" growth and is among the "lowest numbers" of incremental growth in the State. Existing OHS providers can easily absorb this minimal growth. Brandon's PSA, is not an underserved area . . . there is excellent access to existing providers and . . . the market in this service area is already quite competitive. There is not a single competitor that dominates. In fact, the four existing providers [in Hillsborough and Polk Counties] compete quite vigorously. (Tr. 2897). Existing OHS programs in District 6 provide very good quality of care. The surgeons at the programs are excellent. Dr. Gandhi, testifying in support of Brandon's application, testified that he was very comfortable in referring his patients for OHS services to St. Joseph and Tampa General, having, in fact, been comfortable with his father having had OHS at Tampa General. Likewise, Dr. Vijay and his group, also supporters of the Brandon application, split time between Bayonet Point and Tampa General. Dr. Vijay is very proud to be associated with the OHS program at Tampa General. Lakeland also operates a high quality OHS program. In its application, Brandon did not challenge the quality of care at the existing OHS programs in District 6. Nor did Brandon at hearing advance as reasons for supporting its application, capacity constraints, inability of existing providers to absorb incremental growth in OHS volume or failure of existing providers to meet the needs of the residents of Brandon's primary service area. The Agency, in its preliminary decision on the application, agreed that typical "not normal" circumstances in this case are not present. Included among these circumstances are those related to lack of "geographic access." The Agency's OHS Rule includes a geographic access standard of two hours. It is undisputed that all District 6 residents have access to OHS services at multiple OHS providers in the District and outside the District within two hours. The travel time from Brandon to UCH or Tampa General, moreover, is usually less than 30 minutes anytime during the day, including peak travel time. Travel time from Brandon to St. Joseph's is about 30 minutes. There are times, however, when travel time exceeds 30 minutes. There have been incidents when traffic congestion has prevented emergency transport of Brandon patients suffering myocardial infarcts from reaching nearby open heart surgery providers within the 30 minutes by ground ambulance. Delays in travel are not a problem in most OHS cases. In the great majority, procedures are elective and scheduled in advance. OHS procedures are routinely scheduled days, if not weeks, after determining that the procedure is necessary. This high percentage of elective procedures is attributed to better management of patients, better technology, and improved stabilizing medications. The advent of drugs such as thrombolytic therapy, calcium channel blockers, beta blockers, and anti-platelet medications have vastly improved stabilization of patients who present at Emergency Rooms with myocardial infarctions. In its application, Brandon did not raise outmigration as a not-normal circumstance to support its proposal and with good reason. Hillsborough County residents generally do not leave District 6 for OHS. In fact, over 96 percent of County residents receive OHS services at a District 6 provider. Lack of out-migration shows two significant facts: (a) existing OHS programs are perceived to be reasonably accessible; and (2) County residents are satisfied with the quality of OHS services they receive in the County. This 96 percent retention rate is even more impressive considering there are many OHS programs and options available to County residents within a two-hour travel time. In contrast, there are two low-volume OHS providers in Manatee County, one of them being Blake. Unlike Hillsborough County residents, only 78 percent of Manatee County residents remain in District 6 for OHS services. Such outmigration shows that these residents prefer to bypass closer programs, and travel further distances, to receive OHS services at high-volume facility in District 8, which they regard as offering a higher quality of service. In its Application, Brandon does not raise economic access as a "not normal" circumstance. In fact, Brandon concedes that the demand for OHS services by Medicaid and indigent patients is very limited because Brandon's PSA is an affluent area. Brandon does not "condition" its application on serving a specific number or percentage of Medicaid or indigent patients. There are no financial barriers to accessing OHS services in District 6. All OHS providers in Hillsborough County and LRMC provide services to Medicaid and indigent patients, as needed. Approving Brandon is not needed to improve service or care to Medicaid or indigent patient populations. Tampa General is the "safety net" provider for health care services to all County residents. Tampa General is an OHS provider geographically accessible to Brandon's PSA. Tampa General actively services the PSA now for OHS. Brandon did not demonstrate cost savings to the patient population of its PSA if it were approved. Approving Brandon is not needed to improve cost savings to the patient population. Brandon based its OHS and PTCA charges on the average charge for PSA residents who are serviced at the existing OHS providers. While that approach is acceptable, Brandon does not propose a charge structure which is uniquely advantageous for patients. Restated, patients would not financially benefit if Brandon were approved. Tertiary Service Open Heart Surgery is defined as a tertiary service by rule. A "tertiary health service" is defined in Section 408.032(17), Florida Statutes, as follows: health service, which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost- effectiveness of such service. As a tertiary service, OHS is necessarily a referral service. Most hospitals, lacking OHS capability, transfer their patients to providers of the service. One might expect providers of open heart surgery in Florida in light of OHS' status as a tertiary service to be limited to regional centers of excellence. The reality of the six hospitals that provide open heart surgery services in District 6 defies this health-planning expectation. While each of the six provides OHS services of high quality, they are not "regional" centers since all are in the same health planning district. Rather than each being a regional center, the six together comprise more localized providers that are dispersed throughout a region, quite the opposite of a center for an entire region. Brandon's Allegations of Special Circumstances. Brandon presents two special circumstances for approval of its application. The first is that consideration of the low-volume Manatee County providers should not operate to "zero out" the numeric need calculated by the formula. The second relates to transfers and occasional problems with transfers for Brandon patients in need of emergency open heart services. "Time is Muscle" Lack of blood flow to the heart during a myocardial infarction ("MI") results in loss of myocardium (heart muscle). The longer the blood flow is disrupted or diminished, the more myocardium is lost. The more myocardium lost, the more likely the patient will die or, should the patient survive, suffer severe reduction in quality of life. The key to good patient outcome when a patient is experiencing an acute MI is prompt evaluation and rapid treatment upon presentation at the hospital. Restoration of blood flow to the heart (revascularization) is the goal of the treating physician once it is recognized that a patient is suffering an MI. If revascularization is not commenced within 2 hours of the onset of an acute MI, an MI patient's potential for recovery is greatly diminished. The need for prompt revascularization for a patient suffering an MI is summed up in the phrase "time is muscle," a phrase accepted as a maxim by cardiologists and cardiothoracic surgeons. Recent advances in modern medicine and technology have improved the ability to stabilize and treat patients with acute MIs and other cardiac traumas. The three primary treatment modalities available to a patient suffering from an MI are: 1) thrombolytics; 2) angioplasty and stent placement; and, 3) open heart surgery. Because of the advancement of the effectiveness of thrombolytics, thrombolytic therapy has become the standard of care for treating MIs. Thrombolytic therapy is the administration of medication to dissolve blood clots. Administered intravenously, thrombolytic medication begins working within minutes to dissolve the clot causing the acute MI and therefore halt the damage done by an MI to myocardium. The protocols to administer thrombolysis are similar among hospitals. If a patient presents with chest pain and the E.R. physician identifies evidence of an active heart attack, thrombolysis is normally administered. If the E.R. physician is uncertain, a cardiologist is quickly contacted to evaluate the patient. Achieving good outcomes in cases of myocardial infarctions requires prompt consultation with the patient, competent clinical assessment, and quick administration of appropriate treatment. The ability to timely evaluate patient conditions for MI, and timely administer thrombolytic therapy, is measured and evaluated nationally by the National Registry of Myocardial Infarction. The National Registry makes the measurement according to a standard known as "door-to-needle" time. This standard measures the time between the patient's presentation at the E.R. and the time the patient is initially administered thrombolytic medication by injection intravenously. Patients often begin to respond to thrombolysis within 10-15 minutes. Consistent with the maxim, "time is muscle," the shorter the door-to-needle time, the better the chance of the patient's successful recovery. The effectiveness of thrombolysis continues to increase. For example, the advent of a drug called Reapro blocks platelet activity, and has increased the efficacy rate of thrombolysis to at least 85 percent. As one would expect, then, thrombolytic therapy is the primary method of revascularization available to patients at Brandon. Due to the lack of open heart surgery backup, moreover, Brandon is precluded by Agency rule from offering angioplasty in all but the most extreme cases: those in which it is determined that a patient will not survive a transfer. While Brandon has protocols, authority, and equipment to perform angioplasty when a patient is not expected to survive a transfer, physicians are reluctant to perform angioplasty without open heart backup because of complications that can develop that require open heart surgery. Angioplasty, therefore, is not usually a treatment modality available to the MI patient at Brandon. Although the care of choice for MI treatment, thrombolytics are not always effective. To the knowledge of the cardiologists who testified in this proceeding, there is not published data on the percentage of patients for whom thrombolytics are not effective. But from the cardiologists who offered their opinions on the percentage in the proceeding, it can be safely found that the percentage is at least 10 percent. Thrombolytics are not ordered for these patients because they are inappropriate in the patients' individual cases. Among the contraindications for thrombolytics are bleeding disorders, recent surgery, high blood pressure, and gastrointestinal bleeding. Of the patients ineligible for thrombolytics, a subset, approximately half, are also ineligible for angioplasty. The other half are eligible for angioplasty. Under the most conservative projections, then at least 1 in 20 patients suffering an MI would benefit from timely angioplasty intervention for which open heart surgery back-up is required in all but the rarest of cases. In 1997, 351 people presented to Brandon's Emergency Room suffering from an acute MI. In 1998, the number of MIs increased to 427. In 1999, 428 patients presented to Brandon's Emergency Room suffering from an acute MI. At least 120 (10 percent) of the total 1206 MI patients presenting to Brandon's Emergency Room from 1997 to 1999 would have been ineligible for thrombolytics as a means of revascularization. Of these, half would have been ineligible for angioplasty while the other half would have been eligible. Sixty, therefore, is the minimum number of patients from 1997 to 1999 who would have benefited from angioplasty at Brandon using the most conservative estimate. Transfers of Emergency Patients Those patients who presented at Brandon's Emergency Room with acute MI and who could not be stabilized with thrombolytic therapy had to be transferred to one of the nearby providers of open heart surgery. In 1998, Brandon transferred an additional 190 patients who did not receive a diagnostic catheterization procedure at Brandon for either angioplasty or open heart surgery. For the first 9 months of 1999, 114 such transfers were made. Thus, in 1998 alone, Brandon transferred a total of 516 cardiac patients to existing providers for the provision of angioplasty or open heart surgery, more than any other provider in the District. In 1999, Brandon made 497 such transfers. Not all of these were emergency transfers, of course. But in the three years between 1997 and 1999 at least 60 patients were in need of emergency transfers who would benefit from angioplasty with open heart backup. Of those Brandon patients determined to be in need of urgent angioplasty or open heart surgery, all must be transferred to existing providers either by ambulance or by helicopter. Ambulance transfer is accomplished through ambulances maintained by the Hillsborough County Fire Department. Due to the cardiac patient's acuity level, ambulance transfer of such patients necessitates the use of ambulances equipped with Advanced Life Support Systems (ALS) in order to monitor the patient's heart functions and to treat the patient should the patient's condition deteriorate. Hillsborough County operates 18 ambulances. All have ALS capability. Patients with less serious medical problems are sometimes transported by private ambulances equipped with Basic Life Support Systems (BLS) that lack the equipment to appropriately care for the cardiac patient. But, private ambulances are not an option to transport critically ill cardiac patients because they are only equipped with BLS capability. Private ambulances, moreover, do not make interfacility transports of cardiac patients between Hillsborough County hospitals. There are many demands on the ambulance transfer system in Hillsborough County. Hillsborough County's 18 ALS ambulances cover in excess of 960 square miles. Of these 18 ambulances, only three routinely operate within the Brandon area. Hillsborough County ambulances respond to 911 calls before requests for interfacility transfers of cardiac patients and are extremely busy responding to automobile accidents, especially when it rains. As a result, Hillsborough County ambulances are not always available on a timely basis when needed to perform an interfacility transfer of a cardiac patient. At times, due to inordinate delay caused by traffic congestion, inter-facility ambulance transport, even if the ambulance is appropriately equipped, is not an option for cardiac patients urgently in need of angioplasty or open heart surgery. It has happened, for example, that an ambulance has appeared at the hospital 8 hours after a request for transport. Some cardiac surgeons will not utilize ground transport as a means of transporting urgent open heart and angioplasty cases. Expeditious helicopter transport in Hillsborough County is available as an alternative to ground transport. But, it too, from time-to-time, is problematic for patients in urgent need of angioplasty or open heart surgery. Tampa General operates two helicopters through AeroMed, only one of which is located in Hillsborough County. AeroMed's two helicopters are not exclusively devoted to cardiac patients. They are also utilized for the transfer of emergency medical and trauma patients, further taxing the availability of AeroMed helicopters to transfer patients in need of immediate open heart surgery or angioplasty. BayCare operates the only other helicopter transport service serving Hillsborough County. BayCare maintains several helicopters, only one of which is located in Hillsborough County at St. Joseph's. BayCare helicopters are not equipped with intra-aortic balloon pump capability, thereby limiting their use in transporting the more complicated cardiac patients. Helicopter transport is not only a traumatic experience for the patient, but time consuming. Once a request has been made by Brandon to transport a patient in need of urgent intervention, it routinely takes two and a half hours, with instances of up to four hours, to effectuate a helicopter transfer. At the patient's beside, AeroMed personnel must remove the patient's existing monitors, IVS, and drips, and refit the patient with AeroMed's equipment in preparation for flight. In more complicated cases requiring the use of an intra-aortic balloon pump, the patient's balloon pump placed at Brandon must be removed and substituted with the balloon pump utilized by AeroMed. Further delays may be experienced at the receiving facility. The national average of the time from presentation to commencement of the procedure is reported to be two hours. In most instances at UCH, it is probably 90 minutes although "[t]here are of course instances where it would be much faster . . .". (Tr. 3212). On the other hand, there are additional delays from time-to-time. "[P]erhaps the longest circumstance would be when all the labs are full . . . or . . . even worse . . . if all the staff has just left for the day and they are almost home, to then turn them around and bring them all back." (Id.) Specific Cases Involving Transfers Delays in the transfer process were detailed at hearing by Brandon cardiologists with regard to specific Brandon patients. In cases in which "time is muscle," delay is critical except for one subset of such cases: that in which, no matter what procedure is available and no matter how timely that procedure can be provided, the patient cannot be saved. Craig Randall Martin, M.D., Board-certified in Internal Medicine and Cardiovascular Disease, and an expert in cardiology, wrote to AHCA in support of the application by detailing two "examples of patients who were in an extreme situation that required emergent, immediate intervention . . . [intervention that could not be provided] at Brandon Hospital." (Tr. 408). One of these concerned a man in his early sixties who was a patient at Brandon the night and morning of October 13 and 14, 1998. It represents one of the rare cases in which an emergency angioplasty was performed at Brandon even though the hospital does not have open heart backup. The patient had presented to the Emergency Room at approximately 11:00 p.m., on October 13 with complaints of chest pain. Although the patient had a history of prior infarctions, PTCA procedures, and onset diabetes, was obese, a smoker and had suffered a stroke, initial evaluation, including EKG and blood tests, did not reveal an MI. The patient was observed and treated for what was probably angina. With the subsiding of the chest pain, he was appropriately admitted at 2:30 a.m. to a non- intensive cardiac telemetry bed in the hospital. At 3:00 a.m., he was observed to be stable. A few hours or so later, the patient developed severe chest pain. The telemetry unit indicated a very slow heart rate. Transferred to the intensive care unit, his blood pressure was observed to be very low. Aware of the seriousness of the patient's condition, hospital personnel called Dr. Martin. Dr. Martin arrived on the scene and determined the patient to be in cardiogenic shock, an extreme situation. In such a state, a patient has a survival rate of 15 to 20 percent, unless revascularization occurs promptly. If revascularization is timely, the survival rate doubles to 40 percent. Coincident with the cardiogenic shock, the patient was suffering a complete heart block with a number of blood clots in the right coronary artery. The patient's condition, to say the least, was grave. Dr. Martin described the action taken at Brandon: . . . I immediately called in the cardiac catheterization team and moved the patient to the catheterization laboratory. * * * Somewhere around 7:30 in the morning, I put a temporary pacemaker in, performed a diagnostic catheterization that showed that one of his arteries was completely clotted. He, even with the pacemaker giving him an adequate heart rate, and even with the use of intravenous medication for his blood pressure, . . . was still in cardiogenic shock. * * * And I placed an intra-aortic balloon pump . . ., a special pump that fits in the aorta and pumps in synchrony with the heart and supports the blood pressure and circulation of the muscle. That still did not alleviate the situation . . . an excellent indication to do a salvage angioplasty on this patient. I performed the angioplasty. It was not completely successful. The patient had a respiratory arrest. He required intubation, required to be put on a ventilator for support. And it became apparent to me that I did not have the means to save this patient at [Brandon]. I put a call to the . . . cardiac surgeon of choice . . . . [Because the surgeon was on vacation], [h]is associate [who happened to be in the operating room at UCH] called me back immediately . . . and said ["]Yes, I'll take your patient. Send him to me immediately, I will postpone my current case in order to take care of your patient.