The Issue The basic issues in these consolidated cases concern whether Rule 10- 5.032, Florida Administrative Code, is an invalid exercise of delegated legislative authority. The validity of the rule has been challenged on both procedural and substantive grounds.
Findings Of Fact South Miami is an acute care hospital located in Dade County. South Miami has a open cardiac catheterization program which means any physician within the community can apply for privileges, and, if granted, perform cardiac catheterizations at South Miami. Until recently, it was a closed program. Doctors' Hospital is an acute care hospital located in Coral Gables, Florida. Doctors' has had a cardiac catheterization program since December of 1986, and is authorized to perform diagnostic catheterization on both inpatients and outpatients. Baptist is a 500 bed full service hospital located in Dade County. Baptist has a cardiac catheterization program serving both inpatients and outpatients. Approximately 2,000 cardiac catheterizations are performed at Baptist each year. Deering is a 260 bed hospital in Miami, Florida. The agency has noticed its intent to grant Deering a CON to initiate a cardiac catheterization program. The Agency for Health Care Administration ("AHCA") is designated as the single state agency to issue, revoke, or deny certificates of need and to issue, revoke, or deny exemptions from CON review in accordance with the district plans, the statewide health plan, and present and future federal and state statutes. In 1987, the certificate of need statute was amended to deregulate all outpatient services. At the same time, the capital expenditure cap was raised from $500,000 to $1 million, and the meaning of "major medical equipment" was redefined to include only equipment which has been approved by the United States Food and Drug Administration for less than three years for general usage. These changes had a major impact on the ability of health care providers to acquire and replace equipment. They could now acquire equipment virtually at will, with the Legislature only expressing a limited interest in controlling expensive emerging technologies. This legislative expression was a major policy change with respect to planning for the distribution of health care resources. Prior to these statutory changes, all cardiac catheterization services had been treated as inpatient institutional health services requiring a certificate of need. With the deregulation of outpatient services, without exception, outpatient cardiac catheterization laboratories were deregulated by the statutory changes. With cardiac catheterization equipment being totally deregulated, and the capital expenditure threshold raised, inpatient cardiac catheterization providers could now expand their catheterization facilities and completely replace their equipment without a certificate of need. For these reasons, the then existing cardiac catheterization rule could not be applied because the policy constraints articulated in it were no longer recognizable by the underlying statewide policy expressed in the amended CON statute. The rule then in effect controlled the expansion of existing laboratories in many cases because the necessary equipment for expansion exceeded the then existing capital expenditure threshold. Furthermore, that rule simply did not contemplate the development of unregulated outpatient cardiac catheterization services. These facts led AHCA to conclude that they could no longer control the capacity of existing providers to offer cardiac catheterization services. The rule in existence at that time was believed to be inoperable because it was based upon the assumption that an inventory of laboratories could be established and predicted for future horizons. Under the statutory changes, this assumption was believed to be no longer valid because the number of laboratories was subject to change without constraint at any given time. Initially, the rule amendment process began with internal discussions. Next, a work group was convened to discuss these specific issues. Next, various possible need methodologies were modeled using a variety of assumptions. An updated literature search was undertaken and the comments of the work group were considered. Subsequently, a rule was developed and circulated for internal review at AHCA. Finally, in April of 1988, the proposed amendment was published in the Florida Administrative Weekly. Administrative challenges were brought against the rule. Based upon concerns of the challengers, changes were made to the rule. The rule, with the changes, was filed for adoption with the Secretary of State on July 18, 1988. It became effective, according to the certification of the Secretary of State, on August 7, 1988, and remained in effect until November of 1991. On July 29, 1988, The changes were published in the Florida Administrative Weekly. Within 21 days of the Notice of Change publication in the Florida Administrative Weekly on July 29, 1988, but after the rule became effective, several challenges were launched against the Notice of Change. These challenges purported to be Section 120.54 challenges to proposed amendments. A final order was issued on June 30, 1989, on the challenges to the changes in the 1988 rule amendments. See Florida Medical Center, et al. v. Dept. of Health and Rehabilitative Services, 11 FALR 3904 (June 30, 1989). In the closing paragraphs of the Final Order in the FMC case, the Hearing Officer ordered the following: That the amendments to Rule 10- 5.011(1)(e), F.A.C., published by the Department of Health and Rehabilitative Services on July 29, 1988, with the exception of the amendments to paragraph 2(h), paragraph 3(c)III, and paragraph 6(a) and the amendment regarding the definition of "inpatient visit", are an invalid exercise of delegated legislative authority, because they were adopted by the Department without adhering to the proper procedures for adoption delineated in Section 120.54, Florida Statutes. That should the Department seek to proceed with the other revisions to the rule previously published on July 29, 1988, it must afford interested parties an opportunity to comment on the merits of those proposed revisions in the manner provided for in Section 120.54, Florida Statutes, with a new point of entry. An appeal of the Final Order was taken by AHCA. On April 9, 1991, the District Court of Appeals upheld the final order of the Hearing Officer, holding that, as to those changes which AHCA was without authority to make, it must either withdraw the changes or reinstitute the rulemaking process. AHCA worked closely with its attorneys and with the Joint Administrative Procedures Committee to come to agreement on the interpretation of the appellate court decision and on the procedure to follow to comply with the court's decision. On July 5, 1991, AHCA published its interpretation of the rule resulting from the Final Order affirmed by the District Court of Appeals, by withdrawing the portions of the rule which had been invalidated. A Section 120.54 challenge was mounted against this publication by South Miami Hospital and others, but the challenges were later voluntarily dismissed. On August 9, 1991, AHCA published the amendments it proposed to adopt to replace those which had been withdrawn. This publication was not challenged. These amendments were filed for adoption with the Secretary of State on October 22, 1991, and became effective November 11, 1991. The current version of the challenged rule, Rule 10- 5.032, Florida Administrative Code, reads as follows, in pertinent part: 3/ Departmental Intent. This rule amendment implements the provision of section 381.706 (1)(c), F.S., which provides that a certificate of need shall not be required for an expenditure to provide an outpatient service. This rule defines the requirements for the establishment of inpatient cardiac catheterization services, including minimum requirements for staffing, equipment, and a need methodology for cardiac catheterization programs. A certificate of need for the establishment of inpatient cardiac catheterization services shall not normally be approved unless the applicant meets all relevant statutory criteria, including the standards and need determination criteria set forth in this rule. A cardiac catheterization program which is established and utilized for the purpose of serving outpatients exclusively is not regulated under this rule. A cardiac catheterization program which provides services to inpatients, regardless of the reason for their admission, including but not limited to coronary angioplasty, valvuloplasty, or ablation of intracardiac bypass tracts, or pediatric cardiac catheterization, requires a certificate of need. Hospitals operating more than one hospital facility under the same hospital license in the same district, shall obtain a separate certificate of need for the establishment of a cardiac catheterization program in each health care facility. Definitions. Cardiac Catheterization. Cardiac catheterization is defined as a medical procedure requiring the passage of a catheter into one or more cardiac chambers of the left and right heart, with or without coronary arteriograms, for the purpose of diagnosing congenital or acquired cardiovascular diseases, or for determining measurement of blood pressure flow. Cardiac catheterization also includes the selective catheterization of the coronary ostia with injection of contrast medium into the coronary arteries. Coronary Angioplasty. Coronary angioplasty is defined as a hospital inpatient procedure requiring the dilation of narrowed segments of the coronary vessels, via a balloon-tipped catheter. Catheterization Program. A cardiac catheterization program is defined as an institutional health service which is provided by or on behalf of a health care facility and which consists of one or more laboratories which comprise a room or suite of rooms, and has the equipment and staff required to perform cardiac catheterization serving inpatients and outpatients. A cardiac catheterization program approved for angioplasty services, or other types of therapeutic cardiac procedures shall have the additional necessary equipment and staff to perform angioplasty procedures. Approved Program. A proposed cardiac catheterization and angioplasty program, not operational as defined by this rule, for which a certificate of need, a letter of intent to grant a certificate of need, or a final order granting a certificate of need was issued, consistent with the provisions of 10- 5.008 (2)(b), Florida Administrative Code, on or before the most recent published deadline for agency initial decisions prior to publication of the fixed need pool, as specified in 10-5.008 (1)(1), Florida Administrative Code. Cardiac Catheterization Annual Program Volume. The cardiac catheterization annual program volume equals the total number of inpatient and outpatient admissions to the cardiac catheterization program, for the purpose of cardiac catheterization or angioplasty, for the 12-month period specified in paragraph (8)(c). A single admission is equivalent to one patient visit to the cardiac catheterization program. Each patient visit will be counted in determining the actual program volume regardless of whether the patient is an inpatient or outpatient at the facility performing the procedure, or has been admitted as an inpatient or outpatient at another facility. Inpatient. An inpatient is defined as a person who has been admitted to a hospital for bed occupancy for purpose of receiving inpatient hospital services. A person is considered an inpatient if he was formally admitted as an inpatient with the expectation that he would remain at least overnight and occupy a bed, even though it later develops that he can be discharged or that he is transferred to another hospital and does not actually use a hospital bed overnight. An inpatient of a hospital cannot be considered an outpatient of that or any other hospital at the same time. Outpatient. An outpatient is defined as a person who receives cardiac catheterization in a health care facility and does not meet the definition of inpatient in paragraph (e) [sic]. Service Planning Area. The service planning area for a cardiac catheterization program is the applicable HRS district unless cardiac catheterization subdistricts have been defined by the respective local health council and promulgated into rule by the department. . . . Operational Program. A new cardiac catheterization and angioplasty program approved by the department that has performed at least one inpatient or outpatient cardiac catheterization as of 3 months prior to the beginning date of the quarter of the publication of the fixed need pool; or, in the case of programs which performed only outpatient cardiac catheterization prior to departmental approval, a program that has performed at least one inpatient cardiac catheterization as of 3 months prior to the beginning date of the quarter of the publication of the fixed need pool. Scope of Service. Each cardiac catheterization program shall be capable of providing immediate endocardiac catheter pacemaking in cases of cardiac arrest, and pressure recording for monitoring and to evaluate valvular disease, or heart failure. Applicants for cardiac catheterization programs shall document the manner in which they will meet this requirement. A range of non-invasive cardiac or circulatory diagnostic services must be available within the health care facility itself, including: Hematology studies or coagulation studies; Electrocardiography; Chest x-ray; Blood gas studies; and Clinical pathology studies and blood chemistry analysis. At a minimum a cardiac catheterization program shall include: A special procedure x-ray room; A film storage and darkroom for proper processing of films; X-ray equipment with the capability in cineangiocardiography, or equipment with similar capabilities; An image intensifier; An automatic injector; A diagnostic x-ray examination table for special procedures; An electrocardiograph; A blood gas analyzer; A multichannel polygraph; and Emergency equipment including but not limited to a temporary pacemaker unit with catheters, ventilatory assistance devices, and a DC defibrillator. Service Accessibility. Travel Standard. An adult inpatient cardiac catheterization program shall be available within a maximum automobile travel time of 1 hour, under average travel conditions, for at least 90 percent of a service planning area's population provided that the cardiac catheterization program can meet other applicable statutory and related rule criteria. Hours of Operation. Every cardiac catheterization program shall have the capability of rapid mobilization of the study team within 30 minutes for emergency procedures 24 hours a day, 7 days a week. Applicants for new cardiac catheterization programs shall document the manner in which they will meet this requirement. Underserved Population Groups. Applicants for a cardiac catheterization program shall indicate the projected number of medically indigent and Medicaid patients to be served annually. Applicants shall indicate their past provision of health care services to medically indigent and Medicaid patients. Service Quality. Accreditation. Any health care facility providing inpatient catheterization only, or inpatient and outpatient cardiac catheterization, or angioplasty, must be fully accredited by the Joint Commission on Accreditation of Health Care Organizations (JCAHO) for special care units, or be accredited by the American Osteopathic Association. Availability of Health Personnel. Any applicant proposing to establish a cardiac catheterization program must document that adequate numbers of properly trained personnel will be available. At a minimum, a team involved in cardiac catheterization consists of a physician, one nurse, and one or more technicians. An applicant for a new cardiac catheterization program shall document that the following staff are available: A program director, board-certified or board- eligible in internal medicine, or radiology with subspecialty training in cardiology or cardiovascular, radiology; . . . A physician, board-certified or board- eligible in cardiology, radiology, or with specialized training in cardiac catheterization and angiographic techniques who will perform the examination; Support staff, specially trained in critical care of cardiac patients, with a knowledge of cardiovascular medication and an understanding of catheterization and angiographic equipment; Support staff, highly skilled in conventional radiographic techniques and angiographic principles, knowledgeable in every aspect of catheterization and angiographic instrumentation, with a thorough knowledge of the anatomy and physiology of the circulatory system; Support staff for patient observation, handling blood samples and performing blood gas evaluation calculations; Support staff for monitoring physiologic data and alerting the physician of any changes; Support staff to perform systematic tests and routine maintenance on cardiac catheterization equipment, who must be available immediately in the event of equipment failure during a procedure; Support staff trained in photographic processing and in the operation of automatic processors used for both sheet and cine film; and A Medical Review Committee which reviews medical invasive procedures such as endoscopy and cardiac catheterization. Coordination of Services. Cardiac catheterization programs proposed in a facility not performing open heart surgery must submit a written protocol as part of their certificate of need application for the transfer of emergency patients to a hospital providing open heart surgery, which is within 30 minutes travel time by emergency vehicle under average travel conditions. Cardiac catheterization programs which include the provision of coronary angioplasty, valvuloplasty, or ablation of intracardiac bypass tracts must be located within a hospital which also provides open heart surgery. * * * Service Cost. Cost data for cardiac catheterization programs, among similar institutions, shall be comparable when patient mix, cost accounting methods, labor market differences and other extenuating factors are taken into account. Need Determination. In order to assure patient safety and staff efficiency and to achieve maximum economic use of existing resources, the following criteria shall be considered in the approval of certificate of need applications for new adult cardiac catheterization programs. The minimum annual projected net program volume need for the establishment of a new adult cardiac catheterization program shall be at or exceed an annual program volume of 300 admissions for the service planning area. Applicants shall demonstrate that they will be able to reach an annual program volume of 300 admissions within 2 years after the program becomes operational. Need Determination. A new adult cardiac catheterization program may be approved if the difference between the projected program volume and the number of adult cardiac catheterizations performed in the service planning area during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool, minus the number of approved adult programs times 300, is at or exceeds a program volume of 300 for the applicable service planning area. This need formula is expressed as follows: NN = PCCPV - ACCPV - APP Where: NN is the 12-month net adult program volume need in the service planning area projected 2 years into the future for the respective planning horizon. Net need projections are published by the department as a fixed need pool twice a year. The planning horizon for applications submitted between January 1 and June 30 shall be July of the year 2 years subsequent to the year the application is submitted. The planning horizon for applications submitted between July 1 and December 31 shall be January of the year 2 years subsequent to the year which follows the year the application is submitted. PCCPV is the projected adult cardiac catheterization program volume which equals the actual adult cardiac catheterization program volume (ACCPV) rate per thousand adult population 15 years and over for the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool, multiplied by the projected adult population 15 years of age and over 2 years into the future for the respective planning horizon. The population projections shall be based on the most recent population projections available from the Executive Office of the Governor which are available to the department 3 weeks prior to the fixed need pool publication. ACCPV equals the actual adult cardiac catheterization program volume for the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool. APP is the projected program volume for approved adult programs. The projected program volume for each approved program shall be 300 admissions. Irrespective of the net need calculated under paragraph (c), no additional cardiac catheterization program shall normally be granted unless ACCPV divided by the number of operational programs for the service planning area is at or exceeds a program volume of 300 patient admissions. * * * (g) Actual inpatient and outpatient migration from one service planning area to another shall be considered in the review of Certificate of Need applications. Decisions on certificate of need applications for the expansion of existing programs shall be made on the basis of the applicant's justification for the level of the proposed capital expenditure and the utilization of existing laboratories in the facility. The approval of an additional laboratory(ies) in a facility with an operational or approved inpatient program shall not reduce the net program need as calculated according to the formula contained in paragraph (8)(c). Briefly summarized, the current rule projects a number of anticipated admissions to cardiac catheterization programs in the horizon year by multiplying the current use rate (number of admissions per thousand adult population) times the projected population. If the difference between the current volume and the projected volume is greater than 300, a new program may be awarded, so long as all of the existing programs, plus the proposed program, are projected to perform an average of 300 admissions each. An approved program is assigned a value of 300 for purposes of determining the average. The rule takes into consideration the demographic characteristics of the population by establishing a use rate for cardiac catheterization services in a given service area. The use rate identifies the number of individuals per one hundred thousand who used the service in a defined recent historical period. If the demographics of an area cause the service to be used at a greater or lesser rate than the State as a whole, that fact will be revealed in the use rate. In the same way, the use rate takes into account the health status of the individuals seeking services in the service area because a deviation from normal health status will typically result in a higher or lower use rate than the State as a whole. Since the use rate is based on place of access to the service it is reflective of district-wide gross service use patterns. The rule need methodology does not take into account differences in service use patterns as between numbers of inpatient and numbers of outpatient cardiac catheterization procedures, nor does it take into consideration differences in service use patterns as between number of procedures performed in cardiac catheterization programs in facilities performing open heart surgery and numbers of procedures performed in cardiac catheterization programs in facilities not performing open heart surgery. An example of relevant service use patterns that are not taken into account by the rule methodology is the significantly higher utilization of cardiac catheterization laboratories located in facilities that also offer open heart surgical back-up. Cardiac catheterization laboratories in facilities that do not offer open heart surgical back-up receive only seven percent of the inpatient admissions from the MDC-5 patient pool, compared to thirty-eight percent in cardiac catheterization laboratories with open heart surgery back-up in the same facility. Similar differences in service use patterns are reflected at Tab "D" of SMH Exhibit 10, which shows that there were a total of 9,362 inpatient admissions in the laboratories with open heart surgical back-up, compared with only 553 total inpatient admissions in cardiac catheterization laboratories without open heart surgical back-up. The rule addresses quality of care standards at paragraph (5), headed "Service Quality." Within that section, applicants must document accreditation for special care units, availability of adequate numbers of specified properly trained personnel, and medical review procedures. Paragraph (6) of the rule, entitled "Coordination of Services", also establishes quality standards by requiring a written protocol for the transfer of emergency patients to a hospital providing open heart surgery by providing that only hospitals authorized to perform open heart surgery can perform angioplasty, and providing that pediatric cardiac catheterization can only be performed in hospitals performing pediatric open heart surgery. Paragraph (8) of the rule, which contains the various considerations in determining need, also attempts to address quality of care considerations. The extent to which such considerations are adequately treated is addressed further below. Minimum cost efficiency standards are addressed in the need methodology at subparagraphs (8)(a) and (8)(b) of the rule where it requires that applicants must demonstrate that they will be able to reach an annual program volume of 300 admissions within two years after the program becomes operational and net need must equal a minimum of 300 admissions before a new adult program may be established. The extent to which these standards are adequate is addressed further below. Trends in total usage are taken into account by the rule in that the use rate is updated every six months. If a service area is