["] At that point, we called for helicopter transport, and there were great delays in obtaining [the] transport. The patient was finally transferred to University Community Hospital, had surgery, was unsuccessful and died later that afternoon. (Tr. 409-412). By great delays in the transport, Dr. Martin referred to inability to obtain prompt helicopter transport. University Community Hospital, the receiving hospital, was not able to find a helicopter. Dr. Martin, therefore, requested Tampa General (a third hospital uninvolved from the point of being either the transferring or the receiving hospital) to send one of its two helicopters to transfer the patient from Brandon to UCH. Dr. Martin described Tampa General's response: They balked. And I did not know they balked until an hour later. And I promptly called them back, got that person on the telephone, we had a heated discussion. And after that person checked with their supervisor, the helicopter was finally sent. There was at least an hour-and-a-half delay in obtaining a helicopter transport on this patient that particular morning that was unnecessary. And that is critical when you have a patient in this condition. (Tr. 413, emphasis supplied.) In the case of this patient, however, the delay in the transport from Brandon to the UCH cardiovascular surgery table, in all likelihood, was not critical to outcome. During the emergency angioplasty procedure at Brandon, some of the clot causing the infarction was dislodged. It moved so as to create a "no-flow state down the right coronary artery. In other words, . . ., it cut off[] the microcirculation . . . [so that] there is no place for the blood . . . to get out of the artery. And that's a devastating, deadly problem." (Tr. 2721). This "embolization, an unfortunate happenstance [at times] with angioplasty", id., probably sealed the patient's fate, that is, death. It is very likely that the patient with or without surgery, timely or not, would not have survived cardiogenic shock, complete heart block, and the circumstance of no circulation in the right coronary artery that occurred during the angioplasty procedure. Adithy Kumar Gandhi, M.D., is Board-certified in Internal Medicine and Cardiology. Employed by the Brandon Cardiology Group, a three-member group in Brandon, Dr. Gandhi was accepted as an expert in the field of cardiology in this proceeding. Dr. Gandhi testified about two patients in whose cases delays occurred in transferring them to St. Joseph’s. He also testified about a third case in which it took two hours to transfer the patient by helicopter to Tampa General. The first case involves an elderly woman. She had multiple-risk factors for coronary disease including a family history of cardiac disease and a personal history of “chest pain.” (Tr. 2299). The patient presented at Brandon’s Emergency Room on March 17, 1999 at around 2:30 p.m. Seen by the E.R. physician about 30 minutes later, she was placed in a monitored telemetry bed. She was determined to be stable. During the next two days, despite family and personal history pointing to a potentially serious situation, the patient refused to submit to cardiac catheterization at Brandon as recommended by Dr. Gandhi. She maintained her refusal despite results from a stress test that showed abnormal left ventricular systolic function. Finally, on March 20, after a meeting with family members and Dr. Gandhi, the patient consented to the cath procedure. The procedure was scheduled for March 22. During the procedure, it was discovered that a major artery of the heart was 80 percent blocked. This condition is known as the “widow-maker,” because the prognosis for the patient is so poor. Dr. Gandhi determined that “the patient needed open heart surgery and . . . to be transferred immediately to a tertiary hospital.” (Tr. 2305-6). He described that action he took to obtain an immediate transfer as follows: I talked to the surgeon up at St. Joseph’s and I informed him I have had difficulties transferring patients to St. Joseph’s the same day. [I asked him to] do me a favor and transfer the patient out of Brandon Hospital as soon as possible by helicopter. The surgeon promised me that he would take care of that. (Tr. 2261). The assurance, however, failed. The patient was not transferred that day. That night, while still at Brandon, complications developed for the patient. The complications demanded that an intra-aortic balloon pump be inserted in order to increase the blood flow to the heart. After Dr. Gandhi’s partner inserted the pump, he, too, contacted the surgeon at St. Joseph’s to arrange an immediate transfer for open heart surgery. But the patient was not transferred until early the next morning. Dr. Gandhi’s frustration at the delay for this critically ill patient in need of immediate open heart surgery is evident from the following testimony: So the patient had approximately 18 hours of delay of getting to the hospital with bypass capabilities even though the surgeon knew that she had a widow-maker, he had promised me that he would make those transfer arrangements, even though St. Joseph’s Hospital knew that the patient needed to be transferred, even though I was promised that the patient would be at a tertiary hospital for bypass capabilities. (Tr. 2262). Rod Randall, M.D., is a cardiologist whose practice is primarily at St. Joseph’s. He had active privileges at Brandon until 1998 when he “switched to courtesy privileges,” (Tr. 1735) at Brandon. He reviewed the medical records of the first patient about whom Dr. Gandhi testified. A review of the patient’s medical records disclosed no adverse outcome due to the patient’s transfer. To the contrary, the patient was reasonably stable at the time of transfer. Nonetheless, it would have been in the patient’s best interest to have been transferred prior to the catheterization procedure at Brandon. As Dr. Randall explained, [W]e typically cath people that we feel are going to have a probability of coronary artery disease. That is, you don’t tend to cath someone that [for whom] you don’t expect to find disease . . . . If you are going to cath this patient, [who] is in a higher risk category being an elderly female with . . . diminished injection fraction . . . why put the patient through two procedures. I would have to do a diagnostic catheterization at one center and do some type of intervention at another center. So, I would opt to transfer that patient to a tertiary care center and do the diagnostic catheterization there. (Tr. 1764, 1765). Furthermore, regardless of what procedure had been performed, the significant left main blockage that existed prior to the patient’s presentation at Brandon E.R. meant that the likely outcome would be death. The second of the patients Dr. Gandhi transferred to St. Joseph’s was a 74-year-old woman. Dr. Gandhi performed “a heart catheterization at 5:00 on Friday.” (Tr. 2267). The cath revealed a 90 percent blockage of the major artery of the heart, another widow-maker. Again, Dr. Gandhi recommended bypass surgery and contacted a surgeon at St. Joseph’s. The transfer, however, was not immediate. “Finally, at approximately 11:00 the patient went to St. Joseph’s Hospital. That night she was operated on . . . ”. (Tr. 2267). If Brandon had had open heart surgery capability, “[t]hat would have increased her chances of survival.” No competent evidence was admitted that showed the outcome, however, and as Dr. Randall pointed out, the medical records of the patient do not reveal the outcome. The patient who was transferred to Tampa General (the third of Dr. Ghandhi's patients) had presented at Brandon’s ER on February 15, 2000. Fifty-six years old and a heavy smoker with a family history of heart disease, she complained of severe chest pain. She received thrombolysis and was stabilized. She had presented with a myocardial infarction but it was complicated by congestive heart failure. After waiting three days for the myocardial infarction to subside, Dr. Gandhi performed cardiac catheterization. The patient “was surviving on only one blood vessel in the heart, the other two vessels were 100 percent blocked. She arrested on the table.” (Tr. 2271). After Dr. Gandhi revived her, he made arrangements for her transfer by helicopter. The transfer was done by helicopter for two reasons: traffic problems and because she had an intra-aortic balloon pump and there are a limited number of ambulances with intra- aortic balloon pump maintenance capability. If Brandon had had the ability to conduct open heart surgery, the patient would have had a better likelihood of successful outcome: “the surgeon would have taken the patient straight to the operating room. That patient would not have had a second arrest as she did at Tampa General.” (Tr. 2273). Marc Bloom, M.D., is a cardiothoracic surgeon. He performs open-heart surgery at UCH, where he is the chief of cardiac surgery. He reviewed the records of this 54-year-old woman. The records reflect that, in fact, upon presentation at Brandon’s E.R., the patient’s heart failure was very serious: She had an echocardiogram done that . . . showed a 20 percent ejection fraction . . . I mean when you talk severe, this would be classified as a severe cardiac compromise with this 20 percent ejection fraction. (Tr. 2712). Once stabilized, the patient should have been transferred for cardiac catheterization to a hospital with open- heart surgery instead of having cardiac cath at Brandon. It is true that delay in the transfer once arrangements were made was a problem. The greater problem for the patient, however, was in her management at Brandon. It was very likely that open heart surgery would be required in her case. She should have been transferred prior to the catheterization as soon as became known the degree to which her heart was compromised, that is, once the results of the echocardiogram were known. Adam J. Cohen, M.D., is a cardiologist with Diagnostic Consultative Cardiology, a group located in Brandon that provides cardiology services in Hillsborough County. Dr. Cohen provided evidence of five patients who presented at Brandon and whose treatments were delayed because of the need for a transfer. The first of these patients was a 76-year old male who presented to Brandon’s ER on April 6, 1999. Dr. Cohen considered him to be suffering “a complicated myocardial infarction.” (Brandon Ex. 45, p. 43) Cardiac catheterization conducted by Dr. Cohen showed “severe multi-vessel coronary disease, cardiogenic shock, severely impaired [left ventricular] function for which an intra-aortic balloon pump was placed . . .”. (Id.) During the placement of the pump, the patient stopped breathing and lost pulse. He was intubated and stabilized. A helicopter transfer was requested. There was only one helicopter equipped to conduct the transfer. Unfortunately, “the same day . . . there was a mass casualty event within the City of Tampa when the Gannet Power Plant blew up . . .”. (Brandon Ex. 45, p. 44). An appropriate helicopter could not be secured. Dr. Cohen did not learn of the unavailability of helicopter transport for an hour after the request was made. Eventually, the patient was transferred by ambulance to UCH. There, he received angioplasty and “stenting of the right coronary artery times two.” (Id., at p. 47.) After a slow recovery, he was discharged on April 19. In light of the patient’s complex cardiac condition, he received a good outcome. This patient is an example of another patient who should have been transferred sooner from Brandon since Brandon does not have open heart surgery capability. The second of Dr. Cohen’s patients presented at Brandon’s E.R. at 10:30 p.m. on June 14, 1999. He was 64 years old with no risk factors for coronary disease other than high blood pressure. He was evaluated and diagnosed with “a large and acute myocardial infarction” Two hours later, the therapy was considered a failure because there was no evidence that the area of the heart that was blocked had been reperfused. Dr. Cohen recommended transfer to UCH for a salvage angioplasty. The call for a helicopter was made at 12:58 a.m. (early the morning of June 15) and the helicopter arrived 40 minutes later. At UCH, the patient received angioplasty procedure and stenting of two coronary arteries. He suffered “[m]oderately impaired heart function, which is reflective of myocardial damage.” (Brandon Ex. 45, p. 58). If salvage angioplasty with open heart backup had been available at Brandon, the patient would have received it much more quickly and timely. Whether the damage done to the patient’s heart during the episode could have been avoided by prompt angioplasty at Brandon is something Dr. Cohen did not know. As he put it, “I will never know, nor will anyone else know.” (Brandon Ex. 45, p. 60). The patient later developed cardiogenic shock and repeated ventricular tachycardia, requiring numerous medical interventions. Because of the interventions and mechanical trauma, he required surgery for repair of his right femoral artery. The patient recently showed an injection fraction of 45 percent below the minimum for normal of 50 percent. The third patient was a 51-year-old male who had undergone bypass surgery 19 years earlier. After persistent recurrent anginal symptoms with shortness of breath and diaphoresis, he presented at Brandon’s E.R. at 1:00 p.m. complaining of heavy chest pain. Thrombolytic therapy was commenced. Dr. Cohen described what followed: [H]he had an episode of heart block, ventricular fibrillation, losing consciousness, for which he received ACLS efforts, being defibrillated, shocked, times three, numerous medications, to convert him to sinus rhythm. He was placed on IV anti- arrhythmics consisting of amiodarone. The repeat EKG showed a worsening of progression of his EKG changes one hour after the initiation of the TPA. Based on that information, his clinical scenario and his previous history, I advised him to be transferred to University Hospital for a salvage angioplasty. (Brandon Ex. 45, p. 62). Transfer was requested at 1:55 p.m. The patient departed Brandon by helicopter at 2:20 p.m. The patient received the angioplasty at UCH. Asked how the patient would have benefited from angioplasty at Brandon without having to have been transferred, Dr. Cohen answered: In a more timely fashion, he would have received an angioplasty to the culprit lesion involved. There would have been much less occlusive time of that artery and thereby, by inference, there would have been greater salvage of myocardium that had been at risk. (Brandon Ex. 45, p. 65). The patient, having had bypass surgery in his early thirties, had a reduced life expectancy and impaired heart function before his presentation at Brandon in June of 1999. The time taken for the transfer of the patient to UCH was not inordinate. The transfer was accomplished with relative and expected dispatch. Nonetheless, the delay between realization at Brandon of the need for a salvage angioplasty and actual receipt of the procedure after a transfer to UCH increased the potential for lost myocardium. The lack of open heart services at Brandon resulted in reduced life expectancy for a patient whose life expectancy already had been diminished by the early onset of heart disease. The fourth patient of Dr. Cohen’s presented to Brandon’s E.R. at 8:30, the morning of August 29, 1999. A fifty-four-year-old male, he had been having chest pain for a month and had ignored it. An EKG showed a complete heart block with atrial fibrillation and change consistent with acute myocardial infarction. Thrombolytic therapy was administered. He continued to have symptoms including increased episodes of ventricular arrhythmias. He required dopamine for blood pressure support due to his clinical instability and the lack of effectiveness of the thrombolytics. The patient refused a transfer and catheterization at first. Ultimately, he was convinced to undergo an angioplasty. The patient was transferred by helicopter to UCH. The patient was having a “giant ventricular infarct . . . a very difficult situation to take care of . . . and the majority of [such] patients succumb to [the] disease . . .”. (Tr. 2703). The cardiologist was unable to open the blockage via angioplasty. Dr. Bloom was called in but the patient refused surgical intervention. After interaction with his family the patient consented. Dr. Bloom conducted open heart surgery. The patient had a difficult post-operative course with arrythmias because “[h]e had so much dead heart in his right ventricle . . .”. (Id.) The patient received an excellent outcome in that he was seen in Dr. Bloom’s office with 40 percent injection fraction. Dr. Bloom “was just amazed to see him back in the office . . . and amazed that this man is alive.” (Tr. 2704). Most of the delay in receiving treatment was due to the patient’s reluctance to undergo angioplasty and then open heart surgery. The fifth patient of Dr. Cohen’s presented at Brandon’s E.R. on March 22, 2000. He was 44 years old with no prior cardiac history but with numerous risk factors. He had a sudden onset of chest discomfort. Lab values showed an elevation consistent with myocardial injury. He also had an abnormal EKG. Dr. Cohen performed a cardiac cath on March 23, 2000. The procedure showed a totally occluded left anterior descending artery, one of the three major arteries serving the heart. Had open heart capability been available at Brandon, he would have undergone angioplasty and stenting immediately. As it was, the patient had to be transferred to UCH. A transfer was requested at 10:25 that morning and the patient left Brandon’s cath lab at 11:53. Daniel D. Lorch, M.D., is a specialist in pulmonary medicine who was accepted as an expert in internal medicine, pulmonary medicine and critical care medicine, consistent with his practice in a “five-man pulmonary internal medicine critical care group.” (Brandon Ex. 42, p. 4). Dr. Lorch produced medical records for one patient that he testified about during his deposition. The patient had presented to Brandon’s E.R. with an MI. He was transferred to UCH by helicopter for care. Dr. Lorch supports Brandon’s application. As he put it during his deposition: [Brandon] is an extremely busy community hospital and we are in a very rapidly growing area. The hospital is quite busy and we have a large number of cardiac patients here and it is not infrequently that a situation comes up where there are acute cardiac events that need to be transferred out. (Brandon Ex. 42, p. 20). Transfers Following Diagnostic Cardiac Catheterization Brandon transfers a high number cardiac patients for the provision of angioplasty or open heart surgery in addition to those transferred under emergency conditions. In 1996, Brandon performed 828 diagnostic cardiac catheterization procedures. Of this number, 170 patients were transferred to existing providers for open heart surgery and 170 patients for angioplasty. In 1997, Brandon performed 863 diagnostic catheterizations of which 180 were transferred for open heart surgery and 159 for angioplasty. During 1998, 165 patients were transferred for open heart surgery and 161 for angioplasty out of 816 diagnostic catheterization procedures. For the first nine months of 1999, Brandon performed 639 diagnostic catheterizations of which 102 were transferred to existing providers for open heart surgery and 112 for angioplasty. A significant number of patients are transferred from Brandon for open heart surgery services. These transfers are consistent with the norm in Florida. After all, open heart surgery is a tertiary service. Patients are routinely transferred from most Florida hospitals to tertiary hospitals for OHS and PCTA. The large majority of Florida hospitals do not have OHS programs; yet, these hospitals receive patients who need OHS or PTCA. Transfers, although the norm, are not without consequence for some patients who are candidates for OHS or PCTA. If Brandon had open heart and angioplasty capability, many of the 1220 patients determined to be in need of angioplasty or open heart surgery following a diagnostic catheterization procedure at Brandon could have received these procedures at Brandon, thereby avoiding the inevitable delay and stress occasioned by transfer. Moreover, diagnostic catheterizations and angioplasties are often performed sequentially. Therefore, Brandon patients determined to be in need of angioplasty following a diagnostic catheterization would have had access to immediate angioplasty during the same procedure thus reducing the likelihood of a less than optimal outcome as the result of an additional delay for transfer. Adverse Impact on Existing Providers Competition There is active competition and available patient choices now in Brandon's PSA. As described, there are many OHS programs currently accessible to and substantially serving Brandon's PSA. There is substantial competition now among OHS providers so as to provide choices to PSA residents. There are no financial benefits or cost savings accruing to the patient population if Brandon is approved. Brandon does not propose lower charges than the existing OHS providers. Balanced Budget Act The Balanced Budget Act of 1997 has had a profound negative financial impact on hospitals throughout the country. The Act resulted in a significant reduction in the amount of Medicare payments made to hospitals for services rendered to Medicare recipients. During the first five years of the Act's implementation, Florida hospitals will experience a $3.6 billion reduction in Medicare revenues. Lakeland will receive $17 million less, St.Joseph's will receive $44 million less, and Tampa General will receive $53 million less. The impact of the Act has placed most hospitals in vulnerable financial positions. It has seriously affected the bottom line of all hospitals. Large urban teaching hospitals, such as TGH, have felt the greatest negative impact, due to the Act's impact on disproportionate share reimbursement and graduate medical education payment. The Act's impact upon Petitioners render them materially more vulnerable to the loss of OHS/PTCA revenues to Brandon than they would have been in the absence of the Act. Adverse Impact on Tampa General Tampa General is the "safety net provider" for Hillsborough County. Tampa General is a Medicaid disproportionate share provider. In fiscal year 1999, the hospital provided $58 million in charity care, as that term is defined by AHCA. Tampa General plays a unique, essential role in Hillsborough County and throughout West Central Florida in terms of provision of health care. Its regional role is of particular importance with respect to Level I trauma services, provision of burn care, specialized Level III neonatal and perinatal intensive care services, and adult organ transplant services. These services are not available elsewhere in western or central Florida. In fiscal year 1999, Tampa General experienced a net loss of $12.6 million in providing the services referenced above. It is obligated under contract with the State of Florida to continue to provide those services. Tampa General is a statutory teaching hospital. In fiscal year 1999, it provided unfunded graduate medical education in the amount of $19 million. Since 1998, Tampa General has consistently experienced losses resulting from its operations, as follows: FY 1998-$29 million, FY 1999-$27 million; FY 2000 (5 months)-$10 million. The hospital’s financial condition is not the result of material mismanagement. Rather, its financial condition is a function of its substantial provision of charity and Medicaid services, the impact of the Act, reduced managed care revenues, and significant increases in expense. Tampa General’s essential role in the community and its distressed financial condition have not gone unnoticed. The Greater Tampa Chamber of Commerce established in February of 2000 an Emergency Task Force to assess the hospital's role in the community, and the need for supplemental funding to enable it to maintain its financial viability. Tampa General requires supplemental funding on a continuing basis in order to begin to restore it to a position of financial stability, while continuing to provide essential community services, indigent care, and graduate medical education. It will require ongoing supplemental funding of $20- 25 million annually to avoid triggering the default provision under its bond covenants. As of the close of hearing, the 2000 session of the Florida Legislature had adjourned. The Legislature appropriated approximately $22.9 million for Tampa General. It is, of course, uncertain as to what funding, if any, the Legislature will appropriate to the hospital in future years, as the terms which constitute the appropriations must be revisited by the Legislature on an annual basis. Tampa General has prepared internal financial projections for its fiscal years 2000-2002. It projects annual operating losses, as follows: FY 2000-$20.1 million; FY 2001- $20.6 million; FY 2002-$31.9 million. While its projections anticipate certain "strategic initiatives" that will enhance its financial condition, including continued supplemental legislative funding, the success and/or availability of those initiatives are not "guaranteed" to be successful. If the Brandon program is approved, Tampa General will lose 93 OHS cases and 107 angioplasty cases during Brandon's second year of operation. That loss of cases will result in a $1.4 million annual reduction in TGH's net income, a material adverse impact given Tampa General’s financial condition. OHS services provide a positive contribution to Tampa General's financial operations. Those services constitute a core piece of Tampa General's business. The anticipated loss of income resulting from Brandon's program pose a threat to the hospital’s ability to provide essential community services. Adverse Impact on UCH UCH operated at a financial break-even in its fiscal year 1999. In the first five months of its fiscal year 2000, the hospital has experienced a small loss. This financial distress is primarily attributed to less Medicare reimbursement due to the Act and less reimbursement from managed care. UCH's reimbursement for OHS services provides a good example of the financial challenges facing hospitals. In 1999, UCH's net income per OHS case was reduced 33 percent from 1998. Also in 1999, UCH received OHS reimbursement of only 32 percent of its charges. UCH would be substantially and adversely impacted by approval of Brandon's proposal. As described, UCH currently is a substantial provider of OHS and angioplasty services to residents of Brandon's PSA. There are many cardiologists on staff at Brandon who also actively practice at UCH. UCH is very accessible from Brandon's PSA. UCH reasonably projects to lose the following volumes in the first three years of operation of the proposed program: a loss of 78-93 OHS procedures, a loss of 24-39 balloon angioplasties, and a loss of 97-115 stent angioplasties. Converting this volume loss to financial terms, UCH will suffer the following financial losses as a direct and immediate result of Brandon being approved: about $1.1 million in the first year, and about $1.2 million in the second year, and about $1.3 