experiencing a significant increase, that trend will be reflected in the updated use rate which is used to project need. But, as noted above, the rule methodology does not take into account certain usage trends related to type of patient or type of facility. The rule contains a geographic access standard at subparagraph (4)(a) where it provides that adult inpatient cardiac catheterization shall be available within a maximum automobile travel time of 1 hour, under average travel conditions, for at least 90 percent of a service planning area's population. The rule addresses market economics in several ways. First, by utilizing the number of admissions to the service area programs, second by projecting population into a future horizon, third, by subtracting the existing volume of providers and fourth by prohibiting, generally, the addition of a new program unless the average patient volume within the district is at least 300. Through the use of this data, the rule looks at current market conditions, and purports to protect current market share while projecting future need. The extent to which the rule is adequate in this regard is addressed further below. The rule does not take into consideration the number of individual catheterization laboratories, rather it considers the number of cardiac catheterization programs. The difference is that an individual hospital will have only one program, but it may have more than one laboratory in each program. Because of the ability of existing providers to expand to add new laboratories without certificate of need approval in most cases, it has become difficult for AHCA to establish and maintain an inventory of existing laboratories for the purpose of projecting need. This difficulty caused AHCA to reject any methodology based upon the number of existing laboratories because AHCA felt there was no way the number of existing cardiac catheterization laboratories could be predicted in the horizon year. AHCA does have the ability to control the growth of programs, however, and, therefore, can establish a reliable inventory of programs and predict their number in the horizon year. The agency's thinking in this regard overlooks the obvious fact that programs are, by definition, comprised of one or more cardiac catheterization laboratories and that existing programs can in most cases continue to add laboratories to their program without going through certificate of need review. Such being the case, the ability to regulate and reliably predict the number of future programs does not in any way enhance the ability to predict the number of future laboratories. Further, because programs are comprised of one or more laboratories, one can reach useful conclusions regarding such things as the efficiency or capacity of existing programs only by considering the number of existing laboratories within each of the existing programs. The extent of usage of any individual laboratory cannot be predicted in advance with certainty because it depends on many variables. This uncertainty is supported by the Florida data which demonstrates that laboratory admissions vary greatly from a very low volume after several years to volumes of 1800 to 2000. But because programs, by definition, are comprised of one or more laboratories, it is equally difficult, for the very same reasons, to predict the extent of future usage of programs. Difficult and uncertain as it may be to do so, any effort to predict future need for new cardiac catheterization services must take into account the capacity of the existing laboratories that make up the existing programs. The rule takes into account the recent usage volume of existing providers by subtracting existing volume of catheterizations performed from projected volume, and by protecting an average of 300 admissions to all inpatient programs, and a minimum of 300 for all approved programs. The rule does not, however, address the capacity of existing cardiac catheterization programs or the capacity of existing cardiac catheterization laboratories. The pre-1988 cardiac catheterization rule used a different formula entirely to predict need. As a minimum threshold requirement, it utilized an average of 600 procedures per lab. The National Guidelines For Health Planning 4/ upon which the previous standard of 600 procedures was based include the following provisions: Sec. 121.208 Cardiac catheterization. Standard. (1) There should be a minimum of 300 cardiac catheterizations, of which at least 200 should be intracardiac or coronary artery catheterizations, performed annually in any adult cardiac catheterization unit within three years after initiation. * * * There should be no new cardiac catheterization unit opened in any facility not performing open heart surgery. There should be no additional adult cardiac catheterization unit opened unless the number of studies per year in each existing unit in the health service area(s) is greater than 500. . . . Discussion. The modern cardiac catheterization unit requires a highly skilled staff and expensive equipment. Safety and efficacy of laboratory performance requires a case load of adequate size to maintain the skill and efficiency of the staff. In addition, the underutilized unit represents a less efficient use of an expensive resource and frequently reflects unnecessary duplication, Based on recommendations from the Inter-Society Commission on Heart Disease Resources, the Department believes that a minimum level of 300 catheterizations per year is indicated to achieve economic use of resources. Several State health planning agencies, such as New Jersey, suggested a higher minimum level and the Department will be considering whether a higher level should be established in the future. The Department has also determined the existing units should be performing more than 500 cardiac catheterizations or 250 pediatric cardiac catheterizations before a new unit is opened. The 500 level is based on an average of two catheterizations a day, a rate that is in the Department's judgement readily achievable in most institutions providing these services and that will foster more effective uses of current resources prior to the development of additional resources. More than 600 procedures are performed annually in some institutions. Pediatric cardiac catheterizations require special facilities and support services. Lower target numbers are presented in these cases because of the special conditions and needs of children. The established levels are consistent with the recommendations of the Section on Cardiology of the American Academy of Pediatrics and the Inter-Society Commission on Heart Disease Resources. The patient studied in the cardiac catheterization unit is frequently recommended for open heart surgery. While acceptable inter-institutional referral patterns exist in some areas, cardiac catheterization units should optimally be located within a facility in which cardiac surgery is performed. Other guidelines regarding the utilization and establishment of new cardiac catheterization laboratories appear in the 1983 Report of Inter-Society Commission for Heart Disease Resources. Page 898A of the Inter-Society Report includes the following: Although the rate of development of new cardiac catheterization laboratories has declined in recent years, there is concern that the performance of many laboratories is less than optimal. This represents a duplication of resources that may seriously compromise quality and safety of studies and increase cost of care. Study of costs of each laboratory on a per-procedure basis does not adequately characterize the total costs and/or needs of a region. A footnote to the above quoted language notes the following: Results of a recent survey suggest that many available laboratories are underutilized. Data indicate that 40 percent performed fewer than 300 catheterization studies per year in the 350 hospitals surveyed. Fifty-five percent of 310 hospitals performing open heart surgery did fewer than 200 operations per year. Additional relevant comments at pages 898A-899A of the Inter-Society Report include the following: There is also a compelling economic reason for high utilization of facilities (fig. 1). The cost of equipping and supporting laboratories is extraordinarily high. Equipment life is relatively short and must be amortized within 5 - 7 years and be included in the cost of the laboratory. If case loads are low, there will be an inadequate depreciation fund for new and replacement equipment. *** Laboratories performing adult studies should maintain a minimal case load of 300 per year to justify the financial outlay for the laboratory and personnel and to keep the skills of the personnel, both physician and non-physician, up to date. (Emphasis added) *** Laboratories supporting an active coronary surgical program should have a case load of approximately nine procedures a week, or 450 cases per year. In many hospitals, economic operation of the laboratory will require this level of use. (Emphasis in original) Figure 1 at page 898A of the Inter-Society Report illustrates the equipment amortization cost per examination and clearly shows that the cost per examination decreases as the number of examinations per year increases. The illustration shows that this decrease continues at least to the point of 1,000 examinations per year. Examples derived from Figure 1 are as follows: Examinations per year Amortized equipment cost each exam 200 Approximately $575.00 300 Approximately $400.00 400 Approximately $350.00 600 Approximately $275.00 1000 Approximately $250.00 Also, the ACC/AHA Guidelines for Cardiac Catheterization and Cardiac Catheterization Laboratories published in 1991 by the American College of Cardiology/American Heart Association Ad Hoc Task Force On Cardiac Catheterization include the following at page 1167: For optimum laboratory performance and cost- effectiveness, an adequate caseload is required for the staff to maintain their skills and efficiency. The laboratory should be used only for cardiac catheterization procedures; use as a general or multi-purpose radiology room is no longer acceptable. If catheterizations are not performed on a daily basis, then the laboratory should not continue to exist as a cardiac catheterization laboratory. Laboratories for adult studies should maintain a minimum caseload of 300 per year. AHCA modeled several working drafts of the rule using different minimum standards. The standard of 300 was settled on because, according to the agency's interpretation of the Intersociety Commission guidelines, a cost efficient program can operate at the 300 level. Cost efficiency is a major goal of the certificate of need program. Since the agency believed the goal could be achieved at 300, and given the statutory changes which prompted the rule changes, it was felt by the agency that a higher number would be unduly restrictive. The agency's decision to use 300 as the threshold number of procedures is an unexplained deviation from the earlier 600-procedure standard, an unexplained departure from the National Guidelines For Health Planning, and an unexplained departure from other published guidelines recognized as authoritative. 5/ Unlike open heart, which does contain a provision providing a minimum threshold at which all existing programs must be operating, the agency felt such a provision was not appropriate for cardiac catheterization. Although the literature regarding cardiac catheterization generally supports the notion that a laboratory should perform at least 300 procedures per year to maintain proficiency and enhance quality, and most health planners agree that 300 procedures is aa appropriate minimum level to maintain proficiency and quality, because there did not appear to be any empirical evidence of quality differences above and below the 300 level, the agency felt that requiring all existing laboratories to be operating at the 300 level was not warranted. The literature also contains proficiency and quality guidelines for minimum numbers of procedures to be performed by physicians. The use of the number 300 as the threshold average number of procedures to approve additional programs results in the unnecessary duplication of services when the existing cardiac catheterization laboratories are operating below their capacity or below their practical utilization level. This has an obvious adverse effect on the existing laboratories. An essential ingredient of any functional need determination methodology is a method for identifying unmet need. In order to function rationally, the methodology must not only identify a reasonable estimate of future need, but must also identify a reasonable estimate of the future capacity of existing providers to meet that need. The subject rule fails to address the future capacity of existing providers, because in the normal course of events the capacity of an existing program, even a program comprised of a single laboratory, will be much greater than 300 procedures per year. As a general rule, the practical capacity of a cardiac catheterization laboratory is in the range of 1000 to 1500 procedures per year. 6/ Up to the point of practical capacity, there is a direct, but diminishing, relationship between increased numbers of procedures and increased cost efficiency. 7/ Cardiac catheterization laboratories can be operated very efficiently at a level of 80 or 85 percent of capacity. The failure of the subject rule to consider the future capacity of existing providers in calculating future need has an adverse effect upon the ability to accurately predict future unmet need and also has a potential for adverse effect upon the quality of care offered by the existing providers. The rule authorizes the approval of a new inpatient cardiac catheterization program even though many of the existing programs may be operating substantially below their capacity. The addition of new programs under such circumstances has the adverse effect of tending to reduce utilization of existing facilities that are already functioning well below capacity.
The Issue The issue in these cases is whether certain rules proposed by the Agency for Health Care Administration (AHCA) related to adult interventional cardiovascular services are an invalid exercise of delegated legislative authority.
Findings Of Fact By stipulation of the parties, all Petitioners and Intervenors in these cases are acute care hospitals licensed in Florida pursuant to Chapter 395, Florida Statutes; are substantially affected by the proposed rules at issue in these cases; and have standing to participate in this proceeding. AHCA is the state agency responsible for licensure of hospitals pursuant to Chapter 395, Florida Statutes, and responsible for promulgation of the proposed rules at issue in these cases. This dispute specifically involves proposed rules related to the licensure of adult cardiovascular services in Florida hospitals. Such services include percutaneous cardiac intervention (PCI), also referred to as percutaneous transluminal coronary angioplasty (PCTA). PCI involves the insertion of a device placed into an artery and directed to the site of a coronary artery blockage. The device is used to compress or remove the blockage material and restore arterial blood flow to heart tissue. A mechanism called a "stent" may be left in place at the site of the former blockage to reduce the potential for re-blockage ("restenosis") of the artery. The procedure is performed in a cardiac catheterization laboratory ("cath lab"). PCI that is performed on an emergency basis to open an arterial blockage causing myocardial infarction (heart attack) is referred to as "primary" or "emergent" PCI. PCI performed to resolve symptoms of coronary artery disease manifesting in presentations other than through myocardial infarction is referred to as "elective" PCI. Previous law restricted PCI services to those hospitals with onsite cardiac surgery (commonly referred to as "open heart" surgery). Hospitals are required to obtain a Certificate of Need (CON) from AHCA to operate a cardiac surgery program. Accordingly, in order to offer PCI services, a hospital was required to obtain a cardiac surgery program CON from AHCA. As cardiac catheterization procedures have become more widely available and physician training and experience have increased, the relative safety of the procedures has improved. The volume of open heart cardiac surgery has declined as the patient outcomes for non-surgical coronary artery disease treatments have improved, yet Florida hospitals seeking to provide PCI were still operating under the CON-based restrictions. There is an ongoing debate within the medical community related to the issue of whether non-emergent patients should receive PCI services at hospitals which lack cardiac surgery programs. The historic rationale for restricting the availability of elective PCI procedures to hospitals where onsite cardiac surgery was also available was related to the possibility that an unsuccessful PCI would require immediate resolution through surgery. The evidence establishes that PCI-related events requiring immediate access to onsite cardiac surgery have become less frequent, at least in part due to increased training and experience of practitioners, as well as an increased technical ability to resolve some events, such as arterial ruptures or perforations, within the cath lab. Nonetheless, there is also evidence that the outcomes of cardiac catheterization procedures performed in hospitals with onsite cardiac surgery may be superior to those performed in hospitals where onsite cardiac surgery is not available. In 2004, the Florida Legislature adopted two bills that, insofar as are relevant to this proceeding, had an impact on the regulatory process related to adult interventional cardiovascular services. The effect of the legislation was to shift the regulation of PCI programs away from CON-based restrictions and towards a licensing process. Both bills established a two-level classification of hospitals providing adult interventional cardiology services. House Bill 329 limited the provision of PCI at hospitals without onsite cardiac surgery to emergent patients and provided, in relevant part, as follows: In establishing rules for adult interventional cardiology services, the agency shall include provisions that allow for: Establishment of two hospital program licensure levels: a Level I program authorizing the performance of adult primary percutaneous cardiac intervention for emergent patients without onsite cardiac surgery and a Level II program authorizing the performance of percutaneous cardiac intervention with onsite cardiac surgery. (Emphasis supplied) Senate Bill 182 did not limit PCI services on the basis of onsite cardiac surgery availability and provided, in relevant part, as follows: Section 2. Notwithstanding conflicting provisions in House Bill 329, Section 408.0361, Florida Statutes, is amended to read: * * * In establishing rules for adult interventional cardiology services, the agency shall include provisions that allow for: Establishment of two hospital program licensure levels: a Level I program authorizing the performance of adult percutaneous cardiac intervention without onsite cardiac surgery and a Level II program authorizing the performance of percutaneous cardiac intervention with onsite cardiac surgery. (Emphasis added) Both the House Bill and the Senate Bill were signed into law. The legislation was codified as Section 408.0361, Florida Statutes (2004), which provided, in relevant part, as follows: 408.0361 Cardiology services and burn unit licensure.-- * * * In establishing rules for adult interventional cardiology services, the agency shall include provisions that allow for: Establishment of two hospital program licensure levels: a Level I program authorizing the performance of adult percutaneous cardiac intervention without onsite cardiac surgery and a Level II program authorizing the performance of percutaneous cardiac intervention with onsite cardiac surgery. Extensive evidence was offered at the hearing to support both sides of the debate regarding the appropriateness of performing elective PCI in hospitals without onsite cardiac surgery, and it is clear that the debate continues. However, the evidence establishes that the Florida Legislature specifically chose not to restrict non-emergent PCI to Florida hospitals with onsite cardiac surgery units and has determined that properly-licensed Florida hospitals may provide PCI services without regard to the availability of on-site cardiac surgery. It is reasonable to assume that had the Legislature intended to restrict provision of adult PCI in hospitals without cardiac surgery programs to emergent patients, the "notwithstanding" language contained in Senate Bill 182 would not have been adopted. There is no credible evidence that the Legislature was unaware of the continuing debate within the cardiology community at the time the legislation was adopted in 2004. The Legislature has acknowledged the distinction between emergent and elective PCI as indicated by Subsection 408.036(3)(o), Florida Statutes (2008), which provides under certain circumstances that a hospital without an approved "open heart surgery program" can obtain an exemption from CON requirements and provide emergent PCI services to "patients presenting with emergency myocardial infarctions." It is reasonable to assume that had the codification of the 2004 legislation been incorrect, the Florida Legislature would have subsequently amended the statute to reinstate the restriction. In fact, the Legislature has revised the referenced statute without substantively altering the relevant language establishing the two-level licensure designation. Section 408.0361, Florida Statutes (2008), the current statute directing AHCA to adopt the rules at issue in this proceeding, provides, in relevant part, as follows: 408.0361 Cardiovascular services and burn unit licensure.-- Each provider of diagnostic cardiac catheterization services shall comply with rules adopted by the agency that establish licensure standards governing the operation of adult inpatient diagnostic cardiac catheterization programs. The rules shall ensure that such programs: Comply with the most recent guidelines of the American College of Cardiology and American Heart Association Guidelines for Cardiac Catheterization and Cardiac Catheterization Laboratories. Perform only adult inpatient diagnostic cardiac catheterization services and will not provide therapeutic cardiac catheterization or any other cardiology services. Maintain sufficient appropriate equipment and health care personnel to ensure quality and safety. Maintain appropriate times of operation and protocols to ensure availability and appropriate referrals in the event of emergencies. Demonstrate a plan to provide services to Medicaid and charity care patients. Each provider of adult cardiovascular services or operator of a burn unit shall comply with rules adopted by the agency that establish licensure standards that govern the provision of adult cardiovascular services or the operation of a burn unit. Such rules shall consider, at a minimum, staffing, equipment, physical plant, operating protocols, the provision of services to Medicaid and charity care patients, accreditation, licensure period and fees, and enforcement of minimum standards. The certificate-of-need rules for adult cardiovascular services and burn units in effect on June 30, 2004, are authorized pursuant to this subsection and shall remain in effect and shall be enforceable by the agency until the licensure rules are adopted. Existing providers and any provider with a notice of intent to grant a certificate of need or a final order of the agency granting a certificate of need for adult cardiovascular services or burn units shall be considered grandfathered and receive a license for their programs effective on the effective date of this act. The grandfathered licensure shall be for at least 3 years or until July 1, 2008, whichever is longer, but shall be required to meet licensure standards applicable to existing programs for every subsequent licensure period. In establishing rules for adult cardiovascular services, the agency shall include provisions that allow for: Establishment of two hospital program licensure levels: a Level I program authorizing the performance of adult percutaneous cardiac intervention without onsite cardiac surgery and a Level II program authorizing the performance of percutaneous cardiac intervention with onsite cardiac surgery. For a hospital seeking a Level I program, demonstration that, for the most recent 12-month period as reported to the agency, it has provided a minimum of 300 adult inpatient and outpatient diagnostic cardiac catheterizations or, for the most recent 12-month period, has discharged or transferred at least 300 inpatients with the principal diagnosis of ischemic heart disease and that it has a formalized, written transfer agreement with a hospital that has a Level II program, including written transport protocols to ensure safe and efficient transfer of a patient within 60 minutes. For a hospital seeking a Level II program, demonstration that, for the most recent 12-month period as reported to the agency, it has performed a minimum of 1,100 adult inpatient and outpatient cardiac catheterizations, of which at least 400 must be therapeutic catheterizations, or, for the most recent 12-month period, has discharged at least 800 patients with the principal diagnosis of ischemic heart disease. Compliance with the most recent guidelines of the American College of Cardiology and American Heart Association guidelines for staffing, physician training and experience, operating procedures, equipment, physical plant, and patient selection criteria to ensure patient quality and safety. Establishment of appropriate hours of operation and protocols to ensure availability and timely referral in the event of emergencies. Demonstration of a plan to provide services to Medicaid and charity care patients. In order to ensure continuity of available services, the holder of a certificate of need for a newly licensed hospital that meets the requirements of this subsection may apply for and shall be granted Level I program status regardless of whether rules relating to Level I programs have been adopted. To qualify for a Level I program under this subsection, a hospital seeking a Level I program must be a newly licensed hospital established pursuant to a certificate of need in a physical location previously licensed and operated as a hospital, the former hospital must have provided a minimum of 300 adult inpatient and outpatient diagnostic cardiac catheterizations for the most recent 12- month period as reported to the agency, and the newly licensed hospital must have a formalized, written transfer agreement with a hospital that has a Level II program, including written transport protocols to ensure safe and efficient transfer of a patient within 60 minutes. A hospital meeting the requirements of this subsection may apply for certification of Level I program status before taking possession of the physical location of the former hospital, and the effective date of Level I program status shall be concurrent with the effective date of the newly issued hospital license. (5)(a) The agency shall establish a technical advisory panel to develop procedures and standards for measuring outcomes of adult cardiovascular services. Members of the panel shall include representatives of the Florida Hospital Association, the Florida Society of Thoracic and Cardiovascular Surgeons, the Florida Chapter of the American College of Cardiology, and the Florida Chapter of the American Heart Association and others with experience in statistics and outcome measurement. Based on recommendations from the panel, the agency shall develop and adopt rules for the adult cardiovascular services that include at least the following: A risk adjustment procedure that accounts for the variations in severity and case mix found in hospitals in this state. Outcome standards specifying expected levels of performance in Level I and Level II adult cardiovascular services. Such standards may include, but shall not be limited to, in-hospital mortality, infection rates, nonfatal myocardial infarctions, length of stay, postoperative bleeds, and returns to surgery. Specific steps to be taken by the agency and licensed hospitals that do not meet the outcome standards within specified time periods, including time periods for detailed case reviews and development and implementation of corrective action plans. Hospitals licensed for Level I or Level II adult cardiovascular services shall participate in clinical outcome reporting systems operated by the American College of Cardiology and the Society for Thoracic Surgeons. As required by Subsection 408.0361(5), Florida Statutes (2004), AHCA created the TAP, which convened and met over the course of two years at a series of public hearings. The TAP also received written materials and comments from interested parties. Thereafter, AHCA convened rule development workshops to formulate the proposed rules at issue in this proceeding. The proposed rules were initially noticed in the September 28, 2007, Florida Administrative Weekly (Vol. 33, No. 39). Subsequent Notices of Changes to the proposed rules were published in the Florida Administrative Weeklies of November 16, 2007 (Vol. 33, No. 46); March 28, 2008 (Vol. 34, No. 13); and May 9, 2008 (Vol. 34, No. 19). There is no evidence that AHCA failed to comply with statutory requirements related to the rule adoption process. As required by Subsection 408.0361(3)(a), Florida Statutes (2008), the proposed rules set forth the procedures by which a hospital may apply for licensure as a Level I or Level II provider of adult cardiovascular services without differentiation based on the availability of on-site cardiac surgery. The proposed rules applicable to a hospital seeking licensure as a Level I provider of adult cardiovascular services are set forth at Proposed Rule 59A-3.2085(16). The proposed rules applicable to a hospital seeking licensure as a Level II provider of adult cardiovascular services are set forth at Proposed Rule 59A-3.2085(17). Subsection 408.0361(3)(b), Florida Statutes (2008), establishes minimum volume reporting requirements for licensure as a Level I program. Accordingly, Proposed Rule 59A- 3.2085(16)(a) provides, in relevant part, as follows: 1. A hospital seeking a license for a Level I adult cardiovascular services program shall submit an application on a form provided by the Agency (See Form 1: Level I Adult Cardiovascular Services License Application Attestation; AHCA Form, Section 18(a) of this rule ), signed by the chief executive officer of the hospital, attesting that, for the most recent 12-month period, the hospital has provided a minimum of 300 adult inpatient and outpatient diagnostic cardiac catheterizations or, for the most recent 12-month period, has discharged or transferred at least 300 inpatients with the principal diagnosis of ischemic heart disease (defined by ICD-9-CM codes 410.0 through 414.9). Reportable cardiac catheterization procedures are defined as single sessions with a patient in the hospital’s cardiac catheterization procedure room(s), irrespective of the number of specific procedures performed during the session. Reportable cardiac catheterization procedures shall be limited to those provided and billed for by the Level I licensure applicant and shall not include procedures performed at the hospital by physicians who have entered into block leases or joint venture agreements with the applicant. (Emphasis supplied) Subsection 408.0361(3)(c), Florida Statutes (2008), establishes minimum volume reporting requirements for licensure as a Level II program. Accordingly, Proposed Rule 59A- 3.2085(17)(a) provides in relevant part as follows: 1. A hospital seeking a license for a Level II adult cardiovascular services program shall submit an application on a form provided by the Agency (See Form 2: Level II Adult Cardiovascular Services License Application Attestation; AHCA Form , Section 18(b) of this rule ) to the Agency, signed by the chief executive officer of the hospital, attesting that, for the most recent 12-month period, the hospital has provided a minimum of a minimum of 1,100 adult inpatient and outpatient cardiac catheterizations, of which at least 400 must be therapeutic cardiac catheterizations, or, for the most recent 12-month period, has discharged at least 800 patients with the principal diagnosis of ischemic heart disease (defined by ICD-9-CM codes 410.0 through 414.9). a. Reportable cardiac catheterization procedures shall be limited to those provided and billed for by the Level II licensure applicant and shall not include procedures performed at the hospital by physicians who have entered into block leases or joint venture agreements with the applicant. (Emphasis supplied) St. Anthony's asserts that the proposed rule is invalid on the grounds that it fails to provide a clear and reasonable methodology for assessing and verifying the number of diagnostic catheterization procedures performed. St. Anthony's asserts that the exclusion of cardiac catheterization procedures performed within the hospital's cardiac cath lab but not billed by the hospital is arbitrary and capricious, modifies, enlarges, or contravenes the specific provisions of the statute implemented, fails to establish adequate standards for agency decision making, and vests unbridled discretion in the agency. The evidence fails to support these assertions. Although the phrase "block lease" is undefined by statute or rule, the evidence establishes that insofar as relevant to this proceeding, the term refers to a practice by which a group of cardiologists lease blocks of time from a hospital for exclusive use of a hospital's cardiac cath lab. St. Anthony's has a leasing arrangement with a group of cardiologists identified as the "Heart and Vascular Institute South" ("HAVI South") whereby St. Anthony's leases blocks of time in a cardiac cath lab to HAVI South cardiologists. The facility is located in a privately-owned medical office building physically attached to St. Anthony's hospital building. St. Anthony's leases the medical office building from a developer. HAVI South cardiologists perform cardiac catheterization procedures at the St. Anthony's facility during both leased and non-leased time. St. Anthony's provides personnel to staff the cardiac cath lab regardless of whether the procedure is performed during leased or non-leased time. The HAVI South cardiology group develops the schedule of cardiac catheterization procedures to be performed during the leased time and notifies St. Anthony's of the schedule. The HAVI South cardiology group bills for both their professional fees and the facility charges (referred to as the "technical component") for the cardiac catheterization procedures performed during leased time. St. Anthony's does not bill for cardiac catheterization procedures performed during the leased time. For the cardiac catheterization procedures performed during non-leased time, the HAVI South cardiology group bills for professional fees, and St. Anthony's bills for the technical component. Patricia Sizemore, vice-president for patient services at St. Anthony's, acknowledged that other hospitals could have block-leasing arrangements different from those existing between St. Anthony's and the HAVI South group. The proposed rules would preclude St. Anthony's from including the outpatient cardiac catheterization procedures done by HAVI South during the block-leased time within those procedures available to meet the numeric threshold requirements identified in the statute. The evidence fails to establish that the proposed rule fails to provide a clear and reasonable methodology for assessing and verifying the number of diagnostic catheterization procedures performed. The relevant language of Subsection 408.0361(3), Florida Statutes (2008), identifies the hospital as the applicant and requires that the applicant "provide" the procedures or discharges being reported to meet the specified volume thresholds. The applicable definition of hospital is set forth at Subsection 408.032(11), Florida Statutes (2008), which defines a hospital as a health care facility licensed under Chapter 395, Florida Statutes. Subsection 395.002(12), Florida Statutes (2008), sets forth the following definition: (12) "Hospital" means any establishment that: Offers services more intensive than those required for room, board, personal services, and general nursing care, and offers facilities and beds for use beyond 24 hours by individuals requiring diagnosis, treatment, or care for illness, injury, deformity, infirmity, abnormality, disease, or pregnancy; and Regularly makes available at least clinical laboratory services, diagnostic X- ray services, and treatment facilities for surgery or obstetrical care, or other definitive medical treatment of similar extent, except that a critical access hospital, as defined in s. 408.07, shall not be required to make available treatment facilities for surgery, obstetrical care, or similar services as long as it maintains its critical access hospital designation and shall be required to make such facilities available only if it ceases to be designated as a critical access hospital. Physicians are not "hospitals" and are not licensed or regulated by Chapter 395, Florida Statutes. Physicians are not authorized to apply for licensure under the provisions of the statute and proposed rules at issue in this proceeding. Nothing in the statute suggests that entities other than hospitals may apply for licensure of a Level I or Level II adult cardiovascular services program. The rationale underlying the restriction of reportable procedures to those for which the applicant hospital issues bills for payment is based upon AHCA's reasonable intention to validate the procedure volume data submitted by applicant hospitals. Jeffrey Gregg, chief of AHCA's Bureau of Health Facility Regulation and CON Unit, testified that "the only practical, realistic way" for AHCA to routinely verify the accuracy of the procedure volume identified by a hospital's licensure application is through AHCA's ambulatory patient database. The reporting requirements for the ambulatory patient database are set forth at Florida Administrative Code Chapter 59B-9 and include elements such as demographic information, diagnosis codes, and charges. The database provides AHCA with access to patient record documentation and directly allows AHCA to verify the procedure volume identified in the licensure application. Because St. Anthony's has no charges related to the procedures performed by HAVI South cardiologists during the leased time, St. Anthony's has not reported procedures performed during leased time to the ambulatory patient database. St. Anthony's reports far more cardiac catheterization procedures to the local Suncoast Health Council than it does to AHCA's ambulatory patient database and asserts that AHCA could rely on health council data. AHCA has no organizational relationship with the local health council, and the evidence fails to establish that such data is as reliable as that collected by the ambulatory patient database. AHCA asserts that an additional basis to exclude procedures performed by entities other than the applicant hospital is that AHCA has no direct regulatory authority over the non-hospital entity. St. Anthony's asserts that AHCA would have its customary authority over the hospital and, by extension, over the third-party leasing the cardiac cath lab from the hospital. At best, AHCA's authority to obtain records from the non-hospital operator of the hospital's cardiac cath lab is unclear. St. Anthony's position effectively would permit a third-party operator to lease all of the time in a hospital's cardiac cath lab, yet allow the hospital to apply for and receive an adult cardiovascular service license. Nothing in Section 408.0361, Florida Statutes (2008), suggests that the Legislature intended to provide such an option. The proposed rule designating the reportable cardiac catheterization procedures is logical and rational, is not arbitrary or capricious, and does not modify, enlarge or contravene the specific provisions of the statute implemented. The evidence fails to establish that the designation of appropriately reportable cardiac catheterization procedures constitutes a failure to establish adequate standards for agency decision making or vests unbridled discretion in the agency. Subsection 408.0361(3)(d), Florida Statutes (2008), requires that the proposed rules include provisions "that allow for" compliance with the most recent guidelines of the American College of Cardiology and AHA guidelines for "staffing, physician training and experience, operating procedures, equipment, physical plant, and patient selection criteria to ensure patient quality and safety." Subsection 408.0361(5), Florida Statutes (2008), requires that the TAP "develop procedures and standards for measuring outcomes" and that, based thereon, AHCA adopt rules that include a risk adjustment procedure that accounts for variations in severity and case mix, outcome standards specifying expected levels of performance, and "specific steps to be taken by the agency and the licensed hospitals" that fail to meet outcome standards. The statute also requires that licensed hospitals participate in clinical outcome reporting systems operated by the American College of Cardiology and the Society of Thoracic Surgeons. The TAP determined that the appropriate method of measuring outcome was to utilize the data available through the clinical outcome reporting systems referenced in the statute. Accordingly, Proposed Rule 59A-3.2085(16)(a) identifies the guidelines applicable to Level I adult cardiovascular services; identifies the specific provisions of the guidelines with which a Level I hospital must comply; requires that the Level I hospital participate in the statutorily-identified data reporting system; and requires that Level I hospitals document a quality improvement plan to meet performance measures set forth by the data reporting system. The proposed rule provides, in relevant part, as follows: All providers of Level I adult cardiovascular services programs shall operate in compliance with subsection 59A- 3.2085(13), F.A.C., the American College of Cardiology/Society for Cardiac Angiography and Interventions Clinical Expert Consensus Document on Cardiac Catheterization Laboratory Standards: Bashore et al, ACC/SCA&I Clinical Expert Consensus Document on Catheterization Laboratory Standards, JACC Vol. 37, No. 8, June 2001: 2170-214 and the ACC/AHA/SCAI 2005 Guideline Update for Percutaneous Coronary Intervention A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines (ACC/AHA/SCAI Writing Committee to Update the 2001 Guidelines for Percutaneous Coronary Intervention) guidelines regarding the operation of adult diagnostic cardiac catheterization laboratories and the provision of percutaneous coronary intervention. The applicable guidelines, herein incorporated by reference, are the American College of Cardiology/Society for Cardiac Angiography and Interventions Clinical Expert Consensus Document on Cardiac Catheterization Laboratory Standards: Bashore et al, ACC/SCA&I Clinical Expert Consensus Document on Catheterization Laboratory Standards, JACC Vol. 37, No. 8, June 2001: 2170-214; and the ACC/AHA/SCAI 2005 Guideline Update for Percutaneous Coronary Intervention A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines (ACC/AHA/SCAI Writing Committee to Update the 2001 Guidelines for Percutaneous Coronary Intervention). Aspects of the guideline related to pediatric services or outpatient cardiac catheterization in freestanding non-hospital settings are not applicable to this rule. Aspects of the guideline related to the provision of elective percutaneous coronary intervention only in hospitals authorized to provide open heart surgery are not applicable to this rule. Hospitals are considered to be in compliance with the American College of Cardiology/Society for Cardiac Angiography and Interventions Clinical Expert Consensus Document on Cardiac Catheterization Laboratory Standards: Bashore et al, ACC/SCA&I Clinical Expert Consensus Document on Catheterization Laboratory Standards, JACC Vol. 37, No. 8, June 2001: 2170-214 and the ACC/AHA/SCAI 2005 Guideline Update for Percutaneous Coronary Intervention A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines (ACC/AHA/SCAI Writing Committee to Update the 2001 Guidelines for Percutaneous Coronary Intervention) guidelines when they adhere to standards regarding staffing, physician training and experience, operating procedures, equipment, physical plant, and patient selection criteria to ensure patient quality and safety. Hospitals must also document an ongoing quality improvement plan to ensure that the cardiac catheterization program and the percutaneous coronary intervention program meet or exceed national quality and outcome benchmarks reported by the American College of Cardiology-National Cardiovascular Data Registry. Level I adult cardiovascular service providers shall report to the American College of Cardiology-National Cardiovascular Data Registry in accordance with the timetables and procedures established by the Registry. All data shall be reported using the specific data elements, definitions and transmission format as set forth by the American College of Cardiology-National Cardiovascular Data Registry. Proposed Rule 59A-3.2085(17)(a) identifies the guidelines applicable to Level II adult cardiovascular services; identifies the specific provisions of the guidelines with which a Level II hospital must comply; requires that the Level II hospital participate in the statutorily-identified data reporting system; and requires that Level II hospitals document a quality improvement plan to meet performance measures set forth by the data reporting system. The proposed rule provides in relevant part as follows: All providers of Level II adult cardiovascular services programs shall operate in compliance with subsections 59A-3.2085(13) and 59A-3.2085(16), F.A.C. and the applicable guidelines of the American College of Cardiology/American Heart Association regarding the operation of diagnostic cardiac catheterization laboratories, the provision of percutaneous coronary intervention and the provision of coronary artery bypass graft surgery. The applicable guidelines, herein incorporated by reference, are the American College of Cardiology/Society for Cardiac Angiography and Interventions Clinical Expert Consensus Document on Cardiac Catheterization Laboratory Standards: Bashore et al, ACC/SCA&I Clinical Expert Consensus Document on Catheterization Laboratory Standards, JACC Vol. 37, No. 8, June 2001: 2170-214; and ACC/AHA/SCAI 2005 Guideline Update for Percutaneous Coronary Intervention A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines (ACC/AHA/SCAI Writing Committee to Update the 2001 Guidelines for Percutaneous Coronary Intervention; and ACC/AHA 2004 Guideline Update for Coronary Artery Bypass Graft Surgery: A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines (Committee to Update the 1999 Guidelines for Coronary Artery Bypass Graft Surgery) Developed in Collaboration With the American Association for Thoracic Surgery and the Society of Thoracic Surgeons. Aspects of the guidelines related to pediatric services or outpatient cardiac catheterization in freestanding non-hospital settings are not applicable to this rule. Hospitals are considered to be in compliance with the guidelines in the American College of Cardiology/Society for Cardiac Angiography and Interventions Clinical Expert Consensus Document on Cardiac Catheterization Laboratory Standards: Bashore et al, ACC/SCA&I Clinical Expert Consensus Document on Catheterization Laboratory Standards, JACC Vol. 37, No. 8, June 2001: 2170-214; in the ACC/AHA/SCAI 2005 Guideline Update for Percutaneous Coronary Intervention A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines (ACC/AHA/SCAI Writing Committee to Update the 2001 Guidelines for Percutaneous Coronary Intervention; and in the ACC/AHA 2004 Guideline Update for Coronary Artery Bypass Graft Surgery: A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines (Committee to Update the 1999 Guidelines for Coronary Artery Bypass Graft Surgery) Developed in Collaboration With the American Association for Thoracic Surgery and the Society of Thoracic Surgeons when they adhere to standards regarding staffing, physician training and experience, operating procedures, equipment, physical plant, and patient selection criteria to ensure patient quality and safety. Hospitals must also document an ongoing quality improvement plan to ensure that the cardiac catheterization program, the percutaneous coronary intervention program and the cardiac surgical program meet or exceed national quality and outcome benchmarks reported by the American College of Cardiology-National Cardiovascular Data Registry and the Society of Thoracic Surgeons. In addition to the requirements set forth in subparagraph (16)(a)7. of this rule, each hospital licensed to provide Level II adult cardiovascular services programs shall participate in the Society of Thoracic Surgeons National Database. The Petitioners generally assert that the proposed rules insufficiently identify or establish the minimum standards identified as "guidelines" and "benchmarks" in the rule. The evidence fails to support the assertion. The guidelines are specifically identified and incorporated by reference within the rule. There is no evidence that the documents identified do not constitute the "most recent guidelines of the American College of Cardiology and the American Heart Association" as required by the statute. Hospitals are not obligated to meet all of the requirements set forth in the guidelines. A licensed hospital is deemed to be in compliance when, as specified in the statute, the hospital adheres to the standards related to staffing, physician training and experience, operating procedures, equipment, physical plant, and patient selection criteria to ensure patient quality and safety. The Petitioners generally assert that such distinctions between the various compliance elements are unclear. The evidence fails to support the assertion. There is no credible evidence that the guidelines, albeit technical and complex, are not commonly understood by appropriate medical practitioners and hospital administrators. Martin Memorial asserts that the Proposed Rule 59A-3.2085(16)(a)5. is vague on grounds that it requires Level I hospitals to operate in compliance with the referenced guidelines while Proposed Rule 59A-3.2085(16)(a)9. authorizes provision of elective PCI at Level I hospitals. Martin Memorial further asserts that because the proposed rules provide for elective PCI in hospitals without onsite cardiac surgical programs, the proposed rules enlarge, modify or contravene the enacting statute. Subsection 408.0361(3)(d), Florida Statutes (2008), requires that AHCA include "provisions that allow for" the following: Compliance with the most recent guidelines of the American College of Cardiology and American Heart Association guidelines for staffing, physician training and experience, operating procedures, equipment, physical plant, and patient selection criteria to ensure patient quality and safety. (Emphasis supplied) Proposed Rule 59A-3.2085(16)(a)9. provides as follows: Notwithstanding guidelines to the contrary in the American College of Cardiology/Society for Cardiac Angiography and Interventions Clinical Expert Consensus Document on Cardiac Catheterization Laboratory Standards: Bashore et al, ACC/SCA&I Clinical Expert Consensus Document on Catheterization Laboratory Standards, JACC Vol. 37, No. 8, June 2001: 2170-214 and the ACC/AHA/SCAI 2005 Guideline Update for Percutaneous Coronary Intervention A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines (ACC/AHA/SCAI Writing Committee to Update the 2001 Guidelines for Percutaneous Coronary Intervention), all providers