million in the third year. As stated, UCH is currently operating at about a financial break-even point. The impact of the Balanced Budget Act, reduced managed care reimbursement, and UCH's commitment to serve all patients regardless of ability to pay has a profound negative financial impact on UCH. A recurring loss of more than $1 million dollars per year due to Brandon's new program will cause substantial and adverse impact on UCH. Adverse Impact on St. Joseph’s If Brandon's application is approved, St. Joseph’s will lose 47 OHS cases and 105 PTCA cases during Brandon's second year. That loss of cases will result in a $732,000 annual reduction in SJH's net income. That loss represents a material impact to SJH. Between 1997 and 2000, St. Joseph’s has experienced a pattern of significant deterioration in its financial performance. Its net revenue per adjusted admission had been reduced by 12 percent, while its costs have increased significantly. St. Joseph's net income from operations has deteriorated as follows: FYE 6/30/97-$31 million; FYE 12/31/98- $24 million; FYE 12/31/99-$13.8 million. A net operating income of $13.8 million is not much money relative to St Joseph's size, the age of its physical plant, and its need for capital to maintain and improve its facilities in order to remain competitive. St. Joseph’s offers a number of health care services to the community for which it does not receive reimbursement. Unreimbursed services include providing hospital admissions and services to patients of a free clinic staffed by volunteer members of SJH's medical staff, free immunization programs to low-income children, and a parish nurse program, among others. St. Joseph’s evaluates such programs annually to determine whether it has the financial resources to continue to offer them. During the past two years, the hospital has been forced to eliminate two of its free community programs, due to its deteriorating financial condition. St. Joseph’s anticipates that it will have to eliminate additional unreimbursed community services if it experiences an annual reduction in net income of $730,000. Adverse Impact to LRMC The approval of Brandon will have an impact on Lakeland. Lakeland will suffer a financial loss of about $253,000 annually. This projection is based on calculated contribution margins of OHS and PTCA/stent procedures performed at the hospital. A loss of $253,000 per year is a material loss at Lakeland, particularly in light of its slim operating margin and the very substantial losses it has experienced and will continue to experience as a result of the Balanced Budget Act of 1997. In addition to the projected loss of OHS and other procedures based upon Brandon's application, Lakeland may experience additional lost cases from areas such as Bartow and Mulberry from which it draws patients to its open heart/cardiology program. Lakeland will also suffer material adverse impacts to its OHS program due to the negative effect of Brandon's program on its ability to recruit and retain nurses and other highly skilled employees needed to staff its program. The approval of Brandon will also result in higher costs at existing providers such as Lakeland as they seek to compete for a limited pool of experienced people by responding to sign-on bonuses and by reliance on extensive temporary nursing agencies and pools. Nursing Staff/Recruitment The staffing patterns and salaries for Brandon's projected 40.1 full-time equivalent employees to staff its open heart surgery program are reasonable and appropriate. Filling the positions will not be without some difficulty. There is a shortage for skilled nursing and other personnel needed for OHS programs nationally, in Florida and in District 6. The shortage has been felt in Hillsborough County. For example, it has become increasingly difficult to fill vacancies that occur in critical nursing positions in the coronary intensive care unit and in telemetry units at Tampa General. Tampa General's expenses for nursing positions have "increased tremendously." (Tr. 2622). To keep its program going, the hospital has hired "travelers . . . short-term employment, registered nurses that come from different agencies, . . . with [the hospital] a minimum of 12 weeks." (Tr. 2622). In fact, all hospitals in the Tampa Bay area utilize pool staff and contract staff to fill vacancies that appear from time-to- time. Use of contract staff has not diminished quality of care at the hospitals, although "they would not be assigned to the sickest patients." (Tr. 2176). Another technique for dealing with the shortage is to have existing full-time staff work overtime at overtime pay rates. St. Joseph's and Lakeland have done so. As a result, they have substantially exceeded their budgeted salary expenses in recent months. It will be difficult for Brandon to hire surgical RNs, other open heart surgery personnel and critical care nurses necessary to staff its OHS program. The difficulty, however, is not insurmountable. To meet the difficulty, Brandon will move members of its present staff with cardiac and open heart experience into its open heart program. It will also train some existing personnel in conjunction with the staff and personnel at Bayonet Point. In addition to drawing on the existing pool of nurses, Brandon can utilize HCA's internal nationwide staffing data base to transfer staff from other HCA facilities to staff Brandon's open heart program. Approximately 18 percent of the nurses hired at Brandon already come from other HCA facilities. The nursing shortage has been in existence for about a decade. During this time, other open heart programs have come on line and have been able to staff the programs adequately. Lakeland, in District 6, has demonstrated its ability to recruit and train open heart surgery personnel. Brandon, itself, has been successful, despite the on- going shortage, in appropriately staffing its recent additions of tertiary level NICU beds, an expanded Emergency Room, labor and delivery and recovery suites, and new high-risk, ante-partum observation unit. Brandon has begun to offer sign-on bonuses to compete for experienced nurses. Several employees who staff the Lakeland, UCH and Tampa General programs live in Brandon. These bonuses are temptations for them to leave the programs for Brandon. Other highly skilled, experienced individuals who already work at existing programs may be lost to Brandon's program as well simply as the natural result of the addition of a new program. In the end, Brandon will be able to staff its program, but it will make it more difficult for all of the programs in Hillsborough County and for Lakeland to meet their staffing needs as well as producing a financial impact on existing providers. Financial Feasibility Short-Term Brandon needs $4.2 million to fund implementation of the program. Its parent corporation, HCA will provide financing of up to $4.5 million for implementation. The $4.2 million in start-up costs projected by Brandon does not include the cost of a second cath lab or the costs to upgrade the equipment in the existing cath lab. Itemization of the funds necessary for improvement of the existing cath lab and the addition of the second cath lab were not included in Brandon's pro formas. It is the Agency's position that addition of a cath lab (and by inference, upgrade to an existing lab) requires only a letter of exemption as projects separate from an open heart surgery program even when proposed in support of the program. (See UCH No. 7, p. 83). The position is not inconsistent with cardiac catheterization programs as subject to requirements in law separate from those to which an open heart surgery program is subject. Brandon, through HCA, has the ability to fund the start-up costs of the project. It is financially feasible in the short-term. Long-Term Open heart surgery programs (inclusive of angioplasty and stent procedures, as well as other open heart surgery procedures) generally are very profitable. They are among the most profitable of programs conducted by hospitals. Brandon's projected charges for open heart, angioplasty, and stent procedures are based on the average charges to patients residing in Brandon's PSA inflated at 2 percent per year. The inflation rate is consistent with HCFA's August 1, 2000, Rule implementing a 2.3 percent Medicare reimbursement increase. Brandon's projected payor mix is reasonably based on the existing open heart, angioplasty, and stent patients within its PSA. Brandon also estimated conservatively that it would collect only 45 to 50 percent of its charges from third-party payors. To determine expenses, Brandon utilized Bayonet Point's accounting system. It provided a level of detail that could not be obtained otherwise. "For patients within Brandon's primary service area, . . . that information is not provided by existing providers in the area that's available for any public consumption." (Tr. 1002). While perhaps the most detailed data available, Bayonet Point data was far from an ideal model for Brandon. Bayonet Point performs about 1,500 OHS cases per year. It achieves economies of scale that will not be achievable at Brandon in the foreseeable future. There is a relationship between volume and cost efficiency. The higher the volume, the greater the cost efficiency. Brandon's volume is projected to be much lower than Bayonet Point's. To make up for the imperfection of use of Bayonet Point as an "expenses" proxy, Brandon's financial expert in opining that the project was feasible in the long-term, considered two factors with regard to expenses. First, it included its projected $1.8 million in salary expenses as a separate line item over and above the salary expenses contained in the Bayonet Point data. (This amounted to a "double" counting of salary expenses.) Second, it recognized HCA's ability to obtain competitive pricing with respect to equipment and services for its affiliated hospitals, Brandon being one of them. Brandon projected utilization of 249 and 279 cases in its second and third year of operations. These projections are reasonable. (See the testimony of Mr. Balsano on rebuttal and Brandon Ex. 74). Comparison of Agency Action in CONs 9169 and 9239 Brandon's application in this case, CON 9239, was filed within a six-month period of the filing of an earlier application, CON 9169. The Agency found the two applications to be similar. Indeed, the facts and circumstances at issue in the two applications other than the updating of the financial and volume numbers are similar. So is the argument made in favor of the applications. Yet, the first application was denied by the Agency while the second received preliminary approval. The difference in the Agency's action taken on the later application (the one with which this case is concerned), i.e., approval, versus the action taken on the earlier, denial, was explained by Scott Hopes, the Chief of the Bureau of Certificate of Need at the time the later application was considered: The [later] Brandon application . . ., which is what we're addressing here today, included more substantial information from providers, both cardiologists, internists, family practitioners and surgeons with specific case examples by patient age [and] other demographics, the diagnoses, outcomes, how delays impacted outcomes, what permanent impact those adverse outcomes left the patient in, where earlier . . . there weren't as many specifics. (Tr. 1536, 1537). A comparison of the application in CON 9169 and the record in this case bears out Mr. Hopes' assessment that there is a significant difference between the two applications. Comparison of the Agency Action with the District 9 Application During the same batching cycle in which CON 9239 was considered, five open heart surgery applications were considered from health care providers in District 9. Unlike Brandon's application, these were all denied. In the District 9 SAAR, the Agency found that transfers are an inherent part of OHS as a tertiary service. The Agency concluded that, "[O]pen heart surgery is a tertiary service and patients are routinely transferred between hospitals for this procedure." (UCH Ex. 7, pp. 51-54). In particular, the Agency recognized Boca Raton's claim that it had provided "extensive discussion of the quality implications of attempting to deal with cardiac emergencies through transfer to other facilities." (UCH Ex. 7, p. 52). Unlike the specific information referred to by Mr. Hopes in his testimony quoted, above, however, the foundation for Boca Raton's argument is a 1999 study published in the periodical Circulation, entitled "Relationship Between Delay in Performing Direct Coronary Angioplasty and Early Clinical Outcomes." (UCH Ex. 7, p. 21). This publication was cited by the Agency in its SAAR on the application in this case. Nonetheless, a fundamental difference remains between this case and the District 9 applications, including Boca Raton's. The application in this case is distinguished by the specific information to which Mr. Hopes alluded in his testimony, quoted above.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered granting the application of Galencare, Inc., d/b/a Brandon Regional Hospital for open heart surgery, CON 9239. DONE AND ENTERED this 30th day of March, 2001, in Tallahassee, Leon County, Florida. DAVID M. MALONEY 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 30th day of March, 2001. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Thomas W. Konrad, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 North Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 James C. Hauser, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 John H. Parker, Jr., Esquire Jonathan L. Rue, Esquire Sarah E. Evans, Esquire Parker, Hudson, Rainer & Dobbs 1500 Marquis Two Tower 285 Peachtree Center Avenue, Northeast Atlanta, Georgia 30303 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Monroe Street Tallahassee, Florida 32301
The Issue The central issues in these cases are: As to case no. 89-1293--whether Indian River Memorial Hospital (Indian River) meets the statutory and rule criteria for a certificate of need (CON) to operate an inpatient cardiac catheterization laboratory, and therefore, whether the Department of Health and Rehabilitative Services (Department) should approve CON application number 5726. This application is opposed by Lawnwood Medical Center, Inc. (Lawnwood). As to case no. 89-1294--whether Lawnwood meets the statutory and rule criteria for a CON to operate an open heart surgery program and an inpatient cardiac catheterization laboratory, and therefore, whether the Department should approve CON application number 5729. Indian River opposes the proposed approval of Lawnwood's inpatient cardiac catheterization laboratory in case no. 89-1295. St. Mary's Hospital, Inc. (St. Mary's) opposes the proposed approval of the inpatient cardiac catheterization laboratory in case no. 89-1297.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made: The Parties Indian River is a private, not-for-profit hospital which is operated pursuant to a lease between itself and the Indian River Hospital District, a special tax district. Indian River is located in Vero Beach, Indian River County, Florida, and has 347 licensed beds of which 293 are medical-surgery beds, with 18 intensive care and critical care beds. Ad valorem tax monies support indigent care for Indian River County residents. Lawnwood is a 335 bed acute care hospital located in Fort Pierce, St. Lucie County, Florida. Lawnwood is owned and operated by Lawnwood Medical Center, Inc., a wholly-owned subsidiary of Hospital Corporation of America (HCA). Lawnwood has an established outpatient catheterization laboratory located in a free-standing building on the hospital grounds. St. Mary's is an acute care hospital located in West Palm Beach, Palm Beach County, Florida. St. Mary's has an established inpatient catheterization laboratory program. The Department is the state agency responsible for administering those sections of Chapter 381, Florida Statutes, which govern the review process under which applications for CONs are either granted or denied. Indian River, Lawnwood, and St. Mary's are located within the Department's District IX. The geographical boundaries for District IX encompass Indian River, St. Lucie, Martin, Okeechobee, and Palm Beach Counties. With the exception of Martin Memorial Hospital (whose entitlement to inpatient cardiac cath is disputed by Lawnwood), all existing providers of inpatient catheterization services are located in Palm Beach County. The Applications On August 25, 1988, Indian River submitted a letter of intent to advise the Department of its plan to construct a cardiac catheterization laboratory within the hospital and to establish an inpatient cardiac cath program. The proposal set forth in that letter made reference to Indiarn River's patients who are generally routed to hospitals located in another district for cardiac cath services. The application submitted by Indian River on August 26, 1988, estimated that the capital expenditure of the project, $1,779,750, would provide for the construction of a second floor addition to the hospital which would accomodate the new laboratory. The application alleged that, in the majority of cases, residents of Indian River County in need of cardiac catheterization are sent out of district for such services. On October 13, 1988, the Department responded to Indian River's application by listing omissions from the proposal which the Department required in order to complete its review. This "omissions letter" specified that Indian River was to update its application utilizing the "new rule" for cardiac cath. The responses to the omissions were to be provided by November 14, 1988. Indian River timely responded to the omissions letter on November 9, 1988. The Department deemed Indian River's application to establish an inpatient cardiac cath laboratory complete effective November 14, 1988. On August 26, 1988, Lawnwood submitted a letter of intent to the Department to announce its intention to establish a cardiac cath and open heart surgery program. Lawnwood sought to be included in the application group for which the deadline was September 28, 1988. The timeline for this group required applications to be complete by November 14, 1988. Agency action on the applications submitted in the September, 1988 batch was scheduled for January 13, 1989. Lawnwood's application was received and reviewed by the Department. The omissions letter which outlined approximately six questions requiring further elaboration was issued on October 13, 1988. Lawnwood's omissions response was timely provided on November 14, 1988. The Department deemed Lawnwood's application for an inpatient cardiac cath laboratory and an open heart program complete effective November 14, 1988. Inpatient cardiac catheterization is not currently available in Indian River and St. Lucie Counties. As a result, potential patients residing in these counties are geographically isolated from the existing District IX providers of the same services. State Agency Action Report On January 20, 1989, the Department issued its State Agency Action Report (SAAR) which recommended the approval of an inpatient cardiac cath program for Lawnwood. The portion of Lawnwood's application which sought a CON for an open heart program was denied. The SAAR evaluated the applicants based upon the following criteria: Section 381.705, Florida Statutes; Rule 10-5.011, Florida Administrative Code; and the 1988 District IX Health Plan (DHP). The Health Plans Pertinent to these proceedings are the following portions of the DHP: B. In planning for the specialized services of cardiac catheterization laboratories and open heart surgical services, District IX, in its entirety, shall be the subdistrict. * * * Priority shall be given to area facilities for specialized services which can show a commitment to, or an historical record of, service to Medicaid/Indigent, Handicapped and Underserved population groups. * * * Priority shall be given to Certificate of Need applicants who propose to have both inpatient cardiac catheterization services and open heart surgical services in the same facility. However, should it become evident, at any time, that there is a need for one service and not for both services, then an applicant would not be expected to have to apply for both. The State Health Plan (SHP) sets a goal of ensuring the appropriate availability of cardiac catheterization and open heart surgery services at a reasonable cost. In pursuit of that goal two objectives are specified: Objective 4.1.: To maintain an average of 600 cardiac catheterization procedures per laboratory in each district through 1990. * * * Objective 4.2.: To maintain an average of 350 open heart surgery procedures per program in each district through 1990. The "Old Rule" Need determination for cardiac catheterization capacity under the version of Rule 10-5.011, Florida Administrative Code, which was effective on April, 1988, provided for a calculation whereby the number of catheterization procedures for the projected year equaled the actual use rate (number of procedures per hundred thousand population) in the service area for the 12 month period beginning 14 months prior to the letter of intent deadline (the batching group) multiplied by the projected population in the service area for the projected year. The projected year was the year in which the proposed cardiac cath laboratory would initiate service (not more than two years into the future). The "old rule" further provided that no additional cardiac cath laboratories would be established in a service area unless the average number of caths performed per year by the existing and approved laboratories were greated than 600. This volume level contemplated inpatient and outpatient procedures. Consequently, applications for proposed cardiac cath laboratories may not be approved if they would reduce the average volume of procedures performed below 600. The Department did not publish a fixed need pool for this batch of applicants under the "old rule." The Department's goal under the "old rule" provided that it will not normally approve applications for new cardiac catheterization laboratories unless additional need is indicated based upon the calculations explained above. The number of cardiac cath procedures performed in District IX during the relevant time period was 4765. The population during the use rate period was 1,151,929. The historic use rate is therefore 413.65 per 100,000 population. The projected population for the planning horizon is 1,259,178. The projected use for the period is 5208.6. That number divided by 600 yields a total need for the planning period of 8.68 cath laboratories for this District. Applying the Department's historical practice of rounding the number to the nearest whole number establishes a need for 9 cardiac cath laboratories. By subtracting the existing cath laboratories (Boca Raton, JFK, St. Mary's, Palm Beach Gardens, and Delray) results in a need for an additional 4 cardiac cath laboratories. Pursuant to the "old rule," both applicants in this case have established numeric need for their proposed program. The "New Rule" The need formula expressed in the "new rule" is as follows: NN=PCCPV - ACCPV - APP Where: NN is the annual net program volume need in the service planning area projected 2 years into the future for the respective planning horizon. Net need projections are calculated twice a year. The planning horizon for applications submitted between January 1 and June 30, shall be July of the year subsequent to the following calendar year. The planning horizon for applications submitted between July 1 and December 31, shall be January of the year 2 years subsequent to the following calendar year. PCCPV is the projected adult cardiac catheterization program volume which equals the actual adult cardiac catheterization program volume rate (ACCPV) per thousand adult population 15 years and over for the most recent 12 month period available to the department 3 weeks prior to 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 most recent 12-month period for which data are available to the department 3 weeks prior to the publication of the fixed need pool. APP is the projected program volume for approved programs. The projected program volume for each approved program shall be 300 admissions. The Department did not publish