of Level I adult cardiovascular services programs may provide emergency and elective percutaneous coronary intervention procedures. Aspects of the guidelines related to pediatric services or outpatient cardiac catheterization in freestanding non-hospital settings are not applicable to this rule. (Emphasis supplied) Martin Memorial's disagreement with the proposed rule is premised on the following statement in the ACC/AHA/SCAI 2005 Guideline Update: Elective PCI should not be performed at institutions that do not provide onsite cardiac surgery. (Level of Evidence: C) The statement is contained within subsection 4.3 ("Role of Onsite Cardiac Surgical Backup") within Section 4 ("Institutional and Operator Competency"). The statement is defined as a "Class III" standard, meaning within the "conditions for which there is evidence and/or general agreement that a procedure/treatment is not useful/effective and in some cases may be harmful." According to the "Level of Evidence: C" identification, the statement reflects "consensus opinion of experts, case studies, or standard of care." A footnote to the statement provides as follows: Several centers have reported satisfactory results based on careful case selection with well-defined arrangements for immediate transfer to a surgical program (citation omitted). A small but real fraction of patients undergoing elective PCI will experience a life-threatening complication that could be managed with the immediate onsite availability of cardiac surgical support but cannot be managed effectively by urgent transfer. Wennberg, et al., found higher mortality in the Medicare database for patients undergoing elective PCI in institutions without onsite cardiac surgery (citation omitted). This recommendation may be subject to revision as clinical data and experience increase. The guidelines are statements of "best practices" in health care delivery. They are intended to assist practitioners and facility administrators in making appropriate decisions. The cited statement neither prohibits nor requires performance of elective PCI in hospitals without onsite cardiac surgical programs. Whether a practitioner performs elective PCI in a licensed Level I hospital remains a medical decision under the provisions of the enacting statute and proposed rules. The footnote recognizes that elective PCI is available at some hospitals without onsite cardiac surgery through "careful case selection with well-defined arrangements for immediate transfer to a surgical program." The proposed rule specifically establishes staff and transfer requirements designed to facilitate rapid transfer of a patient from a Level I to a Level II facility. There is no evidence that such staff and transfer requirements are insufficient or otherwise inappropriate. Patient selection criteria are those which expressly identify clinical presentations of patients who are appropriate for revascularization through PCI. Section 5 of the referenced ACC/AHA/SCAI 2005 Guideline Update, titled "Clinical Presentations" explicitly addresses such criteria and constitutes the patient selection criteria contained within the document. The patient selection criteria do not regulate the location where PCI procedures are performed. As stated previously, the Florida Legislature, presented with the option of limiting the availability of cardiac catheterization services available at Level I hospitals to emergent patients, rejected the limitation. The evidence fails to establish that Proposed Rule 59A-3.2085(16)(a)5. is vague or that Proposed Rule 59A-3.2085(16)(a)9. enlarges, modifies or contravenes the enacting statute. Martin Memorial and St. Anthony's assert that the proposed rule contravenes Subsection 408.0361(5)(a), Florida Statutes (2008), which provides that AHCA adopt rules that include "at least the following" elements: A risk adjustment procedure that accounts for the variations in severity and case mix found in hospitals in this state. Outcome standards specifying expected levels of performance in Level I and Level II adult cardiovascular services. Such standards may include, but shall not be limited to, in-hospital mortality, infection rates, nonfatal myocardial infarctions, length of stay, postoperative bleeds, and returns to surgery. Specific steps to be taken by the agency and licensed hospitals that do not meet the outcome standards within specified time periods, including time periods for detailed case reviews and development and implementation of corrective action plans. The TAP recommended to AHCA that existing outcome data reporting systems created by the American College of Cardiology and the Society of Thoracic Surgeons be utilized for data collection related to licensed hospital adult cardiovascular services programs. Subsection 408.0361(5)(b), Florida Statutes (2008), requires that hospitals licensed under the proposed rules participate in clinical reporting systems operated by the American College of Cardiology and the Society of Thoracic Surgeons. The requirement was adopted by the 2007 Legislature based on the TAP recommendation. Proposed Rule 51A-3.2085(16)(a)8. requires licensed Level I hospitals to participate in the American College of Cardiology-National Cardiovascular Data Registry (ACC-NCDR) and sets forth additional directives related to such participation. The ACC-NCDR system is a risk adjusted outcome reporting system that accounts for variation in severity and case mix. It collects approximately 200 data elements and is in use in approximately 2,000 hospitals. Proposed Rule 51A-3.2085(17)(a)6. directs licensed Level II hospitals to participate in the Society of Thoracic Surgeons National Database (STS database) and sets forth additional requirements related to such participation. The STS database provides information generally similar to the ACC-NCDR database. Although Proposed Rule 59A-3.2085(17)(a)5. states that the Level II hospital must meet or exceed the performance standards identified within the ACC-NCDR, there appears to be no specific requirement in the proposed rules that a Level II hospital participate in the ACC-NCDR system. Proposed Rule 59A-3.2085(17)(a)6. contains a citation to Proposed Rule 59A-3.2085 (16)(a)7. The cited paragraph consists of text that is similar to the paragraph preceding the citation. The intent of the reference is unclear. If the reference were intended to incorporate the ACC- NCDR reporting requirements with those applicable to Level II hospitals, the citation in Proposed Rule 59A-3.2085(17)(a)6. should have been to Proposed Rule 59A-3.2085(16)(a)8., where the ACC-NCDR requirements are identified. In any event, the statute requires participation by licensed hospitals in the reporting systems, and, as stated previously, Level II hospitals must document plans to ensure that the cited standards are met; so, it is logical to presume that Level II hospitals will participate in the ACC-NCDR system, in addition to the STS database. Martin Memorial and St. Anthony's assert that the proposed rule does not include the "outcome standards specifying expected levels of performance" required by Subsection 408.0361(5)(a)2., Florida Statutes (2008), and that the proposed rules fail to identify the "national quality and outcome benchmarks" referenced therein. The evidence fails to support the assertions. 93. Proposed Rules 59A-3.2085(16)(a)7. and 59A- 3.2085(17)(a)5. require that each licensed hospital must document a "quality improvement plan to ensure" that the specified cardiac services meet or exceed "national quality and outcome benchmarks" reported by the ACC-NCDR and the STS databases. The word "benchmark" is not defined by statute or rule. Merriam Webster's dictionary defines "benchmark" as "a point of reference from which measurements may be made" or "something that serves as a standard by which others may be measured or judged." The evidence establishes that the "national quality and outcome benchmarks" referenced in the proposed rules are the "expected levels of performance" identified through the ACC-NCDR system. Each hospital participating in the ACC-NCDR system receives a detailed quarterly outcome report indicating the particular hospital's performance relative to all other reporting hospitals on a variety of elements associated with cardiac catheterization and PCI provided at the hospital. Accompanying each periodic report is an "Executive Summary" that identifies the relative performance of the hospital receiving the report on ten specific "PCI and Diagnostic Catheterization Performance Measures," including six "PCI Quality Measures," two "PCI Utilization Measures," and two "Diagnostic Quality Measures." The Executive Summary information visually displays the data through a set of "box and whisker plots" that present the range of data reported by all participating hospitals on each specific measure. The summary received by each hospital identifies its specific performance through an "arrow" and numeric data printed on the plot. The plot visually displays "lagging" and "leading" performance levels. The plot identifies hospitals performing below the tenth percentile of all participating hospitals as "lagging" hospitals. The plot identifies hospitals performing above the 90th percentile as "leading" hospitals. The evidence, including review of the ACC-NCDR data reporting system, establishes that the "expected levels of performance" are rationally those levels within the broad range of hospitals which are neither "leading" nor "lagging" according to the data. It is reasonable to assume that a "leading" hospital is performing at a level higher than expected and that a "lagging" hospital is performing at a level lower than expected. By reviewing the plot for each measure, a hospital can determine its performance relative to other participating hospitals on the ten measures included in the Executive Summary. The additional numeric data contained within the quarterly report permit additional comparison between an individual hospital and all other participating hospitals. Subsection 408.0361(5)(a)2., Florida Statutes (2008), does not require that AHCA establish numeric minimal standards, but only requires that the rule identify "outcome standards specifying expected levels of performance." The ACC-NCDR reporting system required by the statute and adopted by the proposed rules sufficiently identifies expected levels of performance. By their very nature, the outcome standards are not fixed. It is reasonable to presume that as hospital practices change, measurements of relative performance will also change. The rule requires only that each licensed hospital include within a quality improvement plan, documentation to ensure that such outcome standards will be met or exceeded, essentially encouraging a pattern of continual improvement by licensed programs. Subsection 408.0361(5)(a)3., Florida Statutes (2008), requires that the rule include the "specific steps to be taken by the agency and licensed hospitals that do not meet the outcome standards within specified time periods, including time periods for detailed case reviews and development and implementation of corrective action plans." The proposed rule complies with the requirements of the statute. Enforcement of outcome standards requirements applicable to Level I programs is addressed at Proposed Rule 59A-3.2085(16)(f) which provides as follows: Enforcement of these rules shall follow procedures established in Rule 59A-3.253, F.A.C. Unless in the view of the Agency there is a threat to the health, safety or welfare of patients, Level I adult cardiovascular services programs that fail to meet provisions of this rule shall be given 15 days to develop a plan of correction that must be accepted by the Agency. Failure of the hospital with a Level I adult cardiovascular services program to make improvements specified in the plan of correction shall result in the revocation of the program license. The hospital may offer evidence of mitigation and such evidence could result in a lesser sanction. Enforcement of outcome standards requirements applicable to Level II programs is addressed at Proposed Rule 59A-3.2085(17)(e), which provides as follows: Enforcement of these rules shall follow procedures established in Rule 59A-3.253, F.A.C. Unless in the view of the Agency there is a threat to the health, safety or welfare of patients, Level II adult cardiovascular services programs that fail to meet provisions of this rule shall be given 15 days to develop a plan of correction that must be accepted by the Agency. Failure of the hospital with a Level II adult cardiovascular services program to make improvements specified in the plan of correction shall result in the revocation of the program license. The hospital may offer evidence of mitigation and such evidence could result in a lesser sanction. AHCA does not routinely conduct surveys of accredited hospitals. Such surveys are conducted by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). AHCA generally conducts hospital surveys only during the investigation, pursuant to Florida Administrative Code Rule 59A-3.253(8), of a complaint filed against a hospital. AHCA would likely review ACC-NCDR and Society of Thoracic Surgeons data reports associated with the investigation of a specific complaint related to adult cardiovascular services. Assuming that AHCA's review of the data identified a deficiency, the proposed rules provide the licensee a 15-day period to develop a plan of correction acceptable to AHCA, unless the issue poses "a threat to the health, safety or welfare of patients" in which case it is reasonable to expect that a more prompt resolution of a deficiency would be required. Pursuant to Florida Administrative Code Rule 59A- 3.253, a hospital could be sanctioned for failing to submit a plan of correction related to an identified deficiency, or for failing to implement actions to correct deficiencies specified in an approved plan of correction. There is no evidence that AHCA's enforcement authority under the proposed rules differs in any significant manner from the general enforcement authority already available to the agency. There is no evidence that the proposed rules would result in any alteration of AHCA's investigative practices. Martin Memorial notes that, while the proposed rule provides a 15-day period for development of a plan of correction, AHCA's general enforcement rules already provide a ten-day period and asserts that the proposed rule is therefore inconsistent, fails to establish adequate standards for agency decisions, and vests unbridled discretion in the agency. The specific time period set forth in the proposed rule is clearly applicable, and there is no credible evidence of legitimate confusion in this regard. AHCA has suggested that "lagging" hospitals could be specifically regarded as failing to meet the outcome benchmarks identified in the ACC-NCDR data, but the proposed rule makes no specific reference to any systematic classification of hospital performance, and the statute does not require that a minimal performance level be established. Martin Memorial asserts that the Proposed Rule 59A- 3.2085(17)(a)6. is capricious because it requires that "each hospital licensed to provide Level II adult cardiovascular services programs shall participate in the Society of Thoracic Surgeons National Database," but only physicians can participate in the database. The enacting statute requires such participation. Subsection 408.0361(5)(b), Florida Statutes (2008), directs AHCA to adopt rules that require Level I or Level II licensed hospitals to "participate in clinical outcome reporting systems operated by the American College of Cardiology and the Society for Thoracic Surgeons." The proposed rule clearly implements the directive established by the statute. There is no credible evidence that the proposed rule is irrational or that a licensed Level II hospital would be unable to meet the obligations of the rule by requiring that its thoracic surgeons participate in the STS database. Martin Memorial asserts that the requirement that an applicant hospital's chief executive officer attest to compliance with certain guidelines is vague because "it is unclear what guidelines apply and what guidelines will not." The evidence fails to support the assertion. The referenced requirement applicable to a hospital seeking licensure as a Level I facility is set forth at Proposed Rule 59A-3.2085(16)(a)2., which provides as follows: The request [for licensure] shall attest to the hospital’s intent and ability to comply with the American College of Cardiology/Society for Cardiac Angiography and Interventions Clinical Expert Consensus Document on Cardiac Catheterization Laboratory Standards: Bashore et al, ACC/SCA&I Clinical Expert Consensus Document on Catheterization Laboratory Standards, JACC Vol. 37, No. 8, June 2001: 2170-214; and the ACC/AHA/SCAI 2005 Guideline Update for Percutaneous Coronary Intervention A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines (ACC/AHA/SCAI Writing Committee to Update the 2001 Guidelines for Percutaneous Coronary Intervention); including guidelines for staffing, physician training and experience, operating procedures, equipment, physical plant, and patient selection criteria to ensure patient quality and safety. The referenced requirement applicable to a hospital seeking licensure as a Level II facility is set forth at Proposed Rule 59A-3.2085(17)(a)2., which provides as follows: The request [for licensure] shall attest to the hospital’s intent and ability to comply with applicable guidelines in the American College of Cardiology/Society for Cardiac Angiography and Interventions Clinical Expert Consensus Document on Cardiac Catheterization Laboratory Standards: Bashore et al, ACC/SCA&I Clinical Expert Consensus Document on Catheterization Laboratory Standards, JACC Vol. 37, No. 8, June 2001: 2170-2; in the ACC/AHA/SCAI 2005 Guideline Update for Percutaneous Coronary Intervention A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines (ACC/AHA/SCAI Writing Committee to Update the 2001 Guidelines for Percutaneous Coronary Intervention); and in the ACC/AHA 2004 Guideline Update for Coronary Artery Bypass Graft Surgery: A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines (Committee to Update the 1999 Guidelines for Coronary Artery Bypass Graft Surgery) Developed in Collaboration With the American Association for Thoracic Surgery and the Society of Thoracic Surgeons, including guidelines for staffing, physician training and experience, operating procedures, equipment, physical plant, and patient selection criteria to ensure patient quality and safety. Proposed Rule 59A-3.2085(16)(a)6. designates the guidelines applicable to the operation of Level I hospital services. Proposed Rule 59A-3.2085(17)(a) designates the guidelines applicable to the operation of Level II hospital services. The specific elements of the referenced guidelines are identified in both the statute and the proposed rules. Martin Memorial asserts that the proposed rule is vague as to training requirements applicable for physicians performing elective PCI in Level I hospitals. In making the assertion, Martin Memorial references training requirements established at Proposed Rule 59A-3.2085(16)(b)2. and applicable to Level I physicians performing emergent PCI with less than 12 months experience. There is no credible evidence that the proposed rule is vague. Proposed Rule 59A-3.2085(16)(b), in relevant part, provides as follows: Each cardiologist shall be an experienced physician who has performed a minimum of 75 interventional cardiology procedures, exclusive of fellowship training and within the previous 12 months from the date of the Level I adult cardiovascular licensure application or renewal application. Physicians with less than 12 months experience shall fulfill applicable training requirements in the ACC/AHA/SCAI 2005 Guideline Update for Percutaneous Coronary Intervention A Report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines (ACC/AHA/SCAI Writing Committee to Update the 2001 Guidelines for Percutaneous Coronary Intervention) prior to being allowed to perform emergency percutaneous coronary interventions in a hospital that is not licensed for a Level II adult cardiovascular services program. The rule provides that a physician with less than 12 months experience working in a Level I facility can perform emergent PCI only if applicable training requirements have been met. The proposed rule does not authorize performance of elective PCI in a Level I hospital by a physician not meeting the minimum annual procedure volume requirements. Proposed Rule 59A-3.2085(17)(b) clearly identifies the requirements applicable to Level II physicians and in relevant part provides as follows: Each cardiac surgeon shall be Board certified. New surgeons shall be Board certified within 4 years after completion of their fellowship. Experienced surgeons with greater than 10 years experience shall document that their training and experience preceded the availability of Board certification. Each cardiologist shall be an experienced physician who has performed a minimum of 75 interventional cardiology procedures, exclusive of fellowship training and within the previous 12 months from the date of the Level II adult cardiovascular licensure application or renewal application. Martin Memorial asserts that the experience requirements set forth at Proposed Rule 59A-3.2085(16)(b)3. (related to Level I hospitals) and Proposed Rule 59A- 3.2085(17)(b)3. (related to Level II hospitals) are arbitrary or capricious. The evidence fails to support the assertion. The text of both proposed rules provides as follows: The nursing and technical catheterization laboratory staff shall be experienced in handling acutely ill patients requiring intervention or balloon pump. Each member of the nursing and technical catheterization laboratory staff shall have at least 500 hours of previous experience in dedicated cardiac interventional laboratories at a hospital with a Level II adult cardiovascular services program. They shall be skilled in all aspects of interventional cardiology equipment, and must participate in a 24-hour-per-day, 365 day-per-year call schedule. Martin Memorial argues that there is no evidence to suggest that 500 hours of experience indicates that appropriate competency levels has been achieved. The evidence establishes that the required experience level was developed by AHCA's hospital licensure unit staff and is the training level currently applicable for hospitals providing emergency PCI services under existing exemptions from CON requirements. The training requirements are not arbitrary or capricious. Martin Memorial asserts that the Proposed Rule 59A-3.2085(16)(c)1. is arbitrary or capricious. The cited rule requires that a Level I hospital make provisions for the transfer of an emergent patient to a Level II hospital, as follows: A hospital provider of Level I adult cardiovascular services program must ensure it has systems in place for the emergent transfer of patients with intra-aortic balloon pump support to one or more hospitals licensed to operate a Level II adult cardiovascular services program. Formalized written transfer agreements developed specifically for emergency PCI patients must be developed with a hospital that operates a Level II adult cardiovascular services program. Written transport protocols must be in place to ensure safe and efficient transfer of a patient within 60 minutes. Transfer time is defined as the number of minutes between the recognition of an emergency as noted in the hospital’s internal log and the patient’s arrival at the receiving hospital. Transfer and transport agreements must be reviewed and tested at least every 3 months, with appropriate documentation maintained. Martin Memorial asserts that the rule is arbitrary or capricious because it does not include a requirement that a Level I hospital make provisions for the transfer of an elective patient to a Level II hospital. There is no credible evidence to support the assertion. There is no evidence that a patient undergoing elective PCI at a Level I would not be regarded as an emergent patient were circumstances such that an emergent transfer to a Level II hospital warranted. There is no credible evidence to suggest a rationale for transferring a non-emergent patient from a Level I to a Level II hospital. Martin Memorial asserts that the proposed rule enlarges, modifies or contravenes the enacting statute on grounds that, although AHCA is directed to adopt rules to ensure compliance "with the most recent guidelines of the American College of Cardiology and American Heart Association Guidelines for Cardiac Catheterization and Cardiac Catheterization Laboratories," the proposed rule provides that "in case of conflicts between the provisions of this rule and the designated guidelines" the rule provisions "shall prevail." Such provisions appear in Proposed Rule 59A-3.2085(13)(j), Proposed Rule 59A-3.2085(16)(g), and Proposed Rule 59A-3.2085(17)(f). The enacting statute requires that hospitals licensed under the provisions of the proposed rules comply with guidelines "for staffing, physician training and experience, operating procedures, equipment, physical plant, and patient selection criteria to ensure patient quality and safety." To the extent that guidelines that relate to elements other than "staffing, physician training and experience, operating procedures, equipment, physical plant, and patient selection criteria to ensure patient quality and safety," the enacting statute does not require compliance by properly- licensed Florida hospitals. Other than as addressed elsewhere herein, the evidence fails to identify any specific conflicts between the guidelines and the proposed rules and, accordingly, fails to establish that the cited proposed rules enlarge, modify or contravene the enacting statute.
The Issue The issue presented by the instant case is whether Petitioner's application for a certificate of need to provide inpatient cardiac catheterization services at Pembroke Pines General Hospital should be granted.