a fixed need pool for this batch under the "new rule." The projected program volume contemplates 300 admissions which relate to inpatient procedures. In addition to the formula set forth above, the "new rule" provides that the actual outmigration from one service planning area to another shall be considered in the review of a CON application. In this case, the actual number of cardiac cath procedures for District IX is understated. The actual number utilized by the Department in the evaluation of these applicants failed to consider the outmigration of patients residing in Indian River County who travelled out of the district for services. The actual number of Indian River patients who travelled out of the District for cardiac catheterization during the period was understated by at least 500. Prior to the evaluation of these applicants, neither the Department nor the applicants had data to calculate the outmigration for cardiac cath services from District IX. That it was occurring was obvious--there were no inpatient facilities in the northern counties. Further, the established referral patterns suggest that patients in the northern counties preferred the outside facilities which were geographically closer than existing programs within District IX. However, no study quantifying the number of residents receiving services elsewhere had been performed. Regardless of the net need calculated under the "new rule" formula above, the rule further provides that no additional cardiac catheterization programs 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. Utilizing the most conservative ACCPV (4133) divided by the number of operational programs (5) would yield an average program volume well in excess of 300. In that instance, the average volume per program would be 827. That assessment assumes a translation of "admissions" to equal "procedures." In contrast, utilizing the 600 figure set forth in the SHP, yields a program need for 7 facilities. That figure confirms that two additional cardiac catheterization programs would be appropriate and adequately supported by District use. In reaching this conclusion, the cardiac catheterization program located at Martin Memorial Hospital has not been included in the number of existing programs. The program at Martin was reportedly approved in the settlement of a prior batch CON case. As such, it may not reduce the number of facilities calculated in this case under the pertinent rule. Based upon the "new rule," both of these applicants have established numeric need for their proposed program. The number of projected procedures (4565) divided by 600 further establishes a need for 7 programs. Open Heart Need Pursuant to the Rule 10-5.011, Florida Administrative Code, the need for open heart surgery programs is determined by computing the projected number of open heart surgical procedures in the service area for a projected year. That number equals the actual use rate (number of procedures per hundred thousand population) in the service area for the 12 month period beginning 14 months prior to the letter of intent multiplied by the projected population in the service area for the year in which the proposed open heart surgery program would initiate service (not more than two years into the future). Based upon the open heart need formula there is no numeric need for additional open heart surgery programs in District IX. Further, the approval of an additional open heart program would reduce the average volume of existing open heart surgery facilities to below 350 open heart procedures annually. The Department will not normally approve applications for new open heart surgery programs in any district unless there is a finding of numeric need coupled with a finding that the additional program will not reduce the volume of existing providers below 350. Not Normal Circumstances Reviewed There are three open heart programs currently operating in District IX (Palm Beach Gardens, Delray, and JFK). All of these programs are located within Palm Beach County which is south of Lawnwood's service area. The closest of these programs (Palm Beach Gardens) is approximately 44.3 miles from Lawnwood. Another open heart program which is located outside of District IX, Holmes Regional Medical Center (located in Brevard County to the north), is approximately 49.8 miles from Lawnwood. Not normal circumstances warranting the approval of an open heart program require a showing of financial, programmatic or geographical conditions which establish that residents of the given service area are unable to access the service. In this case, District IX must be examined and considered as a whole. It is inappropriate to "subdistrict" for purposes of reviewing not normal circumstances. While a number of the residents of the northern counties do avail themselves of services outside of District IX, the basis for that outmigration may be the physicians' established referral patterns, patient preference, or the provider's reputation in the medical community for quality care. Open heart services are available and accessible to all residents of District IX. Consequently, no persuasive not normal circumstances have been established. Ouality of Care Indian River and Lawnwood are properly accredited and have established records of providing quality care in their existing programs and departments. Lawnwood's outpatient cardiac catheterization laboratory has operated without question to its quality of care. Since neither applicant currently provides open heart services, it is anticipated that both will operate their inpatient cardiac cath laboratories in accordance with a transfer agreement for emergency patients. Such agreement could provide for the relocation of patients to a hospital authorized to provide open heart surgery. By rule, the receiving hospital must be located within 30 minutes travel time by emergency vehicle to the inpatient cath facility. In this case, Indian River intends to transfer emergency patients to Holmes Regional Medical Center, a hospital currently authorized to provide open heart surgery services. That hospital is within 30 minutes emergency travel time of Indian River. Lawnwood also proposes to transfer emergency patients to Holmes Regional Medical Center. In order to meet the 30 minute travel time criteria, transfer in this instance must be by helicopter. Lawnwood intends to meet this requirement by agreement with Holmes. Holmes has four pilots, two mechanics, one full-time helicopter, and one backup helicopter to provide this service. By helicopter, the travel time from Lawnwood to Holmes is within 30 minutes. Availability and Access With the addition of the programs at Indian River and Lawnwood, residents in the northern counties of District IX will have an increased access to inpatient cardiac cath. This geographic accessibility will lessen the outmigration for these services by providing more convenient, locally situated programs. It is anticipated that local programs will reduce patient anxiety incidental to the travel associated with attaining the services. Further, when considered in connection with the outpatient programs (existing at Lawnwood and planned for Indian River), a significant volume of cath procedures will be performed without requiring travel to adjacent counties/hospitals. Increased volume will improve the efficiency and skill of personnel administering the procedures. Since the service areas for Indian River and Lawnwood have not, historically, conflicted, it is anticipated that patients of each facility will access their respective hospital for the service required. Personnel Availability and Costs The staffing, training and costs of providing same proposed by Indian River and Lawnwood are reasonable and adequate to fully support inpatient cardiac cath laboratories. Both hospitals have established procedures to monitor and to provide for quality assurance in connection with the services to be performed. Additionally, both have ongoing educational training to enhance their programs. Both hospitals have a cardiologist or other appropriately credentialed physician on staff to anchor the cardiac cath team. Financial Feasibility There are sufficient procedures anticipated to be performed by these hospitals to assure a level of utilization which will provide for the financial feasibility of the inpatient cardiac cath programs. Indian River currently refers approximately 500 cardiac cath procedures to facilities outside District IX. Lawnwood has commenced an aggressive outpatient progrom. With the availability of extending that program (in Lawnwood's case) and recapturing its referrals (in Indian River's case), both of these hospitals should have no financial difficulty in establishing their inpatient programs. Effect on Competition and Costs There should be no appreciable impact on costs or competition in the health care community within District IX if these applications for cardiac cath are approved. While there will be a decline in the service utilization of other facilities outside the district when referrals cease, there is no data from which it must be concluded that such decrease will adversely affect the health care community as a whole. Further, the increased service availability within District IX should not affect competition or costs since historically these facilities do not compete for patients. Similarly, since the potential patients do not currently utilize existing and approved programs (for the most part) within District IX, the approval of these applications for inpatient cardiac cath will not adversely affect the ability of existing providers to attract and retain the personnel or patients for their programs. In the case of Lawnwood's proposal for open heart, such program would, however, detract from the existing providers. Since, on average, the existing providers are not operating at appropriate levels, the creation of an additional provider would significantly affect the existing programs' abilities to attract patients. Theoretically, the existing providers should have the first opportunity to secure outmigrating patients. This would assure that their programs develop and retain a volume to assure quality of care. Indigent Care As stated previously, Indian River is a tax-supported hospital which pledges tax revenues to provide health care for the indigent. It is anticipated that such practice will continue and that those residents of Indian River County who are unable to afford inpatient cardiac cath services will obtain indigent care according to Indian River's historical record. Lawnwood's historical record for providing indigent care (as supported by its outpatient cardiac cath data) is less than exemplary. It is anticipated that as a conditon upon the issuance of the CON, Lawnwood will be required to provide a minimum of 2 percent of the total annual visits to Medicaid patients and a minimum of 3 percent of total annual visits o medically indigent/charity care patients. Those amounts are an appropriate commitment to assist the medically needy within Lawnwood's service area. Miscellaneous Criteria The applicants did not propose the operation of joint, cooperative, or shared health care resources. The applicants did not predicate need for their requested service on the need for research and educational facilities. The special needs and circumstances of health maintainance organizations was not at issue. The parties stipulated as to the reasonableness of the costs and methods for construction of the proposed facilities. Both hospitals intend to construct new laboratories. The costs associated with Indian River's proposed construction are less than those proposed by Lawnwood.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a final oider approving the certificate of need applications filed by Indian River Memorial Hospital and Lawnwood Regional Medical Center to establish inpatient cardiac catheterization laboratories. It is further recommended that Lawnwood's application to establish an open heart surgery program be denied. DONE AND ENTERED this 28th day of March, 1990, in Tallahassee, Leon County, Florida. Joyous D. Parrish Hearing Officer Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of March, 1990. Appendix to Case Nos. 89-1293 et seq. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY INDIAN RIVER: Paragraphs 1 through 16 are accepted. With regard to paragraph 17, it is accepted that Indian River physicians have established referral patterns outside of District IX for inpatient and outpatient cath procedures. To the extent that Indian River's application and response to the omissions letter made reference to this phenomenon, it is accepted that such activities were properly placed at issue in these proceedings. As to the calculations expressed in paragraph 17, no formal study was performed by any party to accurately quantify the number of procedures performed outside District IX on residents of Indian River and St. Lucie Counties. It is accepted that Dr. Celano and his partner performed outpatient procedures cn approximately 200 patients. It is further accepted that another 300 procedures were performed on Indian River residents at Holmes or Florida Hospital. Consequently, the utilization rate has been significantly understated. The total volume of which is unknown except as addressed herein, paragraph 17 is rejected as speculation or unsupported by the record in this cause. The first three sentences of paragraph 18 are accepted. The last sentence is rejected as speculation. With regard to paragraph 19, it is accepted that referrals to other hospitals can cause patient anxiety due to waits or transfer difficulties. Otherwise rejected as comment, argument, recitation of testimony or unnecessary. Paragraphs 20 and 21 are accepted. Paragraph 22 is rejected as irrelevant. Paragraph 23 is accepted. Paragraph 24 is rejected as speculation unsupported by the weight of the evidence or irrelevant. Paragraph 25 is accepted. Paragraph 26 is accepted. Paragraph 27 is accepted. Paragraph 28 is accepted. To the extent that the "new rule" requires consideration of inmigration and outmigration, paragraph 29 is accepted. That data became available subsequent to the finding that these applications were complete is irrelevant. Since no data quantifying outmigration/inmigration was available, the rule read as a whole must dictate whether the applicants have established numeric need. The applicants and the Department knew of the outmigration, consequently, reading the rule as a whole establishes that the existing providers are performing an ample number of procedures to guarantee their continued success and that an additional two programs are warranted. See response to paragraph 29 above regarding paragraph 30. Paragraph 31 is rejected as argument--see response to paragraph 29 and findings reached in paragraphs related to "new rule." Paragraph 32 is rejected as argument, comment or unnecessary. Paragraphs 33 through 41 are accepted. With regard to paragraphs 42 through 80, except as noted by findings of fact related to the applicants and the assessment of their proposals, such paragraphs are unnecessary (need for two programs has been established), argument, irrelevant (as to allegations regarding Lawnwood's open heart proposal), or contrary to the weight of competent evidence. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY LAWNWOOD: Paragraphs 1 through 7 are accepted. With regard to paragraph 8, it is accepted that currently Indian River does not have an outpatient cardiac cath program; however, regardless of the outcome of this proceeding, Indian River will establish an outpatient facility. Paragraphs 9 and 10 are accepted. Paragraph 11 is accepted but is unnecessary since it does not provide a fact related to the conclusions reached in this order. Except as accepted in the findings of fact related to the "old rule," paragraphs 12 through 15 are rejected as contrary to the weight of the evidence. In theory, Lawnwood's proposed findings correctly state how the "old rule" should be applied. The actual numbers differ slightly with the findings reached in the recommended order. Except as accepted in the findings of fact related to the "new rule," paragraphs 16 through 20 are rejected as contrary to the weight of the evidence. In theory, Lawnwood's proposed findings correctly state how the "new rule" should be applied. The actual numbers and conclusions differ slightly with the findings reached in the recommended order. Paragraph 21 is accepted. Except as accepted in the findings of fact related to open heart need, paragraphs 22 and 23 are rejected as unsupported by the weight of the evidence, argument, or irrelevant. Paragraph 24 is accepted. Paragraphs 25 through 28 are accepted. Paragraph 29 is rejected as contrary to the weight of competent evidence, irrelevant (an out of district provider would not have standing to oppose the request), or argument. Paragraph 30 is accepted to the extent that it states Martin's inpatient cath program located in Martin County has improved accessibility; however, that program did not exist when these applications were filed and evaluated by the Department otherwise rejected as irrelevant. Paragraph 31 is rejected as contrary to the weight of the evidence or irrelevant. Paragraph 32 is rejected as contrary to the weight of the evidence related to open heart. Open heart facilities are available and accessible for District IX residents. Transfers to open heart facilities under emergency circumstances after cardiac cath procedures would be the exception and not the rule. Paragraphs 33 and 34 are rejected as irrelevant to the issue of open heart. While outmigration is to be considered in determining need for cardiac cath under the "new rule," such outmigration does not establish inaccessibility for open heart services. Paragraphs 35 through 41 are rejected as contrary to the weight of the evidence, contrary to the appropriate rule application, or irrelevant. Paragraphs 42 (deleting open heart) through 44 are accepted. With regard to paragraph 45, the program located at Martin has not been considered in the evaluation of these applicants since approval for that program occurred after this batch closed. Paragraph 46 is accepted. Paragraph 47 is rejected as irrelevant. Paragraph 48 is rejected as irrelevant. Paragraph 49 is rejected as irrelevant. Paragraphs 50 and 51 are rejected as argument or contrary to the weight of the evidence. Paragraph 52 is accepted. Paragraph 53 is accepted. Paragraph 54 is rejected as irrelevant. Paragraph 55 is accepted. Paragraph 56 is rejected as contrary to the weight of the evidence. Paragraphs 57 through 61 are rejected as contrary to the weight of the evidence. Paragraph 62 is accepted. Paragraphs 63 through 80 are accepted. Paragraph 81 is rejected as contrary to the weight of the evidence. Paragraphs 82 through 85 (related only to cardiac oath) are accepted. Related to the allegations foil open heart, such paragraphs are rejected as contrary to the weight of the evidence or irrelevant. Paragraphs 86 through 90 are accepted. Paragraphs 90 through 96 are accepted only as to representations of facility and staffing it is agreed Lawnwood will have. Otherwise, assumption that volume of surgical cases will exist is rejected as contrary to the weight of the evidence. Paragraphs 97 through 105 are accepted. With regard to paragraph 106, it is accepted that the term emergency vehicle includes helicopter; otherwise, rejected as a conclusion of law. Paragraph 107 is rejected as argument. Paragraph 108 is rejected as argument or contrary to the weight of the evidence. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE DEPARTMENT: Paragraphs 1 through 3 are accepted. The conclusion reached in paragraph 4 is rejected as contrary to the weight of the evidence. Paragraph 5 is accepted. The conclusion reached in paragraph 6 is rejected as contrary to the weight of the evidence. Paragraph 7 is accepted. Paragraph 8 is accepted. Paragraph 9 is rejected as to the conclusion reached regarding the cardiac cath program as contrary to the weight of the evidence. With regard to the conclusion reached regarding the open heart program, the paragraph is accepted. Paragraphs 10 through 13 are accepted. Paragraph 14 is rejected as irrelevant. Paragraphs 15 through 16 are accepted. Paragraph 17 is rejected as argument. Paragraph 18 is rejected as argument, contrary to the weight of the evidence, or irrelevant. Paragraph 19 is accepted. Paragraph 20 is rejected as irrelevant. Paragraph 21 is rejected as irrelevant. Paragraph 22 is accepted. Paragraph 23 is rejected as contrary to the weight of the evidence, irrelevant or multiple facts. Paragraphs 24 through 25 are accepted. Paragraph 26 is rejected as comment, argument, or irrelevant. Paragraphs 27 and 28 are accepted. Paragraph 29 is rejected as argument. Paragraph 30 is rejected as repetitive or argument. The second sentence of paragraph 31 is accepted; otherwise, the paragraph is rejected as irrelevant. Paragraph 32 is accepted. Paragraph 33 is accepted. Paragraph 34 is rejected as contrary to the weight of the evidence. Paragraph 35 is accepted. Paragraph 36 is accepted. Paragraph 37 is accepted. Paragraph 38 is rejected as contrary to the weight of the evidence. Paragraph 39 is accepted. With the substitution of the word "maintenance," paragraph 40 is accepted. Paragraph 41 is accepted. Paragraphs 42 through 47, with the exception of the conclusion that only one cath program is needed (that conclusion is contrary to the weight of the evidence), are accepted. Paragraph 48 is rejected as irrelevant. Paragraph 49 is accepted. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY ST. MARY'S: Paragraph 1 is accepted. The first two sentences of paragraph 2 are accepted. The balance of the paragraph is rejected as unsupported by the record. The first two sentences of paragraph 3 are rejected as contrary to the weight of the evidence. The last sentence is accepted. The first sentence of paragraph 4 is accepted. The balance of the paragraph is rejected as argument. It is accepted that Lawnwood does not have a significant history in connection with the outpatient cath facility. Paragraph 5 is rejected as argument. Paragraph 6 is rejected as irrelevant. Paragraphs 7 through 18 are rejected as argument, irrelevant, contrary to the weight of the evidence or recitation of testimony. The first sentence of paragraph 19 is accepted. The balance of the paragraph is rejected as argument, contrary to the weight of the evidence, or irrelevant. Paragraph 20 is rejected as irrelevant. Paragraph 21 is accepted but is irrelevant. Paragraph 22 is rejected as irrelevant. Paragraph 23 is rejected as recitation of testimony. Paragraph 24 is rejected as irrelevant. Paragraph 25 is rejected as irrelevant. The first sentence of paragraph 26 is accepted. The balance is rejected as argument or conclusion of law. Paragraphs 27 and 28 are rejected as argument. Paragraph 29 is accepted. The first sentence of paragraph 30 is accepted. The balance of the paragraph is rejected as argument. Paragraph 31 is rejected as contrary to the weight of the evidence. Paragraph 32 is rejected as argument. Paragraph 33 is rejected as argument. Paragraph 34 is accepted. Paragraph 35 is rejected as argument. Paragraph 36 is rejected as argument. Paragraph 37 is accepted. Paragraphs 38 and 39 are accepted. Paragraph 40 is rejected as irrelevant. COPIES FURNISHED: Kenneth F. Hoffman Oertel, Hoffman, Fernandez & Cole, P.A. 2700 Blair Stone Road Post Office Box 6507 Tallahassee, Florida 32314-6507 John Radey Jeffrey L. Frehn Aurell, Radey, Hinkle & Thomas 101 North Monroe Street Suite 1000, Monroe Park Tower Post Office Box 11307 Tallahassee, Florida 32302 David Watkins Patricia A. Renovitch Oertel, Hoffman, Fernandez & Cole, P.A. 2700 Blair Stone Road Post Office Box 6507 Tallahassee, Florida 32314-6507 Lesley Mendelson Senior Attorney Department of Health and Rehabilitative Services Ft. Knox Executive Center 2727 Mahan Drive, Suite 103 Tallahassee, Florida 32308 Sam Power Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
Findings Of Fact Petitioner's name and address are North Broward Hospital District d/b/a North Broward Medical Center, 201 E Sample Road, Pompano Beach, Florida 33604. The North Broward Hospital District is a Special Taxing District created by the Florida Legislature. It currently owns and operates three public, nonprofit hospitals in Broward County including Broward General Medical Center ("BGMC") and North Broward Medical Center Respondent, Department of Heath and Rehabilitative Services ("HRS"), is responsible for the administration of Section 381.493 through 381.499, Fla. Stat. ("the CON statute"), and Fla. Administrative Code Ch. 10-5 ("the CON rules"). Under the foregoing, authorities, HRS reviews applications for CONs to construct, purchase or otherwise implement certain new health care facilities and new institutional health care services, as defined by the CON statute. One of these new institutional health care services subject to HRS' review under the CON statute and CON rules is open-heart surgery service, as defined in Fla. Admin. Code Rule 10-5.11(16)(a). By formal application under the CON statute and CON rules which was deemed complete by HRS effective October 16, 1985, NBMC applied for a certificate of need ("CON") to institute an open-heart surgery service at 201 E. Sample Road, Pompano Beach, Florida 33604. Exhibit "A" is a true, correct, and authentic copy of NBMC's application for certificate of need for open-heart surgery. NBMC's application was denied by HRS by letter dated February 28, 1986, received by NBMC open March 10, 1986. Exhibit "B" is a true, correct, and authentic copy of said letter. Publication of the denial appears at Vol. 12; No. 11, Florida Administrative Weekly (March 14, 1986). HRS' basis for denying the application is contained in the "State Agency Action Report". Exhibit "C" is a true, correct, and authentic copy of HRS' State Agency Action Report pertaining to NBMC's application. NBMC has petitioned HRS for formal Section 120.57(1), Fla. Stat., administrative proceedings challenging the denial of its application for open- heart surgery. Exhibit "D" is a true, correct, and authentic copy of that petition. In its application, NBMC stated that one of its sister hospitals, BGMC, currently provided open-heart surgical services. NBMC proposed in its application to utilize the same open-heart surgical team at NBMC as was then practicing at BGMC. Applicants for CONs for open-heart surgery services must satisfy certain regulatory standards prescribed in CON Rule 10-5.11(16). These standards include: (k)1. There shall be no additional open- heart surgery programs established unless: The service volume of each existing and approved open-heart surgery program within the service area is operating at and is and expected to continue to operate at a minimum of 350 adult open-heart surgery cases per year or 130 pediatric heart cases per year; and The conditions specified in (e)4., above will be met by the proposed program. (E.S.) Rule 10-5.11(16)(e)4. provides in pertinent part as follows: There shall be a minimum of 200 adult open- heart procedures performed annually, within three years after initiation of service, an any institution in which open-heart surgery is performed for adults. (E.S.) Exhibit "E" is a true, correct, and authentic copy of CON Rule 10-5.11(16). 10. In 43 Fed. Reg. 13040, 13048 (March 28, 1978) (42 C.F.R. 121.207), the Secretary of the United States Department of Health and Human Services ("HHS") set forth the federal CON standards for open-heart surgery, as part of the National Guidelines for Health Planning. The National Guidelines for Health Planning are referenced in HRS's State Agency Action Report. Exhibit "F" is a true, correct, and authentic copy of that portion of the Nation Guidelines for Health Planning which pertain to the implementation of open-heart surgery services. The National Guidelines for Health Planning also provide that approval of new open-heart surgery services should be contingent upon existing units operating and continuing to operate at a level of at least 350 procedures per year. The National Guidelines for Health Planning further provide as follows: In some areas, open-heart surgical teams, including surgeons and specialized technologists, are utilizing more than one institution. For these institutions, the guidelines may be applied to the combined number of open-heart procedures performed by the surgical team where an adjustment is justifiable in line with Section 121.6(B) and promotes more cost effective use of available facilities and support personnel. In such cases, in order to maintain quality care a minimum of 75 open-heart procedures in any institution is advisable, which is consistent with recommendations of the American College of Surgeons. (E.S.) HRS' CON Rule 10-5.11(16); which contains the "350" standard, does not contain any comparable exception for institutions sharing open-heart surgical teams. NBMC's application for CON projects 200 open-heart surgeries by the end of the third year of operations and, when combined with BGMC's open-heart procedures satisfies the exception contained in the National Guidelines for Health Planning, as described above. There are no disputed issues of material fact that will require an evidentiary hearing in this matter. The parties therefore agree that the matter shall be submitted pursuant to legal memoranda and oral argument. The parties' legal memoranda will be due on June 17, 1986, and oral argument will be held on the scheduled hearing date of June 19, 1986. The parties agree to allow responses to the legal memoranda, which responses shall be submitted no later than June 26; 1986.
The Issue The issue is whether the application made by Plantation General Hospital for certificate of need number 5736 for an open heart surgery program should be granted.
Findings Of Fact General. Procedural background and description of the parties. Plantation General Hospital filed a letter of intent with the Department of Health and Rehabilitative Services (Department) and the local planning agency noticing its intention to file an application for a certificate of need for an adult open heart surgery program on August 28, 1988. Its application for certificate of need No. 5736 was filed on September 28, 1988. On October 10, 1988, the Department notified Plantation of omissions from its application, which were supplemented in a response filed November 14, 1988, and the Department deemed the application complete on November 16, 1988. The Department issued its notice of intent to deny the application on January 30, 1989, and Plantation requested a hearing on that denial. Florida Medical Center, North Ridge General Hospital and Broward General Hospital intervened in the proceeding. Broward General sought to intervene shortly before the hearing was to begin, and its participation was limited. By notice dated May 31, 1989, the Department announced that it had reconsidered its position and would support Plantation's application. Plantation General Hospital is a 264-bed general medical surgical hospital located in the City of Plantation, Broward County, Florida. It is owned by Hospital Development and Services Corporation which in turn is owned by Healthtrust, Inc. It offers acute care services, except for open heart surgery and burn treatment. It does not propose to perform pediatric open heart surgery. It does offer cardiac catheterization and other non-invasive cardiac services such as EKG, stress testing and other procedures. It also has services which would support an open heart surgery program such as radiology, pathology, anesthesiology, neurology, intensive care, and an emergency room. Plantation received a certificate of need in 1984 to operate a cardiac catheterization laboratory, which opened in April of 1985. It now performs a large number of catheterizations, so that there is pressure to offer an open heart surgery program. Diagnostic catheterizations often reveal that a patient could benefit from open heart surgery. Patients prefer to have surgery done at the hospital where the catheterization is done. Conversely, patients often choose a hospital for catheterization that has the capability to perform open heart surgery. Patients having therapeutic catheterization (angioplasty) must be served at a hospital approved to offer open heart surgery. Therapeutic catheterization itself sometimes triggers the need for immediate heart surgery. Plantation is currently constructing a new wing for its obstetrical patients and proposes to convert part of its present obstetric space for use by the open heart surgery program. The proposed open heart area would have a single operating room, a recovery area, a pump room for the heart-lung oxygenator pump, a sub-sterile storage area and a nurses' station. Existing beds near the proposed open heart area are monitored beds which could be converted to cardiovascular intensive care unit beds at a lower cost than would be the case for wholly new construction. That conversion would not require certificate of need review. The project Plantation General proposes involves the renovation of 2,229 square feet at a projected cost of $267,480. Equipment is projected to cost an additional $300,000. Plantation General anticipates the total project cost will be $599,970. Plantation is not a teaching or research hospital and does not propose to offer teaching or research as part of its open heart surgery program. The hospital does not contend that there is an unmet need for indigent open heart health services which its project would fill. It has historically provided some medical service to Medicaid patients and to the medically indigent. Plantation does not contend, however, that the level of its medical services historically provided to the medically indigent, the extent to which it proposes to provide open heart surgery to underserved population groups, or to Medicaid patients enhances its application. These items are neutral factors which have no impact on the need determination. The Intervenors acknowledged that Plantation would provide minimally appropriate open heart services for the indigent. Plantation General's owner, Healthtrust, Inc., has created a limited partnership to become the new owner of its hospital; Hospital Development and Services Corporation will serve as the general partner, and a number of doctors will be limited partners. The partnership offering is closed, and the approvals, transfers, and other activities created by the closing of the partnership are ongoing. It is anticipated that after receipt of all approvals and transfers the partnership will be deemed to have been in effect as of June 1, 1989. Florida Medical Center is a 459 bed acute hospital located in Fort Lauderdale, Broward County, Florida. It provides a full array of cardiac services, with the exception of heart transplants. It offers cardiac catheterization services, and was the first hospital to offer open heart surgery in Broward County. North Ridge Medical Center presented no testimony about its size or location because its standing had been stipulated. It provides a full array of cardiac services including cardiac catheterization and open heart surgery, but not heart transplants. North Ridge performs the largest volume of open heart surgery procedures in Broward County. Broward General Hospital is the largest facility of the four facilities operated by the North Broward Hospital District, an independent special taxing district. Broward General has 744 acute care beds, and is located in Fort Lauderdale, Florida. It operates an array of cardiac services, including cardiac catheterization, coronary angioplasty, cardiac electrophysiology studies, intra-aortic balloon pumping, and insertion of temporary and permanent pacemakers. Its physical plant consist of one open heart surgery suite, one cardiac catheterization laboratory, and cardiac and progressive care beds. On January 26, 1989, North Broward Hospital District entered into a contract with the Cleveland Clinic Florida which will permit the clinic to provide its cardiac services exclusively at Broward General. Broward General is in the process of expanding its open heart surgery suites from one suite to two, its catheterization labs from one to two, and adding 16 coronary care and 24 progressive care beds. Broward General has 29 staff cardiologists, three of whom are Cleveland Clinic Florida physicians who hold interim privileges. Eight cardiovascular surgeons are on its staff, two of whom are Cleveland Clinic Florida physicians. Statutory Criteria for Evaluating Certificate of Need Applications. Consistency with the state health plan and local health plan. Section 381.705(1)(a), Florida Statutes. The Department is required to consider The need for the health care services and hospices being proposed in relation to the applicable district plan and state health plan, except in emergency circumstances which pose a threat to the public health. Section 381.705(1)(a), Florida Statutes. Plantation General does not contend that there are emergency circumstances in Broward County which threaten the public health and require approval of its application. Prehearing stipulation, paragraph 12. There is no applicable state health plan because the last plan was specifically drafted to cover the period 1985-87. That last plan does contain a goal stating that it is the state's desire to "ensure the appropriate availability of . . . open heart surgery services at a reasonable cost" and the goal is implemented by an objective, number 4.2, which is "to maintain an average of 350 open heart procedures per program in each district through 1990." This objective is predicated upon the assumption that the Department will interpret subparagraph 11 of Rule 10-5.011(1)(f), Florida Administrative Code, infra, to permit a new program if the existing programs, on the average, provide 350 open heart procedures per year. The correctness of that interpretation is discussed in Findings 60 and 61, as well as in the Conclusions of Law. The state health plan also states that applicants proposing cardiac surgery must make those services available to all segments of the population regardless of their ability to pay. Section 381.705(1)(n). The parties stipulated that Plantation has provided medical services to Medicaid patients and to the medically indigent and the extent to which Plantation proposes to provide open heart services is neither an enhancement nor detraction from its application. Currently five facilities in Broward County provide open heart surgery: Broward General, Florida Medical Center, North Ridge, Holy Cross, and Memorial Hospital. There are no facilities which have not yet opened, but which have obtained certificate of need approval for open heart surgery. During the period of July 1987 - June 1988, current providers had the following volume of procedures: Hospital Broward General Number of Procedures 143 Florida Medical Center 382 North Ridge 781 Holy Cross 362 Memorial 478 Total Dividing the number of procedures 2,146 by the five existing providers yeilds an average of 431 procedures per program. The average number of procedures therefore exceeds 350, which is consistent with the provisions of the old state health plan. The local health plan has three criteria which bear upon the application. It requires that the application be consistent with accreditation standards, the hospital must be willing to accept patients from all payor classes, and must comply with the Department's rules. It is stipulated that Plantation General has full accreditation and if approved will obtain accreditation for its open heart surgery program. Plantation accepts Medicare, Medicaid, private pay, and indigent patients. At page 70, its application states that the hospital will provide 2% of its open heart surgery to indigent patients, 67% of its patients will be Medicare patients and 31% will be private pay patients. The hospital has not projected any Medicaid utilization because open heart surgery is typically performed on older patients, and most of those patients will qualify for Medicare rather than Medicaid due to their age. No Medicaid open heart surgery was reported in HRS District X (Broward County) for the year preceding Plantation's application. The application is consistent with the last state health plan and the local health plan. Availability, utilization, geographic accessibility and economic accessibility of facilities in the district. Section 381.705(1)(b), Florida Statutes. Open heart surgery is available to all residents in Broward County within two hours normal driving time; it is therefore geographically accessible. Plantation does not propose to provide a substantial portion of its open heart services to individuals who reside outside of HRS Service District X (Broward County). Plantation does not contend that there is a pool of patients who are denied access to open heart surgery on financial grounds. The increased access to indigents which Plantation would provide is negligible (only about six surgeries per year), and the parties have stipulated that its commitment to provide services to the medically indigent neither enhanced nor detracted from its application. There is no evidence of any waiting list at facilities which provide open heart surgery which would be alleviated by the approval of Plantation General's application. Plantation's argument that service availability has been a problem for some patients at Plantation who need open heart or emergency angioplasty services is rejected. It can provide diagnostic catheterizations but not angioplasty because it lacks open heart surgery certification. With respect to emergency angioplasty, there is an inherent service availability problem when a hospital such as Plantation establishes a catheterization lab, when it is not approved to provide open heart surgery. Angioplasty can have the unfortunate side effect in a small number of cases of triggering an immediate need from open heart surgery. A patient must be immediately transferred, or the open heart surgery must be performed at Plantation, even though it is not approved for that service. Those problems are problems which Plantation knowingly assumed when it began its catheterization lab knowing that it was not approved for open heart surgery. It is not significant that at times of peak demand at Florida Medical Center there may be no beds available for a patient from Plantation who needs open heart surgery. Patients are commonly transferred to Florida Medical Center because it is the nearest hospital to Plantation. More than one half of its patients who were transferred went to Memorial Hospital, however, not Florida Medical Center. There is no evidence that another hospital in Broward County has not had a bed available for a patient from Plantation who needed open heart surgery when Florida Medical Center's unit was full. The issues of efficiency and the extent of utilization raise the question whether there is additional capacity in existing open heart programs which should be used in preference to opening a new program at Plantation General. This is related to the need calculation made in Rule 10-5.011(1)(f)8, Florida Administrative Code, discussed at Finding 60. An efficiency standard of 350 procedures per year is found in Rule 10-5.011(1)(f)11a(I), Florida Administrative Code. That utilization standard is met by all facilities in Broward County except for Broward General, see, Finding 14, supra. It provided only 143 open heart procedures in the year July 1987-June 1988. Broward General has been providing open heart surgery for 16 years and has not yet approached the 350 procedures per year. Broward General is in the process of substantially expanding its cardiac program, through its association with the Cleveland Clinic, and the addition of a second open heart surgery operating room. That expansion could accommodate the volumes Plantation seeks to achieve. Florida Medical Center already has two open heart surgery rooms in operation and is adding a third. Based upon its current volumes and the fact that there is no reasonable likelihood of real future growth in the use rate for open heart surgery, Broward General and Florida Medical Center have existing capacity to serve the demand for surgeries which Plantation projects it would perform during its first two years of operation. North Ridge provides approximately 600 surgeries per year, and utilizes more than one operating room. It also has capacity to contribute to District X (Broward County), especially given the reduced demand in Broward caused by the reduction in Palm Beach County residents coming to Broward County for open heart surgery. Open heart surgery programs in Palm Beach County hospitals have recently come on line, and are providing surgery for Palm Beach County residents who formerly traveled to Broward. There is no evidence that existing open heart surgery programs lack the capacity to sufficiently handle future demand. There is no proof that existing facilities are being over utilized, which is consistent with the prior finding that there is no waiting list at any provider. All candidates for open heart surgery are currently being served. There is little overlap in the medical staffs of Plantation General and Broward General, and Plantation referred no cases to Broward General for open heart surgery in 1987 and only three in 1988, but the additional capacity of Broward General is an important consideration. Part of the reason for the certificate of need process is to control and reduce capital expenditures, and, through that control to indirectly reduce associated labor costs and other ancillary costs which arise from the proliferation of medical services. To the extent that other institutions, especially Broward General, could provide additional surgery through its approved open heart surgery program, restraining an increase in the number of providers will eventually have the effect of directing patients to hospitals with lower utilization. This might not be the case if there were proof that Broward General did not provide quality care, and residents voted with their feet and shunned the program to seek care elsewhere. The parties have stipulated, however, that there are no quality of care problems with any of the existing open heart surgery programs in the county, including Broward General. Efficiency considerations therefore weigh against approval of the Plantation General application. There are no geographic accessibility problems, nor any reason to believe that access to open heart surgery by medically indigent or other underserved populations would be enhanced by the Plantation General proposal. Ability of applicant to provide quality care. Section 381.705(1)(c), Florida Statutes. Plantation General is fully accredited by the Joint Commission on the Accreditation of Hospitals. It provides quality care in the services now available at Plantation General. Plantation intends to implement its open heart surgery program by forming a steering committee to direct its development, with responsibility to assure that the program will comply with all applicable rules and provide high quality services. In an effort to keep the cost of its program low, the Plantation General application has sought to minimize the renovations, expansions, and the equipment attributable to the program. This attempt at cost effectiveness has serious quality of care implications. It will be difficult to provide a quality open heart program operating at a reasonable surgical volume with a single operating room; the application also proposes only to have one oxygenator pump, which is inadequate. Plantation General is likely to encounter difficulty in finding a sufficient number of skilled personnel to provide a quality program. It assessing the adequacy of a single open heart surgery operating room, it is necessary to keep in mind that Plantation will also be providing therapeutic catheterization, or angioplasty, which requires immediate access to open heart surgery as a back up. The volume of angioplasties will affect the hospital's ability to schedule open heart surgery in its single operating room, for angioplasty cannot take place if there is no operating room available for open heart surgery should the patient require it. Plantation projects it will handle between 203 and 271 angioplasties in the first year its open heart surgery program will operate, and between 218 and 291 angioplasties in the second year. The average time for an angioplasty is 3 to 3.5 hours. The open heart surgery team and other staff also must be available on site while angioplasty proceeds in case they are needed. In terms of the staff necessary to perform open heart surgery, the Plantation application indicates that there will