Findings Of Fact Based on the evidence received at hearing and matters officially recognized, the Hearing Officer makes the following Findings of Fact: Petitioner and its Parent Corporation Petitioner is a for-profit Florida corporation formed on February 1, 1985, by Encino, California-based Nu-Med Hospitals, Inc. (NM), of which it is a wholly-owned subsidiary. NM provides various administrative services to Petitioner. In return for these services, Petitioner pays NM an annual fee. The fee in 1987 was approximately $1.8 million. In 1988, it was about $952,000. NM has also advanced loans to Petitioner. One such loan was in the amount of approximately $31.4 million at an interest rate of 15.6%, the same interest rate that NM had to pay to obtain the money which was the subject of the loan. Although interest rates have declined, the loan has not been refinanced. The failure to refinance has added substantially to Petitioner's costs. Furthermore, there is a significantly greater cash flow from Petitioner to NM than would be the case had the loan been refinanced. The total pre-tax cash flow from Petitioner to NM, including the amount attributable to the "excess interest" of the aforementioned loan, was $7,900,000 (or roughly 40% of NM's equity investment in Petitioner) in fiscal year 1987 and $4,387,000 (or roughly 23% of NM's equity investment in Petitioner) in fiscal year 1988. In addition to providing administrative services and making loans to Petitioner, NM has also invested more than $17 million over the past four years in Petitioner. Petitioner had an after-tax profit of $852,300 in fiscal year 1987. In fiscal year 1988, it had an after-tax loss of $346,600. Preliminary figures reveal that Petitioner suffered an after-tax loss of slightly more than $1 3l0 in fiscal year 1989. Pembroke Pines General Hospital. Petitioner owns and operates Pembroke Pines General Hospital (PPGH). PPGH is an acute- care hospital with a licensed capacity of 301 beds. It is fully accredited by the Joint Commission on Accreditation of Health Care Organizations. The hospital's bed complement includes 24 intensive care beds (12 coronary beds and 12 surgical beds) 2/ and 32 telemetry beds. Its telemetry unit will be expanded to 48 beds in the near future. In July, 1988, PPGH instituted an eleven bed obstetrical unit. Prior to the acquisition of the hospital in 1985, NM conducted a due diligence study to seek information about the hospital and became aware of the extent of the services provided by the hospital. According to 1987 actual data collected by the Hospital Cost Containment Board (HCCB), PPGH earned a 7.1% return on tangible equity and ranked 7th in this category of the 18 hospitals in Broward County reporting such information; PPGH had a cash flow to total debt ratio of .112% and ranked 9th in this category of the 20 hospitals in Broward County reporting such information; and its total margin percent was 2.6% and it ranked 8th in this category of the 20 hospitals in Broward County reporting such information. According to 1988 actual data collected by the HCCB, in terms of gross revenue per adjusted admission, PPGH ranked 8th of the 30 hospitals in HCCB Group 5 and 3rd of the 20 hospitals in Broward County reporting such information; and in terms of net revenue per adjusted revenue, PPGH ranked 7th of the 30 hospitals in HCCB Group 5 and 5th of the 20 hospitals in Broward County reporting such information. PPGH is located in Respondent's District x, the boundaries of which mirror those of Broward County. It is situated in the southwest quadrant of the county on the corner of Sheridan Street and University Drive. In the area surrounding the hospital is a large concentration of physicians' offices, including one housing a five-member group which limits its practice exclusively to cardiology and is the largest such group in Broward County. The group provides total cardiovascular care to its patients, including echocardiography and nuclear, invasive and clinical cardiology services. It has an active patient case load of 5,000 to 6,000. Of the members of the group, only Dr. Joseph Horgan and Dr. Barry Schiff practice invasive cardiology. Their practice is not confined to invasive cardiology, however. They are also clinical cardiologists. Both are board-certified in internal medicine, as well as cardiology. The Horgan-Schiff group accounts for 15 to 35 patients a day at PPGH, which has an active cardiology service, notwithstanding that it does not offer open heart surgery. The group provides on-site coverage at PPGH from 8:00 A.M. to 7:00 or 8:00 P.M. during the weekday. At other hours members of the group are on call and are able to quickly respond to emergencies at the hospital. Approximately 25 to 30 physicians in the area surrounding the hospital refer their patients who need cardiac catheterizations exclusively to the group. PPGH's primary service area, as defined by Petitioner, is bounded on the north by State load 84, on the south by the Broward County/Dade County line, on the east by the Florida Turnpike, and on the west by the eastern boundary of the conservation area. Included in this area are the cities of Pembroke Pines, Miramar, Davie and Cooper City. Most of Dr. Horgan's and Dr. Schiff's patients reside in PPGH's primary service area. While PPGH is not the only acute-care hospital that serves the residents of this area, it is the only hospital that is located within the area's geographic boundaries. Intervenor PPGH's primary service area is within the jurisdictional boundaries of the South Broward Hospital District (SBHD). SBHD is an independent taxing district which encompasses roughly the southern third of Broward County. It was created in 1947 by a special act of the Legislature to provide quality health care services to the residents of the district regardless of their ability to pay. Hollywood Memorial Hospital SBHD operates several facilities in the district, including a 24-hour walk-in medical center in Pembroke Pines, a freestanding ambulatory surgical center, an oncology center and a radiation therapy center. Its flagship, however, is Hollywood Memorial Hospital (Memorial), a public acute-care hospital that has grown from a 100-bed facility to a 737-bed facility offering a wide variety of health care services. Memorial is located six or seven miles east of PPGH outside of PPGH's primary service area. It is the closest hospital to PPGH. Many of the physicians who have privileges at PPGH also have privileges at Memorial. For instance, 13 of the 16 clinical cardiologists on the medical staff of PPGH, including Dr. Horgan and Dr. Schiff, are also on the medical staff of Memorial. The Horgan-Schiff group is responsible for 10 to 30 patients at Memorial on any given day. Charity Care, Medicaid and Medicare Memorial is the major provider of charity care to residents of the SBHD. In fiscal years 1987, 1988, and 1989, it provided $16,928,000, $22,728,000, and $22,258,000, respectively, in gross indigent charity care 3/ and $6,153 000, $13,739,000, and $7,587,000, respectively, in net unfunded (by tax revenues) indigent charity care. For fiscal year 199(), Memorial projects that it will provide $24,442,000 in gross indigent charity care, of which $14,211,000 will be funded by tax reVenues. A sizeable portion of the hospital's indigent charity care is funded by its operating revenues. During fiscal year 1989, the hospital earned slightly less than $3 million from its operations. Total revenues over expenses that year, however, exceeded $12 million, more than $8 million of which was attributable to returns on its investments. For fiscal year 1988, the hospital's total revenues over expenses was almost $14 million. In calendar year 1986, PPGH furnished 1.1% of the indigent charity care provided in Broward County. It ranked in the top 50% of hospitals in the county in this regard. Memorial ranked 2nd in the county, providing 22.8% of the county's indigent charity care during the calendar year. In calendar year 1987, PPGH provided $596,295 in indigent charity care. This constituted 1.29% of its gross patient revenues. In comparison, during this same period, Memorial provided $18,248,517, or 9.79% of its gross patient revenues, in indigent charity care. In terms of indigent charity care provided during calendar year 1987 as a percentage of gross patient revenue, PPGH ranked 5th of the 12 hospitals reporting in the county and 118th of the 209 hospitals reporting in the state. Memorial, on the other hand, ranked 3rd in the count, behind two other public hospitals, and 19th in the state In calendar year 1988, PPGH ranked 16th of the 30 hospitals in HCCB Group 5 in this category. Of the 20 hospitals reporting in the county, PPGH ranked 10th and Memorial ranked 2nd. Both Memorial and PPGH participate in the Medicaid program. As participants in the program, they are reimbursed for the services they provide to Medicaid patients, but generally not in the amount private pay patients are charged for the same services. The difference between what they receive from Medicaid and what they would have received from a private pay patient is referred to as a "Medicaid deduction." In calendar year 1988, PPGH's "Medicaid deductions" represented .76% of its gross patient revenues. In this category, it ranked 26th of the 30 hospitals in its HCCB group and 8th of the 20 hospitals in Broward County. Memorial, whose Medicaid deductions were 5.29% of its gross patient revenues, ranked 2nd in the county. Based on PPGH's operating budget for calendar year 1989, it ranks 192nd of the approximately 230 acute-care hospitals in the state in the amount of "Medicaid deductions" as a percentage of gross patient revenues. A further comparative review of calendar year 1989 operating budgets reveals that of the 22 hospitals in its HCCB group in calendar year 1989, PPGH ranks last in Medicaid days as a percentage of total patient days. During the third quarter of calendar year 1988, 1.3% of PPGH's gross patient revenues and 5.4% of Memorial's gross patient revenues were attributable to Medicaid patients. PPGH's 1.3% was the 8th highest and Memorial's 5.4% was the third highest of Broward County's 20 hospitals. Pursuant to a contractual arrangement with Respondent, PPGH provides medical services to patients at South Florida State Hospital, a mental health facility operated by the state. In return for the provision of these services;, PPGH is reimbursed at rates comparable to those that apply to Medicaid patients. South Florida State Hospital patients constitute approximately 2 to 5% of PPGH's Average Daily Census. Unlike Memorial, PPGH does not receive any tax revenues to help defray its expenses. PPGH has offered to serve indigent patients who live in the SBHD if the SBHD will reimburse it the same rate the SBHD reimburses Memorial for such services. The SBHD, however, has refused the offer. In terms of Medicare utilization, 1988 HCCB actual data reflects that PPGH ranked 13th of the 30 hospitals in its group and 11th of the 20 hospitals reporting in Broward County. District X Population and Demographics The Executive Office of the Governor, in a report prepared June 22, 1988, estimated that on January 1, 1988, the adult population (15 years of age and over) of Broward County was 1,001,822, and projected that it would increase to 1,047,900 on January 1, 1991. PPGH's primary service area in southwest Broward County has experienced rapid and sustained population growth in recent years. It is the site of several significant retirement communities, including a Century Village development which is expected to have 17,000 residents at build-out. Nonetheless, the population of this area is younger than that of Broward County as a whole. Approximately, 23% of the total population in southwest Broward County is over 55 years of age. While this is two percentage points higher than the national average, it is considerably lower than the countywide figure. Individuals aged 45 to 74 constitute 33.5% of the County's total population, but only 29.7% of the total population of southwest Broward County. The leading cause of death in Broward County is heart disease, a disease to which individuals become more susceptible as they age. Average Daily Census, Occupancy Rates, and Market Scare Notwithstanding the substantial population growth in Broward County, there is now, and has been since at least 1983, a large number of excess hospital beds in District X. The occupancy rates of Broward County hospitals, excluding PPGH, were as follows for calendar years 1983 through 1988: 1983- 65.4%; 1984- 61.3%; 1985- 57.1%; 1986- 55.5%; 1987- 56.2%; and 1988- 52.6%. PPGH, which had a capacity of 301 licensed beds throughout the period, had even lower occupancy rates. During the period, its Average Daily Census (ADC) and, consequently, its occupancy rate declined each year as follows: 4/ Calendar ADC Occupancy Rate 42.5% 37.9% 37.2% 34.1% 32.9% 30.9% Year 1983 127.9 1984 114 1985 111.8 1986 102.6 1987 98.9 1988 93 Based upon statistics for the first six months of calendar year 1989, however, it appears that the hospital's ADC for the entire calendar year will not further decline, but rather will increase to 100.6. 5/ Calendar Year ADC 1983 570.7 1984 533.7 1985 513.6 1986 538.7 1987 552.6 1988 560.5 During calendar years 1983 through 1988, Memorial's occupancy rates far exceeded those of PPGF, as reflected below: Occupancy Rate 78.6% 72.5% 69.7% 73.1% 75.0% 76.1% Based upon statistics for the first six months of calendar year 1989, it appears that for the entire calendar year Memorial's ADC will be 526.5 and its occupancy rate will be 71.3%. Memorial's occupancy rates have been higher than PPGH's due, at least in part, to the fact that Memorial has been able to offer heavily used specialized services not available at PPGH, including neonatal, rehabilitative, and short-term psychiatric care. Furthermore, while PPGH and Memorial both have pharmacy, 6/ physical therapy, nuclear medicine, and cardiac rehabilitation programs, the regular hours of operation of these programs are longer at Memorial. Based upon their ADCs, PPGH's and Memorial's share of the total Broward County market for calendar years 1983 through 1988 was as follows: 7/ Year PPGH 1983 3.6% 1984 3.1% 1985 3.3% 1986 3.1% 1987 3.0% 1988 2.8% Calendar Memorial 16.2% 14.7% 15.1% 16.2% 16.9% 17.2% January, 1988, through June, 1988, discharge data reveals that during that period PPGH and Memorial were responsible for 19.2% and 61.8%, respectively, of the total number of patients from PPGH's primary service area who were discharged from PPGH and District X hospitals with existing or approved inpatient cardiac catheterization programs. Although the ADC for PPGH's total bed complement declined from 1983 to 1988, the number of emergency room visits and emergency room admissions at PPGH increased 18.2% and 31.6%, respectively, during that period. The percentage increases are even greater if only the latter four years of this five-year period are considered. In terms of the average number of critical care beds occupied on a daily basis PPGH has experienced an increase of 28.9% from 1983 to 1988 and an increase of 35.4% from 1984 to 1988. Data reflecting PPGH's performance during the first five and six months of calendar year 1989 indicate that the increase in the number of emergency room visits, emergency room admissions and critical care beds occupied on a daily basis at PPGH has continued. Cardiac Catheterization As accurately described by Respondent in its rules a cardiac catheterization is a medical procedure requiring the passage of a catheter into one or more cardiac chambers of the left and right heart, with or without coronary arteriograms, for the purpose of diagnosing congenital or acquired cardiovascular diseases, or for determining measurement of blood pressure flow. Cardiac catheterization also includes the selective catheterization of the coronary ostia with injection of contrast medium into the coronary arteries. The flow of contrast medium through the coronary arteries may be recorded on x-ray film. The x-ray picture, or angiogram, that is produced can provide information quite helpful to the patient's physician. If it reveals a clot or other blockage restricting the flow of blood to the heart, a balloon-tipped catheter may be used to dilate or open the affected artery. Such a procedure is referred to as a coronary angioplasty. In contrast to cardiac catheterization, which is a diagnostic tool, coronary angioplasty is a therapeutic procedure. A high percentage of patients who receive a coronary angioplasty require open heart surgery immediately following the procedure. Cardiac catheterizations are generally, but not always, elective procedures which need not be performed immediately. There are occasions, however, where a patient is in the throes of a heart attack and requires an emergency coronary angioplasty to restore the flow of blood to the heart to minimize damage to the heart muscle. Under these circumstances, an emergency diagnostic cardiac catheterization, which can be completed in as little as five to six minutes, must also be performed so that the cardiologist will know precisely where in the arterial tree the blockage is located. Respondent permits health care providers to perform such emergency inpatient procedures regardless of whether they possess a certificate of need. Cardiac catheterizations are performed in equipped laboratories and, in the absence of complications, are usually completed within 60 minutes. They may be done on an inpatient or outpatient basis, depending on the condition of the patient. The equipment used is the same, however, whether the procedure is performed on an inpatient or on an outpatient. Recent technological advancements have made it possible to perform more procedures on an outpatient basis than previously. Smaller-sized catheters can now be used. As a result, the entry wound typically heals faster and there are fewer vascular complications. Dr. Horgan and Dr. Schiff were among the first invasive cardiologists in South Florida to employ these smaller- sized catheters. Physicians performing cardiac catheterizations are assisted by technicians and nurses who have specialized skills and training. These technicians and nurses are, at times, in short supply. Competition amongst hospitals to recruit and retain these support staff members is therefore sometimes keen. The majority of cardiac catheterizations are performed on individuals 45 to 74 years of age. 39 There has been no showing that there are any alternative diagnostic procedures which are preferable to cardiac catheterization. District X Inpatient Cardiac Catheterization Programs Broward County is not divided into cardiac catheterization subdistricts. The following seven facilities in Broward County, each of which is within two hours travel time of 90% of the county's population, provide inpatient cardiac: catheterization services pursuant to certificates of need granted by Respondent: Broward General Hospital; Florida Medical Center; Holy Cross Hospital; Memorial; North Broward Regional Medical Center: North Ridge Hospital; and Plantation General Hospital. Broward General, North Broward, and Plantation General each have one cardiac catheterization laboratory. Memorial also has one laboratory, but has plans to construct another pursuant to a "major renovation certificate of need" granted several years ago. It is unclear, however, as to when construction will begin. North Ridge has two laboratories. Florida Medical and Holy Cross each have two laboratories as well, plus one backup laboratory. The average hospital charge and the average length of stay per inpatient admission to these inpatient cardiac catheterization programs during calendar years 1986 and 1987 and the first nine months of calendar year 1988 were as follows: Calendar Average Average Stay 3.71 days 3.27 days 3.43 days 2.98 days 3.70 days 3.00 days Year Charge 1986 (All $4,365.14 Patients) 4936 (Excluding $3,932.44 Medicaid and Medicare) 1987 (All $4,359.92 Patients) 1987 (Excluding $4,041.80 Medicare and Medicaid) 1988 (All $5,054.17 Patients) 1988 (Excluding $4,393.60 Medicare and Medicaid) Cardiac catheterizations are also performed on an outpatient basis at these seven existing facilities. The number of cardiac catheterizations performed in Broward County increased almost 60% from 1985 to 1987, an increase that can be attributed to the aging of the county's population and the advances in cardiac catheterization technology. During the period from April, 1987, through March, 1988, there was a total of 9,289 cardiac catheterization admissions, both inpatient and outpatient, at these facilities, an amount substantially less than their combined capacity. During the period from July, 1987, through June 1988, they also collectively operated well below their combined capacity, handling a total of 9,236 inpatient and outpatient cardiac catheterization admissions Each of the existing laboratories in Broward County can handle at least 1,000 to 1,200 cardiac catheterizations a year during their normal hours of operation with their regular staff. 8/ These laboratories appear to be operating efficiently and to be available to all segments of the county's adult population requiring routine/diagnostic cardiac catheterization services. Furthermore, there is no indication that the quality of care offered at these laboratories is in any way lacking. In addition to these seven existing programs, Respondent has also granted certificates of need authorizing routine/diagnostic inpatient cardiac catheterizations to be performed at two other health care facilities: Imperial Point Hospital and Humana Bennett Hospital. Humana Bennett's primary service area overlaps PPGH's service area. It takes approximately 15 to 20 minutes by car to get to Humana Bennett from PPGH under normal driving conditions. The programs at Imperial Point and Humana Bennett are not yet operational. If their laboratories have hours of operation and staffing levels comparable to those of the laboratories in the county that are currently in operation, these laboratories will also each have the capacity to handle at least 1,000 to 1,200 cardiac catheterizations annually. The same can be said for Memorial's proposed second laboratory. Memorial's Inpatient Cardiac Catheterization Program Since 1981, Memorial's inpatient cardiac catheterization program has been open only to those cardiologists who devote their entire practice to performing cardiac catheterizations. It is closed to cardiologists, like Dr. Horgan and Dr. Schiff, who are not full-time invasive cardiologists. While it has its disadvantages, closing the program in this manner is a policy decision that, on balance, tends to enhance, rather than compromise, the program's efficiency as well the quality of care received by the program's patients. Other cardiac catheterization laboratories in Broward County are "closed" like Memorial's laboratory. The majority of the county's cardiac catheterization laboratories, however, including those at Broward General, Florida Medical, North Broward Regional and Plantation General, have laboratories that are open to any qualified invasive cardiologist. In addition, the laboratories at Humana Bennett and Imperial Point will be "open" when they become operational. In 1984, Dr. Horgan applied for privileges at Memorial's cardiac catheterization laboratory. Following a hearing before the SBHD's Board of Commissioners, final action was taken by the board to deny Dr. Horgan's application. Dr. Horgan appealed the board's decision to the Fourth District Court of Appeal. The board's decision was affirmed by the appellate court. Thereafter, in early 1987, at the request of the administrator of Memorial, Dr. Horgan, as well as his partner Dr. Schiff, discussed with Memorial representatives the possibility of their performing cardiac catheterizations at Memorial. Although approval of such an arrangement was initially given by the hospital, it was later withdrawn after members of the hospital's cardiology department complained about the arrangement. At present, three full-time invasive cardiologists, Dr. Mario Sperber and his partners Dr. Barry Alter and Dr. Michael Mareke have privileges to perform cardiac catheterizations at Memorial. They charge $1-500 for a routine/diagnostic left and right heart catheterization. Included in this charge is a fee of $191 that is passed on to the radiologist who assists in the interpretation of the angiogram. Because it has an open heart surgery program, Memorial is also authorized to perform routine/non-emergency angioplasties. These angioplasties are performed in Memorial's cardiac catheterization laboratory. The total number of procedures done in this laboratory during fiscal year 1988 was 1,635, seven of which were performed on Medicaid patients and 176 of which were performed on an outpatient basis. The total number of procedures, including angioplasties, done in Memorial's cardiac catheterization laboratory during fiscal year 1989 increased slightly to 1,650. The number of those procedures performed on an outpatient basis, however, almost doubled. The ratio of routine/diagnostic inpatient cardiac catheterizations to routine/diagnostic outpatient cardiac cathetrizations performed at Memorial has decreased from about 6 to 1 to approximately 4 to A further decrease is likely in view of the technological improvements that have been made. During calendar year 1988, 1,238 routine/diagnostic cardiac catheterizations, 234 angioplasties, and 512 open heart surgeries were performed at Memorial. During the first six months of calendar year 1989, there ware 680 routine/diagnostic cardiac catheterizations, 168 angioplasties, and 241 open heart surgeries done at Memorial. Approximately 23% of the total number of inpatient procedures performed in Memorial's cardiac catheterization laboratory during the first six months of calendar year 1988 were done on patients who resided in PPGH's primary service area. From fiscal year 1988 to fiscal year 1989, the revenues over direct expenses of Memorial's cardiac catheterization laboratory increased slightly. PPGH's Cardiac Catheterization Laboratory In addition to the previously mentioned cardiac catheterization laboratories in Broward County, there is also a 695-square foot cardiac catheterization laboratory located inside the operating room suite at PPGH. Cardiac catheterizations are performed at this laboratory, however, exclusively on an outpatient basis. It is the only such outpatient laboratory in Broward County and it was the first of its kind in South Florida. The laboratory at PPGH is leased to a Florida limited partnership, University Heart Institute, Ltd (Partnership) which operates the outpatient cardiac catheterization program at the hospital. 