be one surgical team. Each team consists of two surgeons, one anesthesiologist, a circulating nurse, a perfusionist to operate the heart-lung oxygenator pump, and two scrub nurses. Plantation did not adequately explain how its staffing projections would enable the open heart surgery service to cover the projected number of surgeries and angioplasties, given the substantial overtime that would have to be incurred if both the open heart and angioplasty programs operate. In order to provide angioplasty coverage, by 1991-92, Plantation's open heart surgery schedule will have to provide 654 to 873 hours of angioplasty back-up coverage, based on a three hour average angioplasty. In turn, this means that 12.5 to 17 hours of such coverage will be necessary each week based upon an average time of 3 hours for each angioplasty. The cardiac surgeons on staff at Plantation will require about 5 1/2 hours to perform open heart surgery without including clean up or set up time. For Plantation's open heart surgery program during its second year of operation, its health care planner, Mr. Nelson, assumes six operations per week during the first three-quarters of the year and eight per week in the last quarter of the year. The normal operating hours for the program will be 8 to 9 hours per day. Thus, for the first three quarters of 1991-92, open heart surgery will occupy the time available in the single operating room at least three days a week. The 4 to 5 angioplasties still must be covered, which will require at least 2 days of the dedicated open heart surgery room's time. By the last quarter of the second year of operation, the open heart surgery suite will be utilized at least 4 days a week for actual surgery, leaving only one day available for the necessary angioplasty back up coverage. Thus, the single operating room proposed will require the hospital surgical staff to regularly work well beyond normal operating hours and will create substantial scheduling problems to accommodate both open heart surgery and angioplasties. What this means is that it is not likely that the configuration for the open heart surgery program proposed by Plantation will work out. Plantation will have to add staff, and probably renovate and equip another operating room. The Intersociety Commission on Heart Disease Resources guidelines recommend that an open heart program have two fully equipped open heart operating rooms, or a designated open heart operating room immediately adjacent to a general surgical suite which also has the necessary equipment in place to provide open heart surgery. Plantation's proposal would violate these guidelines because it has only a single operating room and only enough equipment in to handle one operating room. Plantation's witness, Mr. Webb, did testify that he has worked in two other facilities with only one open heart operating room, that the rooms were not dedicated solely to open heart, and no serious problems were encountered with these programs, but his testimony did not deal with the problems likely to be encountered by Plantation given its projected open heart volumes and likely angioplasty volumes. It may be true that after the open heart surgery program is implemented, additional operating rooms might be added without requiring additional certificate of need review, but it is improper for the institution to low-ball its application projections, on the assumption that it can later make &*an inadequate proposal sufficient by additional capital expenditures for construction or reconfiguration of operating rooms, acquisition of additional equipment or hiring additional staff. Such a piecemeal process defeats the purpose of certificate of need review; it causes a review of selected portions of a program, rather than the program as it will actually operate. Plantation's intention to purchase a single heart-lung oxygenator pump is a serious deficiency. A single pump is likely to suffer occasional mechanical breakdown, and no other pump will be available in an emergency. More importantly, the pump will certainly need routine maintenance, and the heavy schedule of use for the operating suite based upon the projected volumes of open heart and angioplasty cannot be maintained with a single pump. The pump should not be moved from room to room because of the increased risks of contamination caused by movement. With respect to the configuration of the overall unit, the operating suite will have four cardiovascular intensive care unit beds in its open heart surgery area. This is an adequate design, even though most of the cardiovascular intensive care beds will be on the third floor. Plantation General's ability to provide quality care is also questionable based upon the limited partnership it has formed with its doctors. Since the advent of diagnostic related groups (DRGs), the reimbursement to hospitals from federal sources has been limited to a flat fee arrangement. It is in the interest of the hospital to discharge patients as quickly as possible, to maximize the value of that payment. On the other hand, doctors refer, admit and discharge patients from the hospital, hospital administrators do not. Hospitals therefore seek ways to encourage doctors to share the hospital's financial incentives to make a profit within the payment constraints of diagnostic related groups. One way to do this is to have doctors share in the profitability of the hospital. Plantation General has formed a limited partnership with some of its doctors. Those limited partners must be on the active staff of Plantation. The general partner is Hospital Development and Services Corporation, the owner of Plantation General Hospital. The partnership will lease the hospital, and the limited partners will be paid, based on their units of ownership, upon the operating cash flow of the hospitals. If doctors refer more patients to the hospital, the cash flow will be greater and distributions should be larger. This arrangement is fraught with the potential for abuse which is highlighted in the prospectus for the limited partnership, which states: Prospective Payment System. The Social amendments of 1983 established a prospective payment system for Medicare and amended Section 1866(a)(1)(F) of the Social Security Act (the "Act") to specify that hospitals seeking reimbursement under the prospective payment system must enter into agreements with a utilization and quality control peer review organization ("PRO"). Section 1886(f)(2) of the Act specifies that the Secretary of the Department of Health and Human Services may deny payment or require a hospital to take corrective action if a PRO provides the Secretary of the Department of Health and Human Services with documentation that a hospital has attempted to circumvent the prospective payment system through unnecessary admissions or overutilization. Fraud and Abuse. The Act imposes criminal penalties upon persons who make or receive kickbacks, rebates in connection with the Medicare prog anti-fraud and abuse rules prohibit prov others from soliciting, offering, receiving o directly or indirectly, any remuneration in r either making a referral for a Medicare-covere or item or ordering any covered service Violations of these rules may be punished by up to $25,000 or imprisonment for up to five both. In addition, the Medicare a and Program Protection Act of 1987 makes it a civil offense to violate these prohibitions, punishable by exclusion from the Medicare and Medicaid programs. The Limited Partners are to receive cash distributions based upon the available cash flow, if any, of the Partnership generated through the provision of services to patients admitted to the Hospital by physicians, some of whom will be Limited Partners. The Limited Partners therefore may receive a greater amount of distributions if physicians admit a greater number of patients to the Hospital. Individual investors share in the Partnership's cash flow only in proportion to their respective investments in the Partnership and not in accordance with the number of referrals or admissions each makes. Arguably, therefore, the investors' sharing of Partnership profits would not be a prohibited kickback or rebate. The Third Circuit United States Court of Appeals has recently held that the fraud and abuse rules are violated if one purpose (as opposed to a primary or sole purpose) of a payment to a provider is to induce referrals. U.S. versus Greber, 760 F. 2d 68 (1985). The Greber case involved the payment of fees for alleged professional services. Although the Greber holding (i.e., the one purpose test) casts an extremely wide net, its application to the present facts is not clear. Although as stated above, the present arrangement, which involves the allocation of cash flow on the basis of ownership interests held, arguably is not objectionable on these grounds, it is clear that as the number of referrals and admissions increase, revenues and, potentially, available cash flow will increase. It is not inconceivable, therefore, that the Partnership's activities may be held to violate the anti-fraud and abuse rules and subject the Partnership and the Partners to criminal and civil sanctions. The federal government has announced a policy of scrutinizing and evaluating joint ventures among healthcare providers under the fraud and abuse rules, and this area of the law is in a state of rapid development and change. Because of the changing state of the law and the lack of clear authority, it is not possible to give a more precise analysis of the application of the fraud and abuse provisions to the Partnership. The hospital's limited partnership arrangement is also probably contrary to the Code of Ethics of the American College of Physicians. It states: The physician should avoid any business arrangement that might, because of personal gain, influence his decision in patient care. . . In the case of personal conflicts, the moral edict is clear, the physician must avoid any personal commercial conflicts of interest that might compromise his loyalty in treatment of patients. Collusion with nursing homes, pharmacists, or colleagues for personal financial gain is morally reprehensible. For a physician to own shares in a drug company or in a hospital in which he practices does not constitute an unethical behavior of itself, but it does make him vulnerable to the accusation that his actions are influenced by such ownership. The safest course would be to avoid any such potentially compromising situation. Unfortunately, the application here has the direct effect of promoting compromising situations of this type. Moreover, this type of arrangement has been the subject of a "special fraud alert" from the Office of the Inspector General of the U. S. Department of Health and Human Services. One of the factors that the Inspector General looks to is "whether investors are chosen because they are in a position to make referrals." Under the prospectus for the Plantation General limited partnership, only medical staff can become limited partners and "physicians expected to make a large number of referrals may be offered greater investment opportunity in the joint venture than those anticipated to make fewer referrals." (Tr. 520) Moreover, "investors may be required to divest their ownership interest if they cease to practice in the service area, for example, if they move, become disabled, or retire." (Id) While it is understandable that the owner of the hospital may find the limited partnership to be an attractive means to bond physicians to its profit motivation, this set-up creates inherent conflicts of interest which have serious implications for quality of care. This innovation should not be condoned through certificate of need approval. Availability of health manpower and the extent to which the proposed services will be accessible to all residents of the District. Section 381.705(1)(h), Florida Statutes. An applicant must demonstrate that there is adequate health manpower to meet the staffing needs of the project. There is a current nursing shortage nationally, and recent graduates from nursing school do not posses the training necessary to perform in an open heart operating room or critical care after surgery. One of the means Plantation proposes to fill its nursing positions is to use agency nurses, nurses provided by pool services from temporary placement agencies. (Tr. 70, Plantation's proposed finding 31). While such nurses may be valuable in other parts of the hospital, these sort of temporary nurses should not be used in an open heart program. Hospitals in general and open heart surgery programs in particular suffer an acute shortage of qualified nursing staff. Florida Medical Center has found it necessary to establish its own training program because it cannot find adequately trained nurses in Southeast Florida, including Dade, Broward, and Palm Beach Counties. Even North Ridge Hospital, which has a reputation for high staff retention, has a nursing turn-over rate of 20 to 25%. When Delray Hospital in Palm Beach County opened its open heart surgery program its program was under substantial pressure because of its high nursing turn-over rate, its inability to find nurses to cover a 24 hour period of time and nurse "burn out" from excessive overtime. The Broward County nursing shortage contributes substantially to increased health care costs because of the marketing and monetary incentives related to recruiting and retaining nurses. New open heart programs must raid nurses from competing programs, which exerts a upward pressure on nurse salaries. If the Plantation program were to be approved, the existing open heart programs would probably lose nurses, which has an adverse impact on the present system. None of the foregoing should be construed as a reason to deny nurses the economic advantages which arise from a nursing shortage. The issue is whether, taken as a whole, the benefits of the application justifies the upward pressure on health care costs implicit in the approval of an additional program when there is additional capacity in current providers. On balance here, there is inadequate reason to do so. Immediate and long term financial feasibility. Section 381.705(1)(i), Florida Statutes. Many of the elements of financial feasibility are not in dispute. The parties have stipulated that Healthtrust, the parent corporation for Plantation General, has access to $600,000 and will make those funds available if this application is approved. They also stipulated that if one operating room and one pump are adequate and appropriate, the $300,000 in equipment cost shown in Table 3 of the application adequately covers necessary equipment costs; that the 2,229 gross square feet to be renovated, as shown in the line drawing in the application, is adequate for creating the room shown in the drawing,(i.e., one operating room, one recovery room, a pump room, an observation room, a sub-sterile storage area, a scrub area, and a nurses station), and the renovations can be accomplished for $299,970. The parties also stipulated that Plantation General's bad debt projections, policy adjustments and contractual adjustments contained in is pro forma are reasonable if the gross revenue projection is accurate. The salary projections per full- time equivalent found on Table 11 for staff are reasonable but the parties did not agree that the number of positions or the distribution of staff is appropriate. The perfusionist charge is reasonable, and the depreciation cost is correctly stated in the application. The projections of the percentage of utilization by payor class found in the application is reasonable. The areas of contention are the long and short term feasibility of the project based upon Plantation's projected charges, and the accuracy of Plantation's projected expenses. Plantation projects it will perform 184 open heart surgeries in its first year of operation and 312 in the second year. The anticipated average charges are $34,860 in the year beginning July, 1990 and $36,603 in the year beginning July, 1991. These charges were calculated by an outside consultant who has no control over the actual charges which the hospital may establish if the program is implemented. The average charge was predicated upon an examination of Florida Health Care Cost Containment Board data pertaining to the DRGs for open heart surgery reported by the five Broward open heart providers during the third quarter of 1986. The charges ranged from a low of $29,063 at North Ridge to a high of $39,208 at Hollywood Memorial. The projection of average charges is inherently imprecise, but is useful to analyze whether, if Plantation charged patients an amount within the range of the average actual charges within the district, the project would be financially feasible. Plantation does not guarantee that its charges will be no more than the average charges. Its total income will vary based upon the mix of cases and the types of patients it serves. Based on the anticipated charges, Plantation calculated the incremental cost associated with the project. The incremental revenue to the hospital (that is, the revenue generated by the facility with the open heart surgery program as opposed to revenue that will be realized without the program) should be $6,414,240 in the first year and as much as $11,420,136 in the second year. This calculation is necessary in order to determine whether costs would exceed the likely charges, which would clearly affect the financial feasibility of the project. Plantation projected that these costs and deductions from revenue would be $2,919,293 the first year and $5,286,554 in the second year. It is quite likely that Plantation would perform 184 surgeries during the first year and it is reasonable to assume it could achieve the projected 312 surgeries in the second year. Plantation's average charges as set forth in the application may be low. Plantation General's charges are, on balance, about 20% higher than the charges at North Ridge. This would mean that the average charge for Plantation General's first year of operation would be $42,708 rather than $34,860. It might have been better if Plantation General had developed a charge comparison taking into account the cost per adjusted admission by using the case mix index published by the Florida Health Care Cost Containment Board. The failure to use that adjustment is not that significant given the inherent "softness" in the projection of patient charges. Plantation General's projected charges found in Finding 42 are reasonable. What is much more significant is the questionable nature of Plantation General's expenses. The Intervenors have argued that the applicant's cost projections fail to include costs associated with non-revenue producing Departments, such as pharmacy, laboratory, X-ray, nuclear medicine, respiratory therapy, EKG, cardiac catheterization and pathology, dietary and medical records. In essence, the Intervenors claim that the only expenses which are acknowledged by Plantation General are incremental costs from instituting the open heart program, but not the true cost. Plantation General presented the testimony of Mr. Tharpe, who prepared the cost analysis. He testified that he included the cost of supplies, laboratory and all other ancillary areas that provide services to patients by taking the projected income from the open heart surgery program, and comparing it to the projected income of the entire hospital. The actual 1988 hospital revenues were inflated by 5% a year to estimate the hospital's 1990-91 revenue. Open heart revenues would then constitute about 7% of total hospital revenues. He used this percentage to estimate the cost that would be associated with using non-revenue generating departments. This 7% ratio was not applied to fixed overhead cost such as the mortgage costs or the cost of hospital administration, because those costs would be incurred whether or not Plantation operated an open heart program. Neither did he apply the 7% ratio to other cost centers such as the obstetrics or pediatrics departments. In this way, Mr. Tharpe claimed he allocated the cost for all routine and ancillary areas which would provide services to open heart patients. This analysis is unpersuasive. Followed it to its logical conclusion, no new program would ever have to account for its share of the ongoing cost of the hospital imbedded in fixed overhead, such as mortgage, administration, power, or interest charges. It provides a convenient excuse for the hospital to understate expenses and thereby make a new service look more profitable, and therefore more likely to be financially viable in both the short and long terms. A better way to perform cost analysis is to use a step-down cost analysis. This procedure allocates overhead of non-revenue departments to revenue departments to get fully costed figures for delivering services within each hospital department. This step-down cost analysis is a generally accepted accounting procedure and is one required by Medicare. The statistical basis of step-down cost analysis avoids the inherent oversimplification in the assumption that costs are linear, i.e., that all costs and charges have the same relationship to each other within the hospital. Without necessarily accepting Mr. Newman's projection that the fully allocated cost of open heart surgery at Plantation General would be $22,800 per case and not $12,800 per case, the is persuasive that the expense projections of Plantation General are unrealistic, and understated. It is not possible, based on the record made, to determine what the actual expense would be. Due to this failure of proof, it is therefore impossible to determine whether the project is feasible in the long or short term. While open heart surgery is often a very profitable service, in the absence of persuasive evidence on the cost of providing open heart surgery services, it would be inappropriate to assume that the project would be sufficiently profitable that it would be financially feasible in the short or long terms. Needs and circumstances of facilities providing a substantial portion of their services to persons not residing in the service area. Section 381.705(1)(k), Florida Statutes. The prehearing stipulation states that this criteria is an issue, but it really is not. Although other hospitals such as North Ridge and Florida Medical Center provide services to patients from Palm Beach County, the effect of the project on them is not relevant under this criteria. This criteria focuses on the effect of the establishment of a new service at Plantation General on other providers located outside District X, Broward County. There is no proof that it will have any such effect. Probable impact of the proposed project on the cost of providing the service, including the effect on competition. Section 381.705(1)(l), Florida Statutes. The introduction of another provider of open heart surgery will provide the potential for additional price and non-price competition among providers of open heart surgery services. The major purchasers are really not the individuals who have surgery, but the managed care plans, such as HMOs and PPOs, which negotiate with hospitals on behalf of their subscribers. Plantation General currently has contracts with about 25 managed care plans and receives about 30% of its revenue from those plans. This is an indication that the market regards Plantation as a competitive provider. On the other hand, Florida Medical Center, which is its closest competitor geographically, is not actively seeking managed care contracts and has not added any for the last eighteen months. The addition of Plantation General would be consistent with the statutory directive to foster increased competition among health care providers. The Hearing Officer also accepts Dr. Zaretsky's testimony that even if all 184 surgeries which Plantation General projects it will perform during its first year were drawn from Florida Medical Center or, in the alternative, from North Ridge, neither hospital would suffer such a significant loss of revenue which should weigh against the approval of Plantation General's open heart surgery program. The analysis does not end there, however. Plantation General is likely to enter the market for open heart surgery with a substantial market share, a share equal to the number of surgeries it now refers out to existing providers. In that case, Florida Medical Center's number of open heart surgeries will fall below the 350 per year quality standard during both the first and second year of Plantation General's new program. Florida Medical Center will only stay above the 350 surgery standard if it increases its market share substantially, or if Plantation fails to meet its own market share projections. Both are unlikely. Based upon the Department's Rule 10- 5.011(1)(f)11b: No additional open heart surgery programs shall be approved which would reduce the volume of exis heart surgery facilities below 350 o procedures annually for adults . . . . Plantation General's program therefore conflicts with this portion of the Department's rule. Costs and methods of construction. Section 381.705(m), Florida Statutes. Based on the stipulation of the parties, the proposed renovations represent conventional construction methods that are not unreasonable. Neither the cost nor the methods of construction for the renovation of the 2,229 gross square feet have been put in issue. The costs are, however, understated to the extent that they do not provide for adequate construction, i.e., the need for a second operating room. See, Findings 31 and 32, above. Applicants past and proposed provision of services to Medicaid and indigents clients. Section 381.705(1)(n), Florida Statutes. According to the stipulation of the parties, the extent of Plantation General's commitment to make open heart surgery available to Medicaid or medically indigent neither enhances nor detracts from its project. (Stipulation at paragraph 25). Less costly, more efficient alternatives. Section 381.705(2)(a), Florida Statutes. There is no alternative to open heart surgery when it is medically indicated. It is more efficient to deny Plantation General's application and let existing providers absorb whatever increase there may be in the population seeking open heart surgeries. This is especially significant because the proposal would drop Florida Medical Center below the 350 surgeries per year and because Broward General is not currently operating with an existing current volume of 350 adult open heart surgeries per year. See, Rule 10- 5.011(1)(f)11.a.(I), b., Florida Administrative Code. Appropriateness and the efficiency of the existing facilities. Section 381.795(2)(b), Florida Statutes. The existing open heart surgery programs in Broward County have the capacity to perform additional open heart surgeries. See, Findings 20-22 above. The expansion of those facilities, especially in view of Broward General's failure to meet the 350 surgery minimum volume requirement of Rule 10- 5.011(f)11.a.(I), Florida Administrative Code, weighs against approval of the application. The denial of Plantation's application may have an effect on Broward General's number of surgeries, for a limitation on the number of providers should have the effect of directing more surgeries to Broward General. This assumption is inherent in the rule. Alternative to new construction. Section 381.705(2)(c), Florida Statutes. As with the preceding paragraph, the expansion of existing services such as that of Broward General is an alternative to the capital expenditures and related labor costs incident to the opening of an open heart surgery program at Plantation General. Problems facing patients in the absence of this proposal Section 381.705(2)(d), Florida Statutes. There is no evidence of any problem of geographic access, and no evidence that the opening of this program will improve, in any substantial degree, financial access to underserved populations, nor is there evidence of a need for additional programs because the existing programs are at capacity. That, from time to time, Florida Medical Center is unable to admit patients who doctors at Plantation General would like to transfer there does not show that there is a problem obtaining open heart surgery in the service district. Florida Medical Center is not the only other provider of open heart surgery. The problem which patients having catheterization at Plantation General face if they need open heart surgery is inherent in Plantation General's decision to establish the cardiac catheterization program when it did not also have approval for open heart surgery, and cannot be used to bootstrap the present application. Rule Criteria for Evaluating Certificate of Need Applications. Need. Rule 10-5.011(1)(f)2, 8, and 11, Florida Administrative Code. The rule on open heart surgery states, in part that: The department will not normally approve applications for new open heart surgery programs unless the conditions of sub-paragraphs 8. and 11. below, are met. There is no persuasive proof that the situation in Broward County is abnormal, due to an unavailability or inaccessibility to open heart surgery services. There is no over-crowding at existing providers, or some quality of care problem with an existing provider which causes potential patients to shun a program. Neither is there a monopoly in the district which should be broken up to provide consumers of health care choice and generate competition. The only circumstance which might be characterized as abnormal is the recognition that Broward General has had its program for a substantial time but has not yet achieved an annual volume of 200 open heart procedures, the volume which is the ordinary minimum for a quality program. See Rule 10-5.011(1)(f)5d., Florida Administrative Code . There is no testimony that the care offered by Broward General is inadequate, or that it is somehow inaccessible, which accounts for the low number of procedures. The rule provides a mathematical calculation for the need for additional open heart providers in a service area. Rule 10-5.011(1)(f)8., Florida Administrative Code. It calculates a base period: The twelve-month period beginning 14 months prior to the filing of the hospital's letter of intent. This is the period July 1, 1987, through June 30, 1988. During the base period, 2,146 open heart surgeries were performed in Broward County. (See, Finding 14.) The population of the county at the mid-point of this period, January 1, 1988, was 1,198,243 persons. This results in a use rate in Broward County of 179.1 open heart surgeries per 100,000 population. Based upon an anticipated opening of services in July 1990, the county population at that time is projected to be 1,247,226 persons. Multiplying the use rate by the projected population yields a need for 2,233 open heart surgeries in Broward County in 1990. This number is then divided by 350 procedures per facility to assess the number of facilities needed; there is a need for 6.4 open heart programs and there are presently five open heart providers. According to the formula in sub- subparagraph 8 one additional provider may be approved. This need assessment, however, is not controlling. Other portions of the rule place limits on the need for additional programs, even when the need calculation in subparagraph 8 supports adding a provider. Rule 10-5.011(1)(f)11, Florida Administrative Code, states in pertinent part: There shall be no additional open heart surgery programs established unless: The service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year..., b. No additional open heart surgery program shall be approved which would reduce the volume of open heart surgery facilities below 350 open heart procedures annually.... The text of the rule requires "each" provider to operate at 350 cases per year before another program is approved. There is no mention of any averaging of the total number of cases under sub-subparagraph 11a in determining whether the requirement is met. Averaging the number of open heart surgeries in each program makes little sense in the context of the entire rule. There would be no need for both sub-subparagraphs 11a(I) and b, for if there is a need in the district, each existing and approved open heart surgery program in a district must be handling 350 procedures on average. The 350 surgery standard in the rule was adopted based upon the National Health Planning Guidelines issued in March, 1978. These guidelines approved recommendations of the Intersociety Commission on Heath Disease Resources, which state: In order to prevent duplication of costly resources which are not fully utilized, the opening of new units should be contingent upon existing units operating and continuing to operate at a level of least 350 procedures per year. Those Guidelines also state that additional open heart surgery services should not be permitted unless existing services are operating at, and will continue to operate at a minimum of 350 surgeries per year. Sub-paragraph 11 of the rule is clear; each provider must operate at a level of 350 cases annually before another applicant will be approved. Plantation General's application fails in two respects: Broward General is currently providing less that 350 surgeries per year, and if Plantation is approved, both Broward General and Florida Medical Center will fall below the 350 standard. Plantation General has failed to prove that any circumstances at Broward General are so abnormal that the "not normal" fail-safe provision of Rule 10-5.011(f)2., Florida Administrative Code, should come into play. Mr. Nelson, the health planner for Plantation General attempted to show that the opening of the program at Plantation should not cause the annual number of surgeries done at Florida Medical Center to fall below 350. That testimony was not as credible as the testimony of Ms. Lamb, or especially the testimony of Dr. Luke. Mr. Nelson's analysis assumed that the open heart surgery use rate would continue to increase at the same rate that it had increased in the past. This is not a reasonable assumption. It is likely that the use rate in Broward County will decline, not increase, for a number of reasons, including the prevention of heart disease through wellness trends, the increased use of alternative therapy such as angioplasties, and the affect that utilization reviews and cost containment measures have had on the number of open heart surgery. Moreover, Broward County has a higher use rate than the state average, which is also substantially higher than the use rate in Palm Beach County, although the populations of both counties are similar. The primary reason for Broward's high use rate has been that until recently Palm Beach County residents had to come to Broward County hospitals for open heart surgery. The opening of open heart surgery programs in Palm Beach County will continue to depress the Broward County use rate. Taken as a whole, the need methodology found in the rule, consisting of the need determination in Rule 10-5.011(1)(f)8, and the further cutoff provisions found in sub-subparagraphs 11a and b show that there is no need for an additional open heart surgery program in Broward County. Service availability. Rule 10-5.011(1)(f)3, Florida Administrative Code. By use of a single operating room, Plantation General's proposed program is not capable of providing 500 open heart operations per year, as required by Rule 10-5.011(1)(f)3d, Florida Administrative Code. Theoretically the program could serve two cases per day, five days a week for 52 weeks a year, and thus handle a total of 520 cases. This ignores, however, the necessity to leave the single operating room available for open heart backup when angioplasty procedures are going on. The hospital projects and should achieve a substantial volume of angioplasty if the open heart program is approved. (See, Finding 26, above.) Even Plantation General, in its proposed recommended order, acknowledged "that it is most unlikely that Plantation could actually do 500 cases per year in a one operating room open heart program." (Proposed Finding 66.) Plantation General argues, however, that it is only necessary that the room have "the capacity to do that many [500] cases." Id. If Plantation had proposed to use the room solely for open heart surgeries, without also having to make its operating room available for its projected volume of angioplasty, Plantation General's argument might prevail. Because Plantation General does propose a substantial volume of angioplasties, the backup time necessary for those cases must be taken into account. The proposal it has made does not meet the rule requirement that its program be capable of providing 500 surgeries per year. Service accessibility. Rule 10-5.011(1)(f)4, Florida Administrative Code. The rule requires that "open heart surgery shall be available to all person in need." Rule 10-5.011(1)(f)4d, Florida Administrative Code. The level of commitment to indigent care in Plantation General's application neither enhances nor detracts from its application. This has been stipulated by all parties. Travel time for surgery is not a problem in Broward County, and the service would meet the requirement for hours of operation. Rule 10- 5.011(1)(f)4a, and b, Florida Administrative Code. The single operating room with a single heart-lung oxygenator pump means that emergency procedures cannot be done within a maximum of 2 hours waiting time. An open heart operation takes more than 5 hours, an angioplasty takes 3 hours or more. Once the operating suite is committed to one of those procedures, no emergency procedure can be performed within 2 hours. The proposal fails to meet Rule 10-5.011(1)(f)4c, Florida Administrative Code. Service quality. Rule 10-5.011(1)(f)5, Florida Administrative Code. The application meets the requirements of Rule 10-5.011(1)(f)5a that the hospital be accredited by the Joint Commission on the Accreditation of Hospitals. It has not met the requirement of Rule 10-5.011(1)(f)5b that "any applicant proposing to establish an open heart surgery program must document that adequate numbers of properly trained personnel will be available to perform in the following capacities...." The application only states that the necessary personnel will be available (Application, at 21-22), but does not reveal how Plantation General proposes to staff its program, especially with experienced nurses. Similarly, another subportion of the rule on service quality requires that "any hospital proposing or operating an open heart surgical program shall have a written plan specifying projected caseloads and projected space, support, equipment and supply needs for the open heart surgical procedures and patients." Rule 10-5.011(1)(f)5e, Florida Administrative Code. No such plan was included in its application; instead Planation proposes to draft its plan following the approval of its certificate of need. (Application at 22). This is improper, for the adequacy of the plan cannot be analyzed as the application is being considered. This is especially significant in terms of a plan for operating the program with a single heart-lung oxygenator pump. How the hospital expects to operate the program with no second pump for emergencies, or for use while the first pump is under ordinary maintenance is a significant deficiency. The application therefore fails to meet this portion of the rule. Cost effectiveness. Rule 10-5.011(1)(f)6, Florida Administrative Code. It is likely that the charges made by Plantation General will be in line with those from other competitive providers of open heart surgery in the Broward County area. Market forces would prevent Plantation from charging more than the going rate. There is insufficient evidence, based on Plantation General's present charge structure, to find that its charges would be appreciably below the cost of other providers. There is no undertaking in its application to charge no more than the $34,860 per case found in Table 8 of its application. (Application page 71). The application meets Rule 10- 5.011(1)(f)6b, Florida Administrative Code. Consistency with state and local health plans. Rule 10-5.011(1)(f)7, Florida Administrative Code. The plan is consistent with the state and local health plans. See, Finding 16, above.
Recommendation It is RECOMMENDED that the application of Plantation General for certificate of need No. 5736 to implement an open heart surgery program in HRS District X be denied. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 29th day of June, 1990. WILLIAM R. DORSEY, JR. 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 29th day of June, 1990. APPENDIX Rulings on findings proposed by the Petitioner, Plantation General Hospital. 1. Adopted in Finding of Fact 1. 2. Adopted in Finding of Fact 3. 3. Adopted in Finding of Fact 4. 4. Adopted in Finding of Fact 2. 5. Adopted in Finding of Fact 7. 6. Adopted in Finding of Fact 8. 7. Adopted in Finding of Fact 9. 8. Adopted in Finding of Fact 12. 9. Adopted in Finding of Fact 14, with a correction for the number of procedures at Memorial Hospital. To the extent necessary, adopted in Findings of Fact 12 and 13. Adopted in Finding of Fact 15. Adopted in Finding of Fact 67. Adopted in Finding of Fact 15. Rejected as subordinate to other findings. Adopted in Finding of Fact 16. Adopted in Finding of Fact 17. Rejected for the reasons stated in Findings of Fact 18 and 19. Discussed in Findings of Fact 20 through 23. Rejected because there is no service availability problem and the economic access of Plantation would add as minimal. Generally adopted in Finding of Fact 24. Rejected as argument. Rejected for the reasons stated in Finding of Fact 32. Rejected, the proposal to have only one heart-lung pump is a serious deficiency, especially due to the failure to have developed as part of the application the written plan required by Rule 10-5.011(1)(f)5d, Florida Administrative Code. To the extent necessary, discussed in Finding of Fact 34. Rejected for the reasons stated in Findings of Fact 37 and 38. Rejected for the reasons stated in Findings of Fact 37 and 38. The testimony of Ms. Levine that staff could be hired without substantial difficulty is rejected. Rejected as unnecessary. Rejected as unnecessary, the prior application is not at issue. It is true and no competing service would be required to shut down its operations do to the inability to hire skilled nurses. Otherwise rejected for the reasons found in Findings of Fact 37 and 38. Rejected, the salaries are reasonable, but the new program is likely to raid other programs and cause an upward pressure on salaries as explained in Finding of Fact 39. To the extent necessary, discussed in Finding of Fact 37, especially as related to hiring recent nursing graduates or using agency nurses. Rejected as unnecessary, see Finding of Fact 39. Adopted in Finding of Fact 15. Rejected as unnecessary. Sentences 1 and 2 adopted in Finding of Fact 40. Dr. Lukes' testimony with respect to intending to spend 5 million dollars on the open heart program is not persuasive. Adopted in Finding of Fact 40. (As amended), generally adopted in Findings of Fact 42 and 44. The 184 surgeries is adopted in Finding of Fact 42; Plantation's evidence with respect to likely charges is accepted in Findings of Fact 42 and 46. The Intervenors' argument has been accepted, see Findings of Fact 47 and 48. Rejected for the reasons stated in Finding of Fact 48. Rejected as unnecessary. Rejected for the reasons stated in Finding of Fact 48. Rejected for the reasons stated in Finding of Fact 48. Discussed in Finding of Fact 48, but rejected. Rejected as unnecessary. Rejected because the question is not whether the intervenors proved that the proposed program is not financially feasible. The question is whether Plantation General proved that the program is financially feasible, and its proof is not persuasive. Rejected for the reasons stated in Finding of Fact 49. Accepted in Finding of Fact 50. Adopted in Finding of Fact 50. Rejected as unnecessary. Adopted in Finding of Fact 50. Generally accepted in Finding of Fact 50. Rejected; the testimony of Mr. Knapp has not been accepted on Doctor Zaretsky's cost analysis. Rejected, see Finding of Fact 35. Rejected as unnecessary. Adopted in Finding of Fact 52. To the extent necessary, covered in Finding of Fact 53. Sentence 1, adopted in Finding of Fact 54. The remainder rejected as unnecessary. Discussed in Finding of Fact 54. Discussed in Findings of Fact 20 through 22 and 55 and 56. Adopted in Finding of Fact 57. Rejected because there is insufficient proof patients would face serious problems in obtaining open heart surgery if Plantation's program is not approved. See Finding of Fact 19. Not an issue. Rejected as unnecessary. Rejected as unnecessary. Rejected for the reasons stated in Finding of Fact 64. Adopted in Finding of Fact 17. Rejected for the reasons stated in Finding of Fact 66. Rejected as cumulative. Rejected for the reasons stated in Finding of Fact 67, although Plantation would exceed 200 cases per year within 3 years of instituting service. Rejected, see Findings of Fact 20-23. Adopted as modified in Finding of Fact 68. Adopted in Finding of Fact 69. Adopted in Finding of Fact 60. Adopted in Finding of Fact 14, final sentence rejected as unnecessary. The averaging technique is rejected, see Finding of Fact 61. Rejected for the reasons stated in Finding of Fact It is not clear what factors were used by Hollywood Memorial to justify its open heart program. It is a major indigent care provider, which Plantation General is not. Rejected, see Findings of Fact 56 and 63. Rejected for the reasons stated in Finding of Fact 63. Rejected for the reasons stated in Finding of Fact Dr. Luke's testimony about the reduction in use rates was persuasive. Rejected as unnecessary. Rejected, it is not likely that the use rate in Broward County will continue to grow, or that a use rate for western Broward County should be separately calculated or analyzed. Rejected for the reasons stated in Finding of Fact 63. Rejected for the reasons stated in Finding of Fact 63. Rejected because the drop below 350 is significant according to the text of the rule and is not entitled to more than "slight" weight; other factors also weigh against the application. Rejected as unnecessary. Rulings of findings proposed by North Ridge General Hospital. 1-3. Rejected as unnecessary. Adopted in Finding of Fact 1. Adopted in Finding of Fact 1. Adopted in Finding of Fact 1. Adopted throughout the Findings of Fact. Adopted in the preliminary statement. Rejected as unnecessary. Rejected as a restatement of the rule. Rejected as a restatement of the rule. Rejected as a restatement of the rule. Rejected as a conclusion of law. Adopted in Finding of Fact 60. Adopted in Finding of Fact 60. Rejected as a statement of argument. Rejected as a statement of argument.' Rejected as unnecessary, see also Finding of Fact 63. Rejected as unnecessary. Rejected as inconsistent with the Department's current view of law. Rejected as unnecessary. Adopted in Finding of Fact 62. Rejected as unnecessary. The projection of 184 cases is adopted in Finding of Fact 42. The use rate is discussed in Finding of Fact 63. Rejected as unnecessary. Rejected as unnecessary, see Finding of Fact 63. The testimony of Dr. Luke on the point was the most persuasive. Rejected as unnecessary. Rejected, see Finding of Fact 60. Rejected as unnecessary. Discussed in Finding of Fact 63. 31-56. Generally discussed in Finding of Fact 60 as it relates to the proper calculation of need under the rule. See also Finding of Fact 51 concerning Florida Medical Center falling below 350 surgeries. Discussed in Finding of Fact 15. Discussed in Finding of Fact 12. Rejected as unnecessary. Discussed in Finding of Fact 64. Generally adopted in Findings of Fact 20 through 22. Adopted in Findings of Fact 10 and 23. Adopted in Finding of Fact 21. Adopted in Finding of Fact 22. Adopted in Finding of Fact 23. Stipulated by the parties. Adopted in Finding of Fact 17. The quality of care was stipulated by the parties. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Adopted in Finding of Fact 3. 75-90. Rejected as unnecessary. The question of demand is resolved in Finding of Fact 19. While cardiologists at the hospital may wish to provide angioplasty, which requires open heart surgery, that desire is not relevant. See Finding of Fact 18. Similarly, the testimony of Dr. Honderick that a facility which offers cardiac catheterization should have the ability to render surgical intervention in case of a complication is not relevant. Plantation General knew when it establishes a catheterization lab, without open heart approval, that such problems would occur. The hospital cannot bootstrap these problems into a justification for open heart surgery. They were problems that the hospital knowingly assumed. 