10/ The leasing of a department of a hospital is not an uncommon practice in Broward County. Petitioner provides the space needed to operate the outpatient cardiac catheterization program at PPGH, as well as other support services, pursuant to a management agreement with the Partnership. In return for the space and services it provides, Petitioner receives a nominal sum of $1.00 a month from the Partnership. The management agreement has a termination provision which permits Petitioner to terminate the agreement if, at any time after the first twelve months, "the Partnership has a negative cash flow over a period of six or more calendar months." Petitioner is a 50% general partner of the Partnership. Accordingly, pursuant to generally accepted accounting principles, Petitioner must reflect: the financial activities of the Partnership on its balance sheet as though they were its own. The other general partner in the venture is University Hospital, Inc., (UHI), a corporation controlled by Dr. Horgan and Dr. Schiff and their partner, Dr. Dweck. Petitioner and UHI have equal control over the Partnership. There are also about 20 limited partners, all of whom are physicians. The profits and losses of the Partnership are divided as follows: 50% to Petitioner; 25% to UHI; and 25% to the limited partners. During the first year of operation of the cardiac catheterization laboratory, the Partnership earned a profit of approximately $100,000. PPGH's cardiac catheterization laboratory began operation on April 29, 1988, after the area of the hospital in which it is located received less than $50,000 worth of renovation work. Two-hundred and forty-eight outpatients received cardiac catheterizations at the laboratory in the first twelve months of its operation. During the thirteenth month of its operation, cardiac catheterizations were done on an additional 22 outpatients. Of the 270 outpatients who received cardiac catheterizations during the first thirteen months of the laboratory's operation, only one was a Medicaid patient. The overwhelming majority of outpatients who have received cardiac catheterizations at PPGH's laboratory have been from southwest Broward County and have been referred to the laboratory by Dr. Horgan and Dr. Schiff. Dr. Joseph S. Horgan, M.D., P.A., and Dr. Barry H. Schiff, M.D., P.A., are the exclusive providers of cardiac catheterization services at PPGH's laboratory pursuant to a professional services agreement they entered into with the Partnership. Under the agreement, only "physicians that are associated with, employed or otherwise engaged under contract with" these two Florida corporations run by Dr. Horgan and Dr. Schiff, respectively, may use the laboratory. Dr. Horgan and Dr. Schiff therefore have the sole authority to determine who may perform cardiac catheterizations at PPGH's laboratory. They also serve as co-medical directors of the laboratory and, in these capacities, are responsible for the development and implementation of all policies pertinent to the operation of the laboratory. To date, only Dr. Horgan and Dr. Schiff have performed cardiac catheterizations at the laboratory. A third invasive cardiologist, however, will soon join Dr. Horgan and Dr. Schiff in providing such services at the hospital. The hospital's laboratory will be closed to all other invasive cardiologists. Dr. Horgan and Dr. Schiff charge $950 for a routine/diagnostic right or left heart catheterization and $1,175 for a routine/diagnostic right and left heart catheterization. These charges are consistent with the provision of the professional services agreement with the Partnership which requires that their fees "be competitive with the usual and customary fees charged in the community for similar services." Under the agreement, Dr. Horgan and Dr. Schiff are entitled to keep the fees they receive for the professional services they render. Most of Drs. Horgan's and Schiff's patients receive a right and left heart catheterization. As a result, they average 1.8 procedures per patient and their average charge per patient is $1,100. Unlike the invasive cardiologists who practice at Memorial's laboratory, Dr. Horgan and Dr. Schiff do not utilize radiologists to assist them in interpreting the angiograms they produce. Dr. Horgan and Dr. Schiff have proven to be highly competent and skilled invasive cardiologists and they offer high quality care to the outpatients they catheterize at PPGH's laboratory. There have been no moralities at the laboratory and only a few outpatients have experienced complications after being catheterized. Furthermore, approximately 91% of the catheterizations performed at the laboratory reveal some abnormality. This high rate of abnormal catheterizations suggests that Dr. Horgan and Dr. Schiff are exercising sound judgment in referring outpatients to the laboratory, as opposed to making these referrals without justification. In the professional services agreement with the Partnership, Dr. Horgan and Dr. Schiff have agreed "not to provide outpatient cardiac catheterization and peripheral vascular procedure services within Broward or Dade Counties, Florida for a two (2) year period after the commencement of the term of this Agreement [at any facility other than PPGH] except that [they) shall continue to provide such services at Plantation General Hospital, Florida Medical Center, University of Miami, Jackson Memorial Hospital and Cedars Medical Center of Miami." Most of the cardiac catheterizations that Dr. Horgan and Dr. Schiff perform are done on an outpatient basis. They do cardiac catheterizations on an inpatient basis only if the patient's medical condition warrants. They perform these inpatient cardiac catheterizations at Florida Medical and Plantation General. Between May 1, 1988, and April 30, 1989, they performed inpatient cardiac catheterizations on about 125 to 150 patients in these two facilities. Florida Medical and Plantation General are each within a half hour driving time of PPGH. Florida Medical offers open heart surgery and routine/non-emergency angioplasty. Plantation General has received preliminary approval from Respondent to provide open heart surgery services. Dr. Horgan's and Dr. Schiff's patients receive good care at Florida Medical and Plantation General. In addition to performing these inpatient cardiac catheterizations at Florida Medical and Plantation-General, during the one year period ending April 30, 1989, they also referred approximately 160 patients to Memorial for cardiac catheterization services. If Petitioner had the certificate of need that it is seeking in the instant case, none of these referrals would have been made. When they are performing cardiac: catheterizations at PPGH, Dr. Horgan and Dr. Schiff are assisted by a highly qualified and well-trained support staff consisting of a catheterization technician and three Registered Nurse's, one of whom is the staff director. All four staff members are employees of Petitioner, not the Partnership. Their combined annual salaries total about $119,000. Collectively, they receive approximately another $36,000 from Petitioner in fringe benefits. The Partnership reimburses Petitioner for monies expended “0 compensate these staff members for the work they perform in PPGH's cardiac catheterization laboratory. These staff members, however, do not work full-time in the laboratory. They are also assigned to other-areas of the hospital, most notably the intensive care unit. The majority of cardiac catheterization laboratories in Broward and Dade Counties have support staffs similar in size to the support staff assigned to PPGH's laboratory. The equipment in PPGH's cardiac catheterization laboratory was purchased by the Partnership from Dr. Horgan at Dr. Horgan's cost. Dr. Horgan paid approximately $250,000 for the equipment when he purchased it from EWA Industries, Inc., shortly before the opening of the laboratory. A portion of the money Dr. Horgan used to pay for the equipment came from a loan he received from Petitioner. At the time of its original purchase, the equipment was, for the most part, newly reconditioned. The equipment is not "state-of-the-art." It lacks certain features that are available on other equipment, such as digital/computer analysis capability. These features, however, are of relatively insignificant value. Despite lacking these features, the equipment in PPGH's outpatient cardiac catheterization laboratory is more than adequate, as evidenced by the high quality of Dr. Horgan's and Dr. Schiff's angiograms. Furthermore, although the equipment is made of parts manufactured by different manufacturers, obtaining parts for repair is not a major problem. They are readily available from EWA, which is based in Miami. In addition, there are two distributors and service centers located in Broward County from whom replacement parts may be obtained. Although PPGH has the medical and support staff and the equipment, as well as the ancillary services, necessary to provide routine/diagnostic cardiac catheterization services to inpatients at the hospital, it has not been authorized to do so by Respondent. PPGH's inability to offer these inpatient services places it at a competitive disadvantage relative to those facilities in the county that are authorized to provide these services. For instance, it makes it more difficult for PPGH to compete for contracts with health maintenance organizations and other third party payers. More significantly, PPGH's competitors offering inpatient cardiac catheterization services are able to capture patient revenues that would otherwise be received by PPGH if it were able to provide such services. PPGH's situation, however, is not unique. The majority of hospitals in Broward County are not authorized to offer inpatient cardiac catheterization services. Moreover, even though its competitive position would be enhanced if it were able to offer such services, its inability to do so does net threaten its survival as a health care facility in the Broward County market. If an inpatient at PPGH needs a routine/diagnostic cardiac catheterization that, because of the patient's unstable medical condition, cannot be performed on an outpatient basis, the patient must be transferred to another facility that is authorized to provide inpatient cardiac catheterization services. During fiscal year 1988, PPGH transferred 106 such patients to other facilities to receive inpatient cardiac catheterizations. Even if PPGH had been able to provide inpatient cardiac catheterization services to these patients, some of them would have had to have been ultimately transferred to another facility in any event to receive routine/non- emergency angioplasty or open heart surgery. Patients transferred from PPGH to another facility to receive cardiac catheterizations on an inpatient basis are generally transported by ambulance. A round-trip ambulance ride from PPGH typically costs between $500 and $700. In addition to increasing these patients' costs, such transfers may also cause them to experience additional stress. Clearly, in hindsight, it can be said that these transferred patients would have been better off if they had been initially admitted to a facility with inpatient cardiac catheterization capability instead of PPGH. Unfortunately, however, it is often difficult to determine at the time of admission whether a patient will need cardiac catheterization services. Furthermore, there are occasions where a patient arrives at PPGH's emergency room in such a medically unstable condition that he must wait at the hospital until his condition improves before he can be transported to another facility. It is not uncommon for Dr. Horgan's and Dr. Schiff's patients who need to be transferred from PPGH to receive an inpatient cardiac catheterization to have to wait two or three days before there is an opening in the cardiac catheterization laboratory schedule at Florida Medical or Plantation General that is convenient to them and their physician. During this time, these patients remain at PPGH, thus increasing the length of their stay there and they undergo expensive diagnostic testing designed to provide information that may be useful in managing these patients until they are able to be transferred and catheterized. While such scheduling problems have been experienced in the past, the situation should improve when the laboratories at Imperial Point and Humana Bennett become operational. Furthermore, there has been no Chowing that the patients who had to wait two or three or more days to be transferred from PPGH to Florida Medical or Plantation General could not have received such services at another existing provided, such as Memorial, had they so desired. Patients of Dr. Horgan and Dr. Schiff have died at PPGH while waiting to be transferred to another facility to receive an inpatient cardiac catheterization. A significant number of these patients could have survived had they received an emergency cardiac catheterization and angioplasty. Although the necessary equipment and staff were available at PPGH to perform these procedures, these procedures were nonetheless not performed. Because these were emergency situations where the 34 patients' lives were threatened, PPGH's lack of a certificate of need did not preclude Dr. Horgan and Dr. Schiff from performing these procedures at PPGH. Petitioner's Application for a Certificate of Need Approximately five months after the first outpatient cardiac catheterization procedure was performed at PPGH, Petitioner submitted an application for a certificate of need to provide inpatient cardiac catheterization services at the facility. Petitioner proposes to use, in providing these services, the same laboratory, equipment and staff it now uses for its outpatient program. The application estimates that the total cost of the project will be only $10,000, which represents "the legal and consulting fees associated with the Certificate of Need Application." There will be no financing, refinancing, professional services, construction or equipment costs, according to the application. In estimating the total cost of the project, Petitioner does not include the costs that were incurred to commence operation of PPGH's outpatient cardiac catheterization program, notwithstanding that these costs were incurred in contemplation of the filing of the instant application. 11/ The application also contains an estimate of revenues and expenses for the first two years of operation of the proposed project. The estimate includes projected revenues and expenses attributable to both the inpatient and outpatient operations of the laboratory. Petitioner projects in its application that 532 patients (320 inpatients and 212 outpatients) will visit PPGH's cardiac catheterization laboratory the first year it is able to offer inpatient services 12/ and that 592 patients (355 inpatients and 237 outpatients) will visit the laboratory the following year. Given Dr. Horgan's and Dr. Schiff's track record 13/ and reputation and the financial interest they have in the successful operation of the laboratory, 14/ it is not unreasonable to believe that they will attract these projected numbers of patients to the laboratory. Moreover, they, along with the third invasive cardiologist who will soon join them, should easily b able to handle such patient case loads at the laboratory during reasonable hours of operation with the laboratory's existing support staff and equipment. In projecting the gross revenues that will be generated by the inpatients who visit the laboratory, Petitioner assumes that these inpatients will be charged an average of $4,935 per patient the first year and $5,176 per patient the second year. These charges are consistent with the average charges of existing providers in the county. With respect to outpatients, Petitioner assumes that they will be charged on the average $2,300 per patient the first year and $2,415 per patient the second year. These charges are consistent with the laboratory's current average charge per outpatient. In view of the foregoing, Petitioner's projections in its application regarding gross revenues are reasonable. Of the patients that will visit the laboratory during the first two years of the inpatient program, Petitioner projects in its application that 2% will be Medicaid recipients and 3% will receive charity or free care. In view of PPGH's past performance in these areas, it appears unlikely that these percentages will be realized.15/ Accordingly, Petitioner's projections in its application regarding the deductions from gross revenues for Medicaid contractual allowances and charity care are unreasonably high. The projections made by Petitioner regarding direct and indirect expenses, in the aggregate, are not unreasonably low, notwithstanding that the application's statement of projected revenues does not make specific reference to certain expense items relating to inpatient care, such as nursing care and food supply costs. If anything, Petitioner has overestimated total expenses.16/ Providing only outpatient services, which generate less net income per patient than do inpatient services, the laboratory at PPGH returned a profit of approximately $100,000 in its first year of operation. The profitability of the laboratory will likely increase, as Petitioner projects, if it is able to offer inpatient, in addition to outpatient, services. In both the short-term and the long-term, Petitioner' proposal to provide such services is financially feasible. As evidenced by the attachments to Petitioner's application, as supplemented in response to Respondent's October 13, 1988, omissions letter, PPGH has transfer agreements with St. Francis Hospital and Florida Medical, both of which are within thirty minutes driving time of PPGH and have open heart surgery capability. Potential Impact of Granting the Application While Petitioner will benefit if its application is granted, the same cannot be said for existing providers of 16 For example, Petitioner allocates the entire salary of each of the four support staff members to the cardiac catheterization laboratory, even though these employees also work in other parts of the hospital. 38 inpatient cardiac catheterization services in Broward County. They will have to contend with another effective competitor seeking a share of the already highly competitive Broward County inpatient cardiac catheterization market. Collectively, the existing facilities will lose inpatient cardiac catheterization patients and net revenues they otherwise would have had if the laboratory at PPGH did not offer inpatient services.17/ Memorial will be among those `facilities suffering the greatest such losses. While it is difficult to predict the precise extent of these losses, they no doubt will be significant and therefore adversely impact Memorial's ability to provide charity care. At the very least, Memorial will lose to PPGH the inpatient cardiac catheterization patients that Dr. Horgan and Dr. Schiff now refer to Memorial's laboratory and the net revenues these patients generate. As previously mentioned, Dr. Horgan and Dr. Schiff referred 160 patients to Memorial's laboratory during the year ending April 30, 1989.96. Routine/non-emergency angioplasties and open heart surgery will not be performed at PPGH if Petitioner's application is granted. Accordingly, Memorial will not lose to PPGH any patients requiring these services as a result of the granting of the application. Although patients at PPGH who require routine/diagnostic inpatient cardiac catheterization services will not have to be transferred to another facility to receive inpatient cardiac catheterizations if the application is granted, it will still be necessary to transfer patients needing routine/non-emergency angioplasty and open heart surgery. With the advent of an inpatient cardiac catheterization program at PPGH, the hospital will attract, in far greater numbers than it does presently, individuals who require, not only inpatient cardiac catheterization services, but also routine/non emergency angioplasty or open heart surgery and who therefore must be transferred to another facility. Therefore, there likely will be more, rather than fewer, total transfers of patients than there would be if PPGH did not offer inpatient cardiac catheterization services.18/ Although cardiac catheterization support staff are generally difficult to recruit and retain, the granting of the instant application will not make it any more difficult for existing providers in Broward County to attract and keep such staff members inasmuch as Petitioner already has a support staff assigned to its cardiac catheterization laboratory at PPGH and it does not intend to expand its staff if it is given authorization to provide services at the laboratory on an inpatient basis. Regardless of whether Petitioner's application is granted, the adult population of Broward County requiring inpatient cardiac catheterization services will be able to receive such services from existing and approved providers in the county, which have the collective capacity to meet the population's demand for these services. It is more efficient to make greater use of the current collective capacity of these providers than to add to the county's overall capacity to serve cardiac catheterization inpatients. Furthermore, there is no reason to believe that PPGH will provide quality of care appreciably different from that offered by any existing or approved inpatient cardiac catheterization provider. Even if Petitioner's application is denied, patients of Dr. Horgan and Dr. Schiff who live in the area surrounding PPGH will still be able to receive routine/diagnostic cardiac catheterizations from these two invasive cardiologists, albeit at a facility that is slightly further from their homes and Dr. Horgan's and Dr. Schiff's offices than is PPGH. If an inpatient cardiac catheterization program is established at PPGH, the program's charges will be comparable to those of its competitors. They will neither be excessive, nor unusually low, in relation to those of other programs. Accordingly, approval of the program will have no significant impact on costs and patient charges. Florida Administrative Code Rule 10-5.O11(1) Respondent has adopted procedures governing its review of applications, such as Petitioner's, for certificates of need authorizing the establishment of an inpatient cardiac catheterization program. These procedures are found in Florida Administrative Code Rule 10- 5.011(1)(e).41 Respondent published notice in the April 22, 1988, edition of Florida Administrative Weekly of the amendments it proposed to make to the rule as it existed at that time. (The version of the rule that Respondent sought to amend Bill be referred to hereinafter as the "old rule.") These proposed rule amendments were the subject of rule challenge petitions filed with the Division of Administrative Hearings. The petitions were voluntarily dismissed after the challengers and Respondent negotiated a settlement, pursuant to which Respondent made certain modifications to the proposed amendments to Rule 10- 5011(1)(e). Among the modifications was the addition of the following language relating to the intent of the rule: It is the intent of the department to allocate the projected growth in the number of cardiac catheterization admissions to new providers regardless of the ability of existing providers to absorb the projected need. In addition, the prefatory language of the provision relating to need determination was modified to read as follows: In order to assure patient safety and staff efficiency, to foster competition among providers, and to achieve maximum economic use of existing resources, the following criteria shall be considered in the approval of Certificate of Need applications for new adult cardiac catheterization programs. The minimum annual projected net program volume need for the establishment of a new adult cardiac catheterization program shall be at or exceed 300 admissions for the service planning area. Applicants shall demonstrate that they will be able to reach an annual program volume of 300 admissions within 2 years after the program becomes operational. Notice of these changes and the other modifications that were made to the April 22, 1988, proposed rule amendments was published in the July 29, 1988, edition of Florida Administrative Weekly. Eleven days earlier, these proposed rule amendments, as modified, (hereinafter referred to as the "new rule") had been filed with the Secretary of State. In August 1988, the new rule was challenged on the ground that Respondent had not complied with the procedural requirements of Section 120.54, Florida Statutes, in making changes to the proposed rule amendments originally published on April 22, 1988.19/ The hearing officer assigned to these cases treated the rule challenge petitions as having been filed pursuant to Section 120.54, Florida Statutes, rather than Section 120.56, Florida Statutes, notwithstanding that the new rule had been filed with the Secretary of State more than 20 days prior to the filing of any of these petitions. Following a hearing on the matter, the hearing officer, on June 29, 1989, entered a final order holding that "the amendments to paragraph 2 (h), paragraph 3(c) III, and paragraph 6(a) and the amendment regarding the definition of `inpatient visit' are an invalid exercise of delegated legislative authority, because they were adopted without adhering to the proper procedures for adoption delineated in Section 120.54, Florida Statutes." On or about July 27, 1989, Respondent appealed the hearing officer's final order to the First District Court of Appeal. The appeal is still pending. Since August, 1988, Respondent has been applying the new rule in evaluating inpatient cardiac catheterization certificate of need applications. It applied the new rule in making its preliminary determination to deny Petitioner's application, which was in the first batching cycle after the effective date of the new rule.20/ Although the packet of application materials Respondent sent to Petitioner did not contain any express indication that the new rule would be applied in evaluating its application, Petitioner conceded in its completed application that it had "been informed [through other means) by [Respondent) that the [new rule would] likely be used in evaluating this CON application." In view of this advisement, Petitioner addressed in its application the various provisions of the new rule as they related to its application. The State Health Plan Issues relating to cardiac catheterization are discussed in the 1985-1987 State Health Plan. Among such issues is that of minimum case loads. Regarding this issue, the plan contains the following discussion: Up until 1977 the literature showed a consensus on the need for minimum case loads. Since 1977, expert opinion has become more divided on the issue with many provider representatives advocating that the standards now reflected in federal and many state laws are no longer necessary and justifiable. However, a general opinion among the medical profession is that a certain minimum number case load is essential to assure quality results. A number of complications can occur in catheterization programs if all personnel are not experienced and active. Studies may have to be repeated because inadequate data were received. This could result in unnecessary exposure of patients to radiation and hazards caused by the injection of of engaged contrast materials and the manipulation catheters. The established federal and state minimum standards of 300 procedures annually for adult and 150 for pediatric cardiac catheterization laboratories are believed to be adequate to maintain the expertise of the professional team in this highly specialized service. The plan also addresses the "concern surrounding. . . the physical proximity and the relationship between the [cardiac catheterization] diagnostic facility and a cardiovascular surgical program." It notes that the "Inter-society Commission on Heart Disease Resources (ISCHDR) stresses the need for a very close relationship between the two services;" "national health planning guidelines support this emphasis through a recommendation that no new cardiac catheterization unit be opened in any facility not providing open heart surgery;" and the "Florida rule requires that cardiac catheterization laboratories where coronary angioplasty (e.g., plastic surgery upon blood vessels) is performed must be located in health care facilities which also provide open heart surgery." One of the goals of the State Health Plan is to ensure the appropriate availability of cardiac: catheterization services at a reasonable cost. An objective of the plan is to "maintain an average of 600 cardiac catheterization procedures per laboratory in each district through 1990." The project proposed by Petitioner in the instant case conforms with this goal and objective to the extent that the services offered at PPGH will be competitively priced and that it is likely that the laboratory at PPGH will average at least 600 procedures annually. Local Health Plan The 1988 District X Comprehensive Health Plan contains the following analysis and recommendation with respect to the provision of cardiac catheterization services in Broward County: AVAILABILITY AND ACCESSIBILITY The hospitals offering cardiac catheterization services are well located throughout the County for geographic accessibility. Financial barriers continue to raise questions about accessibility of these services to the poor. QUALITY All of the facilities offering cardiac catheterizations in Broward County are providing in excess of the minimum number of procedures recommended.21/ RECOMMENDATION 1 Applicants for Certificate of Need approval should document either their intention and/or experience in meeting or exceeding the standards promulgated by the appropriate national accreditation body and by HRS. RECOMMENDATION 2 Applicants proposing to initiate or expand cardiac catheterization must make those services available to all segments of the population regardless of the ability to pay. RECOMMENDATION 3 Outpatient cardiac catheterization services should continue to be regulated under the Certificate of Need program. Petitioner has demonstrated that the inpatient cardiac catheterization program it proposes to establish at PPGH will meet or exceed the accreditation standards referred to in Recommendation 1 of the plan. Petitioner's stated policy is to make the services of PPGH available to all segments of the population regardless of their ability to pay. Petitioner's past performance in the area of indigent care suggests, however, that Petitioner may not be firmly committed to implementing this policy. The suggestion is also made in the plan that "[a)11 else being equal applications to establish new cardiac catheterization laboratories in Broward County in facilities with existing open heart surgical capability will receive priority - when being considered for certificates of need."
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Respondent enter a final order denying Petitioner's application for a certificate of need to establish an inpatient cardiac catheterization program at Pembroke Pines General Hospital. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 12th day of January, 1990. Administrative Hearings Parkway 32399-1550 of the Administrative Hearings January, 1990. STUART M. LERNER Hearing Officer Division of The DeSoto Building 1230 Apalachee Tallahassee, Florida (904) 488-9675 Filed with the Clerk Division of this 12th day of
Findings Of Fact At all times pertinent to the issues involved herein, Respondent was licensed as a registered nurse in the State of Florida under license number 01271-2. Respondent has been licensed as a registered nurse in Florida since 1951. Since that time she has taken various continuing education courses in the nursing profession and is up-to-date on her continuing education requirements. She began work as a registered nurse with Methodist Hospital in 1967 and remained there until she was terminated 15 years later in December, 1982. According to Mrs. Scott the patient in question here, Mrs. Thornton, was first assigned to her care on the morning of November 26, 1982. This was the first day she met her. Respondent came into Mrs. Thornton's room that morning to get the patient up and ready for the day. At this point, Mrs. Thornton said she did not feel well and was very weak. Instead of a bath, she asked merely for a light sponge bath. The patient was wearing a high-neck "granny flannel" gown which she would not allow the Respondent to remove even to give her the sponge bath. At that time, Mrs. Scott says, Mrs. Thornton had one IV tube connected to an Abbott pump. This IV was connected to the patient's right forearm. Mrs. Scott did not see nor did she know that Mrs. Thornton had a subclavian catheter installed. Mrs. Scott contends that when she did rounds with Dr. Eye in the afternoon of November 26, he advised her to discontinue the IV in Mrs. Thornton's arm because of puffiness of the arm where the IV was connected. When she went to do that, she states she noticed one suture on the inside of the patient's right arm just above the elbow which was not connected to the IV. She showed this to Dr. Eye, who told her to take it out. As a result, she removed the suture and took out the intravenous tube from the right arm. At this point, she asked Dr. Eye if he wanted to send it to the lab and he said no. As a result, she put the IV set and all other throwaways in the wastebasket. At this point, Dr. Eye gave her an oral order to apply warm compresses to the arm. This order was subsequently reduced to writing. Mrs. Scott categorically denied having removed a left subclavian catheter from Mrs. Thornton. In fact, because of the gown Mrs. Thornton was wearing, Mrs. Scott denies even knowing that such a catheter had been installed. In any case, she would not have removed it by herself, she says, because she had been taught never to remove a subclavian catheter without someone else being present. She contends the catheter she removed was not a CVP (central venous pressure) catheter, as she subsequently charted by mistake. In that regard, she wrote in her nurse's notes, she says, merely what Dr. Eye had written in his order as to the description of the catheter to be removed. Dr. Eye had indicated in his orders to "D/C central line", which meant to disconnect the central line catheter (here, the subclavian) and because of the tremendous confusion at the nurses' station at the time she wrote her notes, she put in the wrong procedure. The subclavian catheter in question here was installed by Dr. Nunn, Mrs. Thornton's surgeon, on November 19, 1982.. During the procedure he inserted a 20-gauge catheter into the patient through the left subclavian area. He did not install any other catheter of a similar size. Somewhat later, he received a call from Mrs. Thornton's physician, Dr. Garcia, regarding the fact that a portion of the catheter was still in the patient and as a result, he performed surgery to remove it. He found a part of the catheter outside the wall of the subclavian vein and the remainder still in the vein. The entire portion of the catheter that was left in the patient was removed and the patient recovered satisfactorily from the surgery. In this regard, the danger inherent in leaving a piece of a catheter like this one inside a patient is that the broken remains could cause blockage of either a coronary artery, or if in the vein, a venal blockage. A third possibility is that of infection though this is somewhat more remote. According to Dr. Nunn, there are various causes for a catheter to break. The catheter may be subjected to rough treatment. The catheter itself may be weak. The catheter could be cut by the person removing it when the suture holding it in place is cut, and, although quite unlikely, the catheter might be broken when it is passed through the needle used to insert it. In Dr. Nunn's experience going back to 1955, however, he has never seen an instance where part of a subclavian catheter was left in a patient by accident. Mrs. Grace E. Davis, Mrs. Thornton's daughter, recalls that on the day Mrs. Thornton was released from the hospital, Mrs. Davis had to wait for her in the waiting room while an additional procedure was accomplished prior to the discharge. As Mrs. Davis recalls, when they got home from the hospital, she asked her mother why they had had to wait and Mrs. Thornton said that it was for the purpose of removing the catheter in her heart through which she was getting nitroglycerin. According to Dr. Earl T. Cullins, who reviewed Mrs. Thornton's medical records, she was in the hospital from November 17 through December 6, 1982. The medical records for that period indicated that the only catheters, IV's, or CVP's in the patient on November 26 may have been an Abbott Intravenous in the right arm and a subclavian catheter on the left side. The records further reveal that Dr. Eye gave verbal orders to disconnect the centerline (catheter) on November 26 and the nurse's notes written by Mrs. Scott indicate that on November 26, a CVP (central venous pressure--centerline catheter) was discontinued by her. CVP insertions are generally made in the subclavian plane or through the jugular vein, with the subclavian insertion being preferred. The records are, according to Dr. Cullins, somewhat confusing. For example, he cannot tell from the records whether the subclavian catheter was -being used for medication or whether it was covered with a pressure dressing on November 26. In any event, the records do not indicate that the left subclavian catheter was removed. Instead, they show that a CVP line (centerline catheter) was removed. While he feels that they are one and the same, he cannot tell for certain whether or not they are. At no place do the records or nurse's notes refer to the two together or as one and the same. Dr. Cullins had much to say about the performance of many of the other professionals involved in this case. For example, he described Dr. Eye as a "spastic" personality and questions the order that Mrs. Scott received to "remove the line." Dr. Cullin feels that if there were two lines in place, it cannot be certainly determined from the notes as to which one she removed. He also contends that Dr. Nunn made a mistake when he inserted the subclavian catheter on November 19 by not taking an X-ray after insertion. Another difficulty with the records, according to Dr. Cullin, is in that they reflect the intravenous needle was inserted in the patient's right hand on November 18 and was thereafter moved from hand to hand until November 26 when all drugs, which required two IV's, were stopped. To Dr. Cullin this indicates that even though the records do not specifically show the second line (other than the fact that the intravenous needle is in the right hand) there had to be one from a medical standpoint. Dr. Cullin is convinced that since the incident took place late in the day, it would not be at all unusual for Mrs. Scott to have mischarted the removal of the intravenous needle from the hand as the CVP needle which is in the only entry relating to removal of any intravenous lines. Dr. Cullin also states that the medical records, which on November 25 reflect "IV site good", and the fact that on- November 25, the nurse's notes refer to a transfer of the patient from the intensive care unit with the CVP line intact, without any other intravenous lines being mentioned, does not mean that there were no other lines. In short, Dr. Cullin is stating that the records are so confused it is impossible to tell whether there was one, two, or more intravenous lines in Mrs. Thornton on November 26, and which one was removed by Mrs. Scott. Ms. Ann Halley, Director of Nursing at Methodist Hospital, became aware of the situation involving Mrs. Thornton when she received a phone call from Dr. Nunn, who had installed the catheter and who told her that when he saw Mrs. Thornton that morning for a follow-up check, about a week after her discharge from the hospital, an X-ray showed that a portion of the subclavian catheter he had installed was still in her chest. Mrs. Thornton was returned to the hospital that afternoon for removal of the remaining piece of catheter, at which time Ms. Halley called for the medical records. when she checked them over, she saw that Respondent was the one who allegedly had removed the catheter. She contacted Ms. Jan G. Headrick, the head nurse on the floor with Mrs. Scott on November 26. Ms. Halley and Ms. Headrick had a discussion with Respondent about the situation during which Respondent admitted she had removed the catheter. In fact, she stated that when she cut the suture, the catheter simply fell out. According to Ms. Halley, Respondent did not actually use the term "subclavian" in regard to the catheter in question. However, in her opinion, there was little indication that Respondent was confused as to which catheter was in issue. Mrs. Thornton's patient records, as they relate to the catheter issue, were reviewed by Dr. Eileen Austin, a consultant with many years experience in the field of nursing. Dr. Austin concluded that a subclavian catheter had been removed from Mrs. Thornton in part by a nurse and that the remaining portion left in at the time of initial removal was surgically removed. Her review of the records revealed that three catheters were inserted during the first period of Mrs. Thornton's hospitalization. These were: An intravenous line inserted in the Patient's right hand on November 18, 1982 initially, but which was restarted several times and moved from hand to hand until it was finally capped on November 22, 1982. A catheter of this nature is always less than one inch in length and is never anywhere near seven and a half inches in length. A sub-clavian catheter inserted on November 19, 1982 which is also inserted in a vein. The purpose of this one appeared, here, too for administering drugs. It is approximately twelve inches in length and was removed, according to the records, by Respon- dent on November 26, 1982. An arterial line installed on November 19, 1982 following inser- tion of the sub-clavian catheter described above. The purpose of this line was for the withdrawal of blood for blood gas determination. It is called an arterial catheter and the longest one Dr. Austin has ever seen is two and a half inches. On the basis of the above, it appears obvious that the only one of the three catheters inserted, according to the records, long enough to have been left in the patient, was the subclavian catheter. A subclavian catheter is inserted into the clavian vessel so that the tip of the catheter is near the heart. It is inserted just below the collarbone. The records here reflected no reference in the nurse's notes after Mrs. Scott indicated removal of the subclavian catheter except for two references to dry dressings over the entry area. According to Dr. Austin, the proper procedure for the removal of a catheter is for the nurse to clip the suture holding the catheter to the skin without cutting the catheter. Thereafter, the nurse withdraws the catheter very carefully and, upon complete withdrawal, compares the length of the portion withdrawn with that of the catheter inserted as described in the patient's records. If a piece is broken off inside the patient, the visual examination in this way will reveal that that taken out is shorter than that put in, thereby indicating that some was left in the patient. Here, according to Dr. Austin, the Respondent failed to exercise proper procedure in two areas: one, she failed to note the length of the catheter inserted so that a comparison with removal could be done and, two, she failed to inspect the tip of the catheter on removal. It should be smooth and round. Anything else indicates that the catheter was broken or cut and part was left therein. This must be immediately reported to the physician. In Dr. Austin's opinion, a nurse who would remove a catheter and fail to insure the entire item was removed, and thereafter fails to report that it was not all removed, is unprofessional and puts the patient in a life- threatening situation. Further, assuming that the Respondent's sole improper activity was in mischarting the actual catheter removed, as Respondent contends, this could constitute substandard performance itself. However, the right arterial catheter in Mrs. Thornton was removed on November 20, 1982 at approximately 2:45 a.m. by Randy G. Martin, the hospital supervisor for the 11 - 7 shift that evening. He removed this catheter because the nurse on duty at the time saw that it was bent and there was some concern that it might break or otherwise do harm. At the time of this operation, Mr. Martin noticed that Mrs. Thornton had a subclavian catheter in place. When the arterial catheter was removed, it was measured and examined to see that the edges were good and then saved for the physician to examine the next day. If this arterial catheter was removed on November 20, it could not have been there on November 26, as Respondent says. Dr. Eye gave certain orders to discontinue all intravenous medication on November 22, 1982. The doctor's orders are as follows: D/C central line Per. with other meds this way Warm heat to rt arm Penicillin 500 mg-p/o Q.I.D. Serum theophyllin 6 hours after dose (scratched out) Room air arterial blood gas Sunday am. D/C all IV medication Dr. Eye's orders O.K.'d w Dr. Garcia Respondent as was stated before, contends she did not remove the subclavian catheter but instead removed the arterial catheter in the right arm, thereafter inaccurately charting its removal as the CVP catheter. She said she did this because she merely quoted the doctor's order. Thorough consideration of the above evidence admitted both for and against the Respondent, considered in light of the inherent probabilities and improbabilities of the evidence, results in the inescapable conclusion that Respondent did in fact withdraw the subclavian catheter from Mrs. Thornton and, in doing so, failed to insure that the entire catheter was removed. As a result, a 5 to 6 centimeter long piece of the catheter was left in Mrs. Thornton's chest which was surgically removed several days later. It is neither alleged nor found that Mrs. Scott was responsible for the catheter breaking. However, the evidence is clear that when she removed the catheter she failed to take those steps necessary and dictated by proper nursing procedures to insure that the entire catheter was removed. An independent examination of Mrs. Thornton's medical records by Dr. Austin, who had no part whatever in the scenario as it was acted at the time in question, revealed that three catheters were inserted in Mrs. Thorton during the period of her initial hospitalization: the subclavian catheter in the left portion of her chest; the arterial catheter in the right arm; and the peripheral catheter in one or both hands from time to time. The arterial catheter was removed by Nurse Martin on November 20, 1982. The peripheral catheter was capped on November 22, 1982. As a result, the only catheter remaining in Mrs. Thornton on November 26, 1982 was the subclavian catheter. when that fact is considered, along with the fact that Mrs. Scott's initial notes, regardless of her current explanation for them, revealed that she removed the CVP catheter (here it should be noted that CVP catheter is, in this case, the same as subclavian catheter), the conclusion is inescapable that she is the individual who removed the subclavian catheter leaving a portion in the patient. There simply is no evidence aliunde Mrs. Scott's own statement that any other catheter remained in the patient on November 26, 1982. This is so notwithstanding the testimony of Mrs. Davis concerning what her deceased aged mother advised happened the day of her discharge. It is difficult to believe that hospital officials would remove a subclavian catheter from Mrs. Thornton on the morning she is released from the hospital and Mrs. Davis' testimony as to that issue is rejected.
Findings Of Fact The initial application for a CON to operate an adult cardiac catheterization laboratory by Metropolitan General Hospital was denied by DHRS in the State Agency Action Report dated June 28, 1983 (Exhibit 2). This denial was based upon a projected use of 2,704 cardiac catheterization procedures in 1985 and four cardiac catheterization facilities in operation in District V, the service area which comprises Pinellas and Pasco Counties. The need methodology rule provides that an additional cardiac catheterization laboratory will not be approved if it reduces the average volume of procedures per lab performed in the district below 600 adult procedures based on the projected need in the service area. With a projected need of 2,704, an additional cardiac catheterization lab would reduce the average below the 600 figure. The four hospitals which have approved cardiac catheterization facilities in this district are: All Children's, Medical Center, Morton F. Plant, and St. Anthony's. All Children's is a pediatric hospital adjacent to Bayfront Medical Center Hospital. All Children's is authorized a pediatric cath lab in which adult patients are treated. Most of these patients come from Bayfront and the cardiac cath procedures are done on an out-patient basis. The number of cardiac cath procedures being performed at All Children's Hospital has increased every year since 1980 and the increase has been due primarily to the increase in the number of adult cardiac cath procedures performed. Adult procedures at this lab outnumber children's cardiac cath procedures by approximately three to one. In 1983, 536 adult cardiac cath procedures were performed at All Children' s Hospital. St. Anthony's Hospital has a cardiac cath lab in which 301, 327, and 300 adult cardiac caths were performed in the years 1981, 1982, and 1983, respectively. In Medical Center Hospital's cardiac cath unit more than 900 cardiac caths were performed in 1984 and the number has increased annually since the lab was installed. In disapproving Metropolitan General's application DHRS counted All Children's cardiac cath lab as an adult cardiac cath lab. When it was pointed out that All Children's cardiac cath lab is approved as a pediatric cardiac cath lab and that is the only cardiac cath lab at All Children's Hospital, DHRS recounted the number of existing cardiac cath labs in the district, did not include the cardiac cath lab at All Children's, found that a need for a total of four units exists in this district, and approved the CON for Metropolitan General. Medical Center protested and this hearing followed. Prior to the granting of this CON to Metropolitan General for a cardiac cath lab, correspondence between DHRS and Morton F. Plant Hospital culminated in DHRS advising Morton F. Plant that it could establish a second cardiac cath lab without going through the CON process if the total cost of the project did not exceed $695,285 (Exhibit 20). Pursuant to this "authorization" Morton F. Plant is proceeding to equip and operate a second cardiac cath lab. In awarding the CON to Metropolitan General, this "second" cardiac cath lab at Morton F. Plant was not counted by DHRS. Counting two labs at Morton F. Plant and not counting All Children's lab' leaves four adult cardiac cath labs in the district. DHRS' witnesses testified that an inspection of the facility at All Children's Hospital revealed only one cardiac cath lab. Because this hospital is a pediatric hospital, because the cardiac cath lab was "grandfathered in" without having to go through the CON process, and because the hospital administrators stated that priority would be given to children over adults in the cardiac cath lab, DHRS concluded not to count All Children's as having an adult cardiac cath lab. Metropolitan General Hospital is an osteopathic hospital. David Dietrick, D.O., is a cardiologist on the staff of Metropolitan General and of Medical Center. He presently performs 125-150 cardiac cath procedures per year and all are now performed at Medical Center Hospital. If a CON to operate a cardiac cath lab is granted to Metropolitan General, Dietrick will move all of the cardiac cath procedures he now does at Medical Center to Metropolitan General. The procedures performed by Dr. Dietrick at Medical Center represent about four percent of the hospital's 350 million gross revenues per year. Medical Center recently completed renovation of its cardiac cath lab and the installation of the latest state of the art equipment. This lab is located in the vicinity of the radiology department in which equipment is provided to do angiographic procedures. These procedures are similar to cardiac cath procedures but are done in the arms, legs, abdomen, etc., rather than in the heart. Because of the similarity of equipment and procedures and the heavy demand for cardiac cath procedures at Medical Center Hospital, the early appointments in the radiology lab are reserved for cardiac cath procedures and on average one such procedure per day is performed in the radiology lab. A total of 926 cardiac cath procedures were performed at Medical Center in 1984. If the current rate for 1985 of 90 per month continues throughout the year, a total of almost 1,100 cardiac cath procedures will be performed at Medical Center Hospital in calendar 1985.
The Issue The issues for determination in this case are whether the following statement was made by Respondent, AGENCY FOR HEALTH CARE ADMINISTRATION; whether the statement violates the provisions of Section 120.535, Florida Statutes; whether the statement constitutes a declaratory statement under Section 120.565, Florida Statutes; whether Petitioner, ALL CHILDREN'S HOSPITAL, INC., has standing to maintain this action; and whether Petitioner is entitled to attorney's fees and costs. The alleged agency statement which is at issue in this case is: The Agency for Health Care Administration takes the position that a shared service agreement may be modified, without prior approval of the Agency, as long as each party continues to contribute something to the program, and the shared service contract remains consistent with the provisions of Rule 59C-1.0085(4), Florida Administrative Code. In addition, the Agency takes the position that modifications to a shared service agreement do not require prior review and approval by the Agency.
Findings Of Fact Petitioner, ALL CHILDREN'S HOSPITAL, INC. (hereinafter ALL CHILDREN'S), is a medical facility located in St. Petersburg, Florida, which provides pediatric hospital care. Respondent, AGENCY FOR HEALTH CARE ADMINISTRATION (AHCA), is the agency of the State of Florida vested with statutory authority to issue, revoke or deny certificates of need in accordance with the statewide and district health plans. Intervenor, BAYFRONT MEDICAL CENTER (BAYFRONT), is an acute care hospital located in St. Petersburg, Florida. ALL CHILDREN'S and BAYFRONT are located adjacent to each other and are connected by a thirty-yard tunnel. In 1969, ALL CHILDREN'S began operation of a pediatric cardiac catheterization program. ALL CHILDREN'S pediatric cardiac catheterization program existed prior to the statutory requirement for a certificate of need to provide such service. Neither AHCA, nor its predecessor agency, Florida Department of Health and Rehabilitative Services, issued a certificate of need for ALL CHILDREN'S cardiac catheterization program. Since 1969, ALL CHILDREN'S has expended at least $500,000 on upgrading the cardiac catheterization program. Since 1970, ALL CHILDREN'S has operated a pediatric open heart surgery program. ALL CHILDREN'S open heart surgery program existed prior to the statutory requirement for issuance of a certificate of need to perform such service. Neither AHCA, nor its predecessor agency, Florida Department of Health and Rehabilitative Services (HRS), issued a certificate of need for ALL CHILDREN'S open heart surgery program. By letter dated May 13, 1974, HRS specifically advised ALL CHILDREN'S that modifications to the ALL CHILDREN'S open heart surgery program were not subject to agency approval. In May of 1973, ALL CHILDREN'S and BAYFRONT entered into a shared service agreement to provide adult cardiac catheterization services. In accordance with the shared service agreement, the actual catheterizations are performed in the physical plant of ALL CHILDREN'S and with equipment located on the ALL CHILDREN'S campus. BAYFRONT contributed to the adult cardiac catheterization shared service program by providing, inter alia, patients, management, medical personnel, and pre- and postoperative care. Beginning in 1975, BAYFRONT has also provided adult open heart surgery services through a joint program with ALL CHILDREN'S with the actual surgeries being performed at the physical plant on ALL CHILDREN'S campus. BAYFRONT contributed to the adult open heart surgery shared service by providing, inter alia, patients, management, medical personnel, and pre- and postoperative care. The shared service agreement between ALL CHILDREN'S and BAYFRONT to provide adult cardiac catheterization and open heart surgical services was in existence prior to the statutory requirement for a certificate of need to perform such services. Neither AHCA, nor its predecessor agency, Florida Department of health and Rehabilitative Services, issued a certificate of need to provide such services. The cardiac catheterization and open heart surgery program operated by ALL CHILDREN'S and BAYFRONT was "grandfathered" in because the program existed prior to the certificate of need requirement. Because no certificate of need was issued to ALL CHILDREN'S and BAYFRONT for its shared adult cardiac service program, no conditions have been imposed by AHCA on the operation of the program. "Conditions" placed on certificates of need are important predicates to agency approval and typically regulate specific issues relating to the operation of the program and the provision of the service such as access, location, and provision of the service to Medicaid recipients. The ALL CHILDREN'S and BAYFRONT cardiac shared services program is the only "grandfathered in" shared service arrangement in Florida, and is the only shared service arrangement operating without a certificate of need in Florida. An open heart surgery program is shared by Marion Community Hospital and Munroe Regional Medical Center in Ocala, Florida. The Marion/Munroe program operates pursuant to a certificate of need issued by AHCA. On December 22, 1995, AHCA published a notice of its intent to approve a certificate of need for a shared pediatric cardiac catheterization program between Baptist Hospital and University Medical Center in Duval County, Florida. BAYFRONT has applied for, but has not yet been issued, a certificate of need to perform cardiac catheterization services independent of the shared services arrangement with ALL CHILDREN'S. The agency receives hundreds of inquiries each year requesting information and guidance from health care providers regarding the certificate of need application process and other requirements of the certificate of need program. On more than one occasion ALL CHILDREN'S and BAYFRONT have inquired either orally or in letters to the agency regarding whether certain changes in their adult cardiac shared services program would require agency approval through a certificate of need application. In response to a 1990 written inquiry from ALL CHILDREN'S and BAYFRONT regarding modifications to the shared services agreement, the agency (then HRS) by letter dated September 18, 1990, stated in pertinent part that "the alterations you propose still constitute shared services." The agency response went on to state that it is therefore "...determined that they (the proposed changes) have not altered the original intent." On January 31, 1991, Rule 59C-1.0085(4), Florida Administrative Code, governing shared service arrangements in project-specific certificate of need applications was promulgated. The rule provides: Shared service arrangement: Any application for a project involving a shared service arrangement is subject to a batched review where the health service being proposed is not currently provided by any of the applicants or an expedited review where the health service being proposed is currently provided by one of the applicants. The following factors are considered when reviewing applications for shared services where none of the applicants are currently authorized to provide the service: Each applicant jointly applying for a new health service must be a party to a formal written legal agreement. Certificate of Need approval for the shared service will authorize the applicants to provide the new health service as specified in the original application. Certificate of Need approval for the shared service shall not be construed as entitling each applicant to independently offer the new health service. Authority for any party to offer the service exists only as long as the parties participate in the provision of the shared service. Any of the parties providing a shared service may seek to dissolve the arrangement. This action is subject to review as a termina- tion of service. If termination is approved by the agency, all parties to the original shared service give up their rights to provide the service. Parties seeking to provide the service independently in the future must submit applications in the next applicable review cycle and compete for the service with all other applicants. All applicable statutory and rule criteria are met. The following factors are considered when reviewing applications for shared services when one of the applicants has the service: A shared services contract occurs when two or more providers enter into a contractual arrangement to jointly offer an existing or approved health care service. A shared services contract must be written and legal in nature. These include legal partnerships, contractual agreements, recognition of the provision of a shared service by a governmental payor, or a similar documented arrangement. Each of the parties to the shared services contract must contribute something to the agreement including but not limited to facilities, equipment, patients, management or funding. For the duration of a shared services contract, none of the entities involved has the right or authority to offer the service in the absence of the contractual arrangement except the entity which originally was authorized to provide the service. A shared services contract is not transferable. New parties to the original agreement constitute a new contract and require a new Certificate of Need. A shared services contract may encom- pass any existing or approved health care service. The following items will be evaluated in reviewing shared services contracts: The demonstrated savings in capital equipment and related expenditures; The health system impact of sharing services, including effects on access and availability, continuity and quality of care; and, Other applicable statutory review criteria. Dissolution of a shared services contract is subject to review as a termination of service. If termination is approved, the entity(ies) authorized to provide the service prior to the contract retains the right to continue the service. All other parties to the contract who seek to provide the service in their own right must request the service as a new health service and are subject to full Certificate of Need review as a new health service. All statutory and rule criteria are met. By letter dated October 22, 1993, ALL CHILDREN'S and BAYFRONT inquired again of the agency regarding modifications of the adult inpatient cardiac shared service program. AHCA did not respond to the 1993 inquiry, and AHCA ultimately considered the inquiry withdrawn. By letter dated February 24, 1995, BAYFRONT made further inquiry of the agency, and requested agency confirmation of the following statement: The purpose of this letter is to confirm our understanding that the Agency for Health Care Administration ("Agency") takes the position that the shared services agreement between Bayfront and All Children's may be modified, without prior approval of the Agency, as long as each party continues to contribute something to the program, and that the shared services contract remains consistent with the provisions of Rule 59C-1.0085(4) F.A.C. By letter dated March 16, 1995, the agency made the following reply to BAYFRONT from which this proceeding arose: The purpose of this letter is to confirm your understanding of this agency's position with reference to the reviewability of a modifica- tion of the shared services agreement between Bayfront Medical Center and All Children's Hospital set forth in your February 24, 1995 letter.
The Issue The 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 THE PARTIES Petitioner, Englewood Community Hospital, Inc., d/b/a Englewood Community Hospital (Englewood), is a 100 bed general acute care hospital located in Englewood, Florida. Englewood is owned and operated by Columbia/HCA Health Care (Columbia), a for-profit corporation. Englewood operates an outpatient cardiac catheterization laboratory in a mobile unit located in the hospital parking lot. Patients and some physicians have been reluctant to use the mobile unit. Venice Hospital, Inc. (Venice) is a not-for-profit, community owned hospital with 342 beds. Venice operates an inpatient cardiac catheterization laboratory for invasive cardiac diagnostic procedures. Venice has unsuccessfully applied twice for a certificate of need (CON) to provide open heart surgery. The Sarasota County Public Hospital Board (Sarasota Hospital Board) is a publicly elected, nine member organization, which is responsible for the operation and oversight of Sarasota Memorial Hospital (Memorial). Memorial is a 952 bed hospital with services including inpatient cardiac catheterization and open heart surgery. Memorial is located in Sarasota, Florida. Englewood, Venice, and Memorial are all located in Sarasota County which is in the Agency for Health Care Administration Planning District 8. There are nine other inpatient cardiac catheterization programs in District 8. The existing inpatient cardiac catheterization programs are distributed as follows: Sarasota County (3); Charlotte County (3); Lee County (4); Collier County (1). Respondent, Agency for Health Care Administration (Agency), is the state agency which administers CON laws in Florida. The Agency published on February 4, 1994, a fixed need pool projection for inpatient cardiac catheterization procedures, showing a need for three additional programs in District 8 for the batch in which Englewood's application was reviewed. This calculation counted an earlier application of Englewood as approved. THE PROJECT Englewood proposes to establish an adult inpatient cardiac catheterization laboratory, placing inside the hospital facility the equipment which is currently located in its mobile cardiac catheterization laboratory. Englewood timely filed the letter of intent, CON application, and response to omissions for CON Number 7663. The Agency originally denied the application because a previous application by Englewood for inpatient cardiac catheterization services had been granted. The previous application proposed to keep the equipment in the mobile unit and build a walkway from the mobile unit to the hospital facility. Englewood withdrew its application for the previous application. The Agency has filed an official notice of changing its position to support Englewood's CON Application Number 7663. NEED FOR THE PROJECT IN RELATION TO THE LOCAL AND STATE HEALTH PLANS The 1993 Florida State Health Plan provides four allocation preferences relevant to the review of the certificate of need applications to establish adult inpatient cardiac catheterization programs. Preference shall be given to an applicant who proposes the establishment of both cardiac catheterization services and open heart surgical services provided that a need for open heart surgery is indicated. Preference shall be given to an applicant proposing to establish a new cardiac catheterization program if the applicant can demonstrate that patients are currently seeking cardiac catheterization services outside the respective county or HRS district. Preference shall be given to hospitals with a history of providing a disproportionate share of charity care and Medicaid patient days in the respective acute care subdistrict. Qualifying hospitals shall meet Medicaid disproportionate share criteria. Preference shall be given to an applicant who agrees to provide services to all patients regardless of their ability to pay. Englewood has projected that charity and indigent care for cardiac catheterizations at less than 1.0 percent of total revenue. Given Englewood's past history, 1.0 percent of total revenue is a gross overstatement. At the final hearing, Englewood stated that it would not agree to condition the CON on Englewood providing charity and indigent care equal to 1.0 percent of the total revenue. The Agency's 1992 Hospital Financial Data showed that Englewood's reported charity and uncompensated care was approximately .09 percent and .06 percent of total revenues for fiscal years 1992 and 1993, respectively. Englewood has agreed to provide adult cardiac catheterization services to anyone in need without ability to pay; thus, Englewood is entitled to a partial preference for providing services to patients regardless of their ability to pay. Englewood has not demonstrated that it should receive a preference for the other three factors. The 1993 District 8 Allocation Factors Report addresses the following preferences relevant to the review of certificate of need applications to establish adult inpatient cardiac catheterization services. Preference shall be given to applicat- ions for new or expanded cardiac catheterization services that clearly indicate the impact of the proposed services on other health providers offering similar services in the same area. Preference shall be given to applicants which agree to provide services to all patients, regardless of their ability to pay. Englewood has agreed to provide services to all patients without ability to pay and is entitled to a partial preference for the second factor in the district plan. AVAILABILITY, QUALITY OF CARE, EFFICIENCY, APPROPRIATENESS, ACCESSIBILITY, EXTENT OF UTILIZATION, AND ADEQUACY OF LIKE EXISTING HEALTH CARE SERVICES IN THE SERVICE DISTRICT. Englewood's proposed inpatient cardiac catheterization program would not adversely affect the quality of care provided by the cardiac catheterization programs at Sarasota Memorial Hospital and Venice Hospital. Memorial has a comprehensive cardiac catheterization program. It operates three dedicated cardiac catheterization laboratories. The Memorial laboratories provide diagnostic catheterizations as well as all available therapeutic catheterization techniques. Prior to performing a diagnostic catheterization, cardiologists are able to determine with a high degree of confidence and reliability whether a patient with cardiovascular disease will require, during a particular hospitalization, therapeutic intervention, e.g. angioplasty or open heart surgery. Cardiologists rely on an array of sophisticated non-invasive diagnostic tests in making such determinations. When a cardiologist determines that a patient is not sufficiently ill to require therapeutic intervention, the patient will customarily receive a diagnostic catheterization on an outpatient basis. During the last several years, there has been a shift in Sarasota County from inpatient catheterization to outpatient catheterization. In fact, the Medicare program requires that Medicare patients receive outpatient catheterization, unless a patient's medical condition requires inpatient care. Normally only patients with unstable medical conditions receive inpatient cardiac catheterization. That group of patients is likely to require therapeutic intervention during the same hospital admission to resolve their medical problems. Between 80 to 90 percent of patients who receive inpatient cardiac catheterization receive therapeutic intervention during the same hospital admission. If an unstable patient presents at a facility which lacks the capability to perform therapeutic intervention, it is in the best medical practice to stabilize the patient and then transfer the patient to a facility which can perform both the diagnostic catheterization and the therapeutic intervention. If the unstable patient requires intervention in the form of angioplasty, it is in the patient's best interest to receive both the diagnostic and therapeutic procedures during a single visit to the cardiac catheterization laboratory. The provision of both procedures in one visit enhances comfort, safety, and efficiency. It is Memorial's practice to provide both types of services in one visit to the catheterization laboratory when possible. Adult inpatient cardiac catheterization programs are available within a maximum automobile travel time of one hour, under average travel conditions, for at least 90 percent of District 8's population. The Sarasota Hospital Board's policy is to provide cardiac catheterization services at Memorial to all residents without regard to their ability to pay. In its most recently completed fiscal year at the time of the final hearing, the Sarasota Hospital Board provided $268,000 of charity care and $720,000 of Medicaid care, related to cardiac catheterization patients. In its application, Englewood stated: "There is no evidence to indicate that the efficiency, appropriateness and adequacy of adult inpatient cardiac catheterizations services in District VIII are less than adequate." Each of the seven hospitals in Sarasota and Charlotte Counties, with the exception of Englewood, operate an adult inpatient cardiac catheterization laboratory. There is excess capacity at the existing cardiac laboratories in Sarasota and Charlotte Counties. A single cardiac catheterization laboratory can safely perform approximately 1500 cases annually. Three of the existing cardiac catheterization laboratories in Sarasota and Charlotte Counties operate a volume between 300-400 cases annually: Fawcett, St. Joseph's, and Doctors'. Fawcett is owned and operated by Columbia. Venice operates the existing laboratory closest to Englewood. Venice's catheterization laboratory has the capacity to perform 1,500 procedures annually. Over the last five years, the number of cases has grown from 500 to approximately 800, where it has leveled off, leaving almost half the laboratory's capacity unused. Venice's catheterization laboratory is available and accessible to Englewood residents. The catheterization laboratory at Venice has been serving Englewood patients and will continue to do so. Venice currently serves a significant share of the market in three of the six zip codes identified by Englewood as its service area. There is adequate capacity at the existing laboratories in Charlotte and Sarasota Counties to treat the existing volume of cardiac catheterization patients, as well as the volume that Englewood proposes to serve. Patients in the Englewood area will not experience serious problems in obtaining inpatient cardiac catheterization services in the absence of Englewood's proposed program. Under these circumstances it is more appropriate and less expensive to the health care system as a whole to fully utilize existing catheterization laboratories. ABILITY OF APPLICANT TO PROVIDE QUALITY CARE AND APPLICANT'S RECORD OF PROVIDING QUALITY OF CARE Englewood has a record of providing appropriate quality of care to its patients. Englewood is fully accredited by the Joint Commission on Accreditation of Health Care Organizations. Englewood submitted a written protocol for transfer of emergency patients to a hospital providing open heart surgery within 30 minutes travel time by emergency vehicle under average travel conditions as part of its application. Englewood's cardiac catheterization program policies and procedures manual is appropriate. The equipment which Englewood proposes for its inpatient cardiac catheterization laboratory was purchased from Southwest Florida Regional Medical Center in Fort Myers, Florida, where it had been used successfully for approximately one year. The equipment is currently being used in Englewood's outpatient cardiac catheterization laboratory. The equipment uses analog imaging, and includes video playback to allow instant review. Digital imaging is newer technology than analog imaging and allows the image of the cardiac areas to be magnified, processed and measured while the physician is performing the catheterization. Regardless whether analog or digital imaging is used the physician will rely on a 35mm film which is made during the catheterization procedure to make the diagnosis. The digital imaging equipment is more expensive than the analog imaging equipment. Although, digital imaging is nice to have, it is not necessary to provide quality cardiac catheterization services. Englewood has plans to move the outpatient cardiac catheterization laboratory from the mobile unit to inside the hospital facilities. As of the date of the final hearing, Englewood had not begun construction of this project to relocate the outpatient laboratory. The cost of renovating space for the cardiac catheterization laboratory and moving the equipment inside is estimated to be $400,000. Two or three people are required to assist the physician perform an inpatient cardiac catheterization. One person circulates, moving outside the sterile area surrounding the procedure table to get medications, log information and generally oversee and monitor the patient's condition. The staff should include cardiovascular technicians, who may be but do not have to be nurses. Englewood proposes the following staffing and salary: FTE'S YEAR 1 HOURLY RATE SALARIES FTE'S YEAR 2 HOURLY RATE SALARIES RNS 3.0 19.92 118,061 5.0 19.68 204,672 Nurse Manager 1.0 0 1.0 0 Cath Lab Tech 2.0 14.43 60,029 2.0 15.01 62,442 Subtotal 6.0 178,090 8.0 267,114 Lab Director 1.0 0 1.0 0 Subtotal 1.0 0 1.0 0 Unit Secretary 0.5 7.96 8,278 1.0 8.28 17,222 Subtotal 0.5 8,278 1.0 TOTAL 7.5 186,368 10.0 284,336 The radiology technician's job is to assist with quality assurance, help maintain and oversee the equipment, and monitor safety. The radiology technician does not have to be present in the laboratory during procedures. Englewood already employs a radiology technician in its radiology department. This technician has had training for cardiac catheterization laboratory duties. Dr. DeGuia currently performs the duties of a medical director and will continue to do so if the inpatient laboratory is established. The nurse manager who is currently employed as the nursing manager for the intensive care, progressive care and outpatient will be utilized in the inpatient laboratory as well. The staff will be cross trained in each position's functions. Englewood will have the assistance of Fawcett Memorial Hospital and Southwest Heart Institute in staffing and training when needed. Englewood's proposed staffing will provide an adequate number of properly trained personnel. The salaries Englewood proposes to pay its staff are reasonable and competitive. UTILIZATION In its application, Englewood projects that the first year of operation of the inpatient laboratory, there will be a total of 236 cardiac catheterizations performed consisting of 132.9 inpatients and 103.1 outpatients. In the second year of operation, Englewood projects the total cardiac catheterizations to be 345 with 194.3 being inpatient and 150.7 being outpatient. Englewood has included six specific zip code in its service area. Based on Englewood's experience with MDC 05 diagnoses1, Englewood's expert witness Scott Hopes opined that Englewood's market share for diagnostic cardiac catheterization services would be as follows: ZIPCODE MARKET SHARE 33947 53.1 percent 33981 43.8 percent 34223 50 percent 34224 65.2 percent 34287 6.4 percent 34293 2.0 percent In order to project inpatient utilization of the Englewood laboratory, it is appropriate to rely upon the historical pool of patients in the Englewood service area who have received inpatient catheterization during a hospital admission, without receiving angioplasty or open heart surgery during that admission. Englewood proposes to serve primarily "low risk" inpatients who are not expected to require intervention during that hospital admission. For the period July 1991 through June 1992, there were 490 inpatient cardiac catheterizations performed