91-98. Addressed in Findings of Fact 26 through 31. 99 Adopted in Finding of Fact 32. 100. Rejected as unnecessary. 101. Adopted in Finding of Fact 33. 102. Adopted in Finding of Fact 25. 103. Adopted in Finding of Fact 67. 104. Rejected as unnecessary. 105. Addressed in Finding of Fact 66. 106. Addressed in Findings of Fact 37 and 38. 107. Addressed in Finding of Fact 31. 108-111. Adopted in Finding of Fact 38. 112. Adopted as modified in Finding of Fact 37. 113. Adopted as modified in Finding of Fact 37. 114. Adopted in Finding of Fact 42 and 43. 115. Adopted in Finding of Fact 42 and 43. 116. Adopted in Finding of Fact 44. 117. Adopted in Finding of Fact 44. 118. Rejected as unnecessary. 119. Rejected as unnecessary. 120. Adopted as modified in Finding of Fact 46. 121-131. Discussed in Findings of Fact 46 and 50. 132. Adopted in Finding of Fact 59. 133. Discussed in Finding of Fact 59. 134. Discussed in Finding of Fact 59. 135. Rejected as unnecessary. 136. Addressed in Finding of Fact 59. Rulings on findings proposed by Florida Medical Center. Covered in preliminary statement. Covered in Finding of Fact 12. Covered in Finding of Fact 1 Discussed in Finding of Fact 12. Rejected as unnecessary. Adopted in Findings of Fact 17 and 18. To the extent appropriate, discussed in Findings of Fact 19 and 21. Covered in Finding of Fact 19. Adopted in Finding of Fact 23. 10-13. Discussed, to the extent appropriate, in Finding of Fact 46. Rejected because although true, the magnitude of the income resulting from those DRGs was not explained sufficiently. The matter of charges is more significant in determining financial feasibility than efficiency here. Implicit in Findings of Fact 44 and 46. Implicit in Finding of Fact 23. Adopted in Finding of Fact 17. Rejected as unnecessary. Adopted in Finding of Fact 17, but the second sentence is rejected as unnecessary in view of the stipulation. Generally adopted in Findings of Fact 14, 32 and 64. Adopted in Findings of Fact 18 and 23. Implicit in Finding of Fact 23. Adopted in Finding of Fact 23. Adopted in Findings of Fact 6 and 35. Adopted in Finding of Fact 35. Adopted in Finding of Fact 35. Adopted in Finding of Fact 33. Rejected as unnecessary. Adopted in Findings of Fact 37 and 38. Adopted in Finding of Fact 48. Adopted in Finding of Fact 42. Rejected as unnecessary. The legal expense would be minimal. Adopted in Finding of Fact 48. Generally adopted in Finding of Fact 48. Adopted in Finding of Fact 48. Discussed in Finding of Fact 48. Adopted in Finding of Fact 48. Rejected as unnecessary. Adopted in Finding of Fact 51. Subordinate to Finding of Fact 63. Adopted in Finding of Fact 51. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. It is stipulated that Florida Medical Center has standing. Rejected as unnecessary. Adopted in Finding of Fact 17. Addressed in Finding of Fact 58. Adopted in Finding of Fact 49. Adopted in Finding of Fact 49. Adopted in Finding of Fact 49. Discussed in Finding of Fact 59. Discussed in Finding of Fact 64. Adopted in Finding of Fact 17. Adopted in Finding of Fact 67. Adopted in Finding of Fact 67. Discussed in Finding of Fact 60. The division by 350 is implicit in the structure of the rule to determine the number of programs. The use rate proposed by Mr. Nelson has been rejected. The appropriate calculation is found at Finding of Fact 60. Adopted in Finding of Fact 63. Adopted in Finding of Fact 63. Adopted in Finding of Fact 63. Adopted in Finding of Fact 60. Adopted in Finding of Fact 61. Rejected as irrelevant. Adopted in Findings of Fact 60 and 63. COPIES FURNISHED: Jay Adams, Esquire 1519 Big Sky Way Tallahassee, FL 32301 Richard C. Bellak, Esquire FOWLER, WHITE, GILLEN, BOGGS, VILLAREAL & BANKER, P.A. 101 North Monroe Street Suite 910 Tallahassee, FL 32301 Richard A. Patterson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Tallahassee, FL 32308 Eric B. Tilton, Esquire 214B East Virginia Street Tallahassee, FL 32301 Michael J. Cherniga, Esquire ROBERTS, BAGGETT, LAFACE & RICHARD 101 East College Avenue Post Office Drawer 1838 Tallahassee, FL 32302 Jack M. Skelding, Esquire PARKER, SKELDING, LABASKY & CORRY 318 North Monroe Street Post Office Box 669 Tallahassee, FL 32302 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Miller, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700
Findings Of Fact Lawnwood Regional Medical Center is a 225 bed community hospital in Ft. Pierce, Florida. It currently holds a CON to add an additional 50 beds. Lawnwood is owned and operated by Hospital Corporation of America, (HCA). On October 14, 1985, Lawnwood submitted a CON application for authorization to provide cardiac catheterization and open heart surgery programs at the facility. The project for both services would involve a total of approximately 10,000 sq. ft. of construction consisting of both new construction and renovation of the present facility, with a project cost of approximately $3.6 million. Lawnwood developed the project because it found a need therefor as a result of various visits to the administrator by physicians practicing in the area who indicated a growing demand for the services. The physicians in question indicated they were referring more and more patients to facilities out of the immediate area and the services in question were very much needed in this locality. The main service area for Lawnwood consists of the northern four counties of DHRS District IX, including St. Lucie, Martin, Okeechobee, and Indian River Counties. The majority of the cardiology practitioners in this service area find it necessary, because of the lack of cardiac catheterization and open heart surgery programs, to transfer patients to facilities either in Palm Beach County, which are from one to two hours away, or to facilities outside the District, primarily in Miami or the University of Florida area, which are even further. While many heart patients are not severely impacted by this, one specific class of patient, the streptokinase patient is. This procedure, involving the use of a chemical injected by catheter to dissolve a clot causing blockage must he done within a relatively short period of time after the onset of the blockage to be effective. However, this can he done outside a cardiac cath lab. A representative sampling of doctors testifying for Lawnwood indicated that during the year prior to the hearing, one doctor, Kahddus, sent 140 patients outside the district for catheterization procedures and 90 additional patients for open heart surgery. Other physicians referring outside District IX included Dr. Hayes - 4; Dr. Marjieh - 240; and Dr. Whittle - 12. Doctors indicated that the situation was so severe that some physicians practicing in the Palm Beach area, who have cardiac catheter and open heart surgery services available to them in the immediate locale are nonetheless referring patients outside the District for these procedures. No physician who does this testified, however. St. Mary's Hospital is a 358 bed not for profit hospital located in Palm Beach County. It has been issued a CON for a cardiac catheterization lab expected to come on line in April, 1987. Palm Beach Gardens Medical Center is a 204 bed acute care hospital which currently operates a cardiac catheterization laboratory and an open heart surgery program. It, too, is located in Palm Beach County. A second cardiac catheterization laboratory was scheduled to open at this facility in February, 1987. An additional cardiac catheterization laboratory is operating at Delray Community Hospital and this facility, as well as the currently existing facility at PBGMC are the only two currently operating cardiac catheterization laboratories within DHRS District IX. There are, however, other cardiac catheterization labs approved for District IX. These include the aforementioned second PBGMC lab, the aforementioned St. Mary's lab, one at JFK Hospital and one at Boca Raton Community Hospital. These latter four facilities are not yet operational. As to open heart surgery programs, only PBGMC and Delray Community Hospital have open heart surgery programs on line. JFK has been approved for an open heart surgery program. DHRS has promulgated rules for determining the need for cardiac catheterization and open heart surgery programs. These rules are found in Section 10-5.11(15) and (16), F.A.C. and establish methodologies based on use rates to determine need. The use rate for the applicable time period here, July, 1984 through June, 1985, is to be multiplied by the projected population for the District in the planning horizon, (July, 1987) which figure is then divided by 600 procedures per laboratory to determine the need for catheterization labs or 350 open heart procedures to determine the need for additional open heart surgery programs. The difficulty in applying this methodology to the current situation is in the calculation of the "use rate" used to measure the utilization of a service per unit of population. For the rule here, it is expressed as the number of procedures per 100,000 population. There is more than one way to calculate a use rate and the DHRS rules do not specify the method of calculation. An "actual use rate" is determined by applying the actual number of procedures performed within a particular geographical area in a particular time period. Data to determine an actual use rate for catheterization services or open heart surgery is not currently available in District IX, however. Applying the formula cited above to the existing figures, however, reflects a use rate of 62.3 procedures per 100,000 population in District IX. This is far below the 409.7 procedures per 100,000 population statewide. Lawnwood proposes to apply the statewide use rate rather than the District IX use rate because District IX is currently in a start up phase and does not have sufficient historical information available to provide an accurate use rate for the purpose of the need methodology. The lower the use rate, the lower the need will be shown to be. If the lower District IX rate is applied, in light of the numerous other laboratories coming on line approved already, there would clearly be no need for any additional services in either the catheterization or open heart surgery areas. Some experts offer as a potential substitute for the actual use rate a "facility based use rate" which involves determining the number of procedures performed in all hospitals within a particular geographic area for the applicable time period and dividing that number of procedures by the population of that area. DHRS evaluators employed this "facility based use rate" in their need calculations. At least one expert, however, contends that the "facility based use rate" is appropriate only when certain conditions exist. These include an adequate supply of facilities or providers in the area; historical, long-standing experience rather than start-up programs; and a lack of a high number of referrals outside of the particular area. Since these three conditions are not met here, it would seen that the "facility based use rate" would not be appropriate. In determining the statewide use rate of 409.07, Mr. Nelson, consultant testifying on behalf of Lawnwood, derived that figure by compiling utilization data for all hospitals in the state providing cardiac catheterization during the time period in question divided by the statewide population as of January 1, 1985. The resulting figure was thereafter converted into a rate per unit of population. A statewide figure such as this includes patients of all ages and it would appear that this is as it should be. Catheterization and open heart surgery services would be open to all segments of the state population and it would seem only right therefore that the entire population be considered when arriving at figures designed to assess the need for additional services. On the other hand, experts testifying on behalf of the intervenors utilized statistical manipulation which tended to indicated that the need, reflected as greater under Mr. Nelson's methodology, was in fact not accurate and was flawed. He that as it may, it is difficult to conclude which of the different experts testifying is accurate and the chances are great that none is 100 percent on track. More likely, and it is so found, the appropriate figure would be one more extensive than the population figures and resultant use rate for District IX alone and closer to the statewide rate across a broad spectrum of the population. When the fact that the older population of the District IX counties, the age cohort more likely to utilize catheterization and open heart surgery services, is greater in the District IX counties than perhaps in other counties north of that area, the inescapable conclusion must be reached that a use rate significantly higher than 62.3 would be appropriate. This may not, however, require the use of a statewide rate of 409.7. Utilizing, arguendo, the statewide use rate of approximately 409 procedures per 100,000 population results in a projected number of procedures of 4,576 in District IX if the projected population figure of slightly more than 1.1 million holds true. When that 4,576 figure is divided by the minimum number of procedures required by rule prior to the addition of further cardiac catheterization labs, (600),a need for 7.63 labs in District IX is shown. With six labs existing or approved, a net need of two additional labs would appear to exist since DHRS rounds upward when the number is .5 or higher. A similar analysis applied to open heart surgery, using a statewide use rate of 120.94 per 100,000 population results in a procedure number of 1,353 for the same population. Utilizing the DHRS rule minimum of 350 procedures per lab for open heart surgery procedures, a net yield of 3.87 programs would be needed in District IX in January, 1988. Subtracting the three existing or approved programs now in the district, and rounding up, would show a need of one additional open heart surgery program. These are the figures relied upon by Lawnwood. Accepting them for the moment and going to the issue of financial feasibility, DHRS apparently has agreed that the project costs for this facility are reasonable. Lawnwood has shown itself to be a profitable hospital and HCA is a large, well run corporation not known for the establishment of non- profitable operations. If one accepts that the actual utilization will approximate the projected utilization figures, then the operation would clearly be financially feasible. Both intervenors challenged the Petitioner's pro forma statement of earnings, but their efforts were not particularly successful. If Lawnwood can perform a sufficient number of procedures, then it should be able to break even without difficulty. Turning to the question of the impact that the opening of Lawnwood's facilities would have on the other providers or prospective providers in the area, both PBGMC and St. Mary's contend that there would be a substantial adverse impact on their existing services as well as on the prospective units already approved. Lawnwood proposes to service a portion of the indigent population with its two new operations. Were this to be done, indeed an impact would be felt by St. Mary's which is currently a substantial provider of indigent and Medicaid treatment and St. Mary's will be particularly vulnerable since it is in the start-up phase of its cardiac catheterization lab. Currently, PBGMC draws patients in both services from Martin and St. Lucie counties as well as from Palm Beach County. The percentage of patients drawn from these more northern counties is, while not overwhelming, at least significant, being 14 percent from Martin County and 9 percent from St. Lucie. Taken together, this constitutes 23 percent of the activity in these areas. St. Mary's anticipates a loss of 25 percent of its potential catheterization cases and if this happens, it will lose approximately $719,000.00 of its gross revenue in catheterization cases alone. St. Mary's further predicts that if Lawnwood's facility is opened, it will have difficulty recruiting and maintaining qualified personnel. PBGMC, figuring it's loss to be approximately $492,000.00, estimates that a layoff of nursing and other staff personnel or the redirecting them into other areas of the hospital would be indicated. PBGMC also refers to the cumulative impact not only of Lawnwood's proposal but of the other cardiac programs in the District which have been approved but are not yet on line. If all come into operation, PBGMC estimates it could lose as much as 69 percent of its activity in these areas. These negative predictions are not, however, supported by any firm evidence and are prospective in nature. From a historic perspective, it is doubtful that any lasting significant negative impact would occur to either PBGMC or St. Mary's overall operation by the opening of Lawnwood's facility. Turning to the question of staffing and its relationship to the issue of quality of care, there is little doubt that Lawnwood could obtain appropriate staffing for both its services if approved. Of the physicians already on staff at the facility, many are now certified and the hospital and the medical community plans training programs for those who are not. As to nurses and other support personnel, Lawnwood is satisfied that it can recruit from other HCA facilities and will recruit from the open market. It has a full time recruiter on staff. Quality of care is of paramount concern to the administration of Lawnwood. It has a current three year accreditation from the Joint Commission on Hospital Accreditation. It also has a quality control committee made up of both physicians and other staff members and the laboratory is approved by appropriate accrediting agencies. These same types of quality control programs would be applied to both new requested services as well. The rules in question governing the approval of cardiac catheterization laboratories and open heart surgery programs set down certain criteria for the approval of additional services which, as to the question of cardiac catheters states at subparagraph 15(o)1a that there will be no additional adult cardiac catheterization laboratories established in a service area unless the average number of catheterizations performed per year by existing and approved laboratories performing adult procedures in the service area is greater than 600. Much the same qualification relates to open heart surgery programs except that in that latter case, the minimum number would be 350 open heart procedures annually for adults and 130 for pediatric heart procedures annually. Ms. Farr, consultant for DHRS, feels that Petitioner's application would be inconsistent with the minimum standards set forth in the rule because she does not believe the Petitioner would do enough procedures in either cardiac catheterization or open heart surgery to meet the 600/350 criteria. She also contends that the proposal is not consistent with the District Health Plan, because the District plan requires the rule which addresses need be followed. Since, in her opinion, the application of the rule shows no need, there would be a violation of the District Health Plan if these proposals were approved. In the area of cardiac catheterization laboratories, of the six licensed and approved labs in District IX, only that existing currently at PBGMC is presently performing more than 600 procedures per year. Substantial testimony tending to indicate that a well organized cardiac catheterization lab can handle between 1500 and 2000 procedures per year, the 600 figure would tend to be a minimum and was so recognized by the drafters of the rule. No evidence was introduced by any party to show the numbers of open heart surgery procedures currently being performed in the three existing or approved open heart surgery programs in the District. Again, however, it would appear that DHRS criteria of 350 would be a minimum rather than an optimum or maximum figure. The parties have stipulated that as to the travel time criteria set forth in the rule for both procedures, 90 percent of the population of District IX is within two hour automobile travel time from availability to either or both procedures. It would further appear from an evaluation of the evidence, that while difficulty is experienced in arranging treatment for indigent transfer patients outside the District, little if any difficulty is experienced in arranging transfer treatment for those who can pay for the service. Little difficulty is experienced in securing treatment for these individuals in either Miami, Orlando, or elsewhere, and aside from inconvenience, there was no showing that a real, substantial health risk existed as a result of the transfer process. All things taken together, then, though the numerical evaluation under the rule process, applying a statewide use rate, tends to indicate that there is a "need" for this additional service, the subparagraph "o" criteria of 600/350 procedures requirement prior to authorization of additional service is not met.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Lawnwood's application for a CON to add a cardiac catheterization laboratory and open heart surgery program at its facility in Ft. Pierce, Florida, be denied. RECOMMENDED this 16th day of March, 1987 at Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-1539 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. By Petitioner - Lawnwood 1 & 2. Accepted and incorporated. 3 & 4. Accepted and incorporated. 5. Accepted and incorporated. 6. Accepted and incorporated. 7. Accepted and incorporated. 8. Accepted and incorporated. 9. Accepted and incorporated. 10. Accepted and incorporated. 11. Accepted and incorporated. 12. Accepted and incorporated in substance. 13. Accepted and incorporated in substance. 14. Accepted and incorporated in substance. Rejected as indicating a need for 2 additional cath labs. Rejected as calling for determination of "not normal status for District IX. Accepted in general but rejected insofar as there is an implication that non-indigent patients experience "significant" difficulty securing treatment. Accepted. 19 & 20. Accepted as to the streptokinase patients specifically. Accepted but not considered to be of major significance. Accepted and incorporated. 23 & 24. Accepted and incorporated. 25 & 26. Accepted and incorporated. 27 & 28. Accepted and incorporated. 29. Accepted. 30 & 31. Accepted and incorporated in substance. 32. Rejected as not supported by the best evidence. 33-36. Accepted and incorporated. Rejected as contrary to the evidence. Accepted. 39-42. Accepted. By Intervenor - St. Mary's 1 - 4. Accepted and incorporated. 5 & 6. Accepted and incorporated. 7 - 9. Accepted and incorporated. 10. Rejected as not supported by the best evidence. 11 & 12. Accepted and incorporated. Accepted and incorporated. Accepted and incorporated. Rejected as not supported by the best evidence. Accepted. Accepted. Accepted. 19-21. Merely a summary of testimony. Not a Finding of Fact. 22-24. Summary of testimony. Not a Finding of Fact. Accepted as ultimate Finding of Fact. Rejected. Rejected as a summary of testimony. Not a Finding of Fact. Irrelevant. Accepted. Accepted. Subordinate. 32-36. Rejected as a recitation of testimony and not Finding of Facts. 37-40. Rejected as contrary to the weight of the evidence. 41 & 42. Accepted. 43-46. Accepted. Rejected. Irrelevant. Accepted. Rejected. By Intervenor - PBGMC 1 & 2. Accepted and incorporated. Accepted except for last sentence which is irrelevant. Accepted. Accepted and incorporated. 6 & 7. Accepted and incorporated. Accepted. 9. Accepted and Incorporated. 10 & 11. Accepted and incorporated. 12. Accepted. 13-16. Accepted and incorporated. Accepted. Accepted. Rejected ultimately as contrary to the weight of the evidence. Accepted. Rejected. Accepted. 23 & 24. Accepted. 25 & 26. Rejected as contrary to the weight of the evidence. 27. Accepted. COPIES FURNISHED: Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Thomas A. Sheehan, III, Esquire 9th Floor, Barnett Centre 625 North Flagler Drive West Palm Beach, Florida 33401 R. Bruce McKibben, Esquire 1323 Winewood Blvd. Building 1, Room 407 Tallahassee, Florida 32301 Eleanor A. Joseph, Esquire Harold F.X. Purnell, Esquire 2700 Blairstone Road, Suite C Tallahassee, Florida 32314 Robert S. Cohen, Esquire 306 North Monroe Street Post Office Box 10095 Tallahassee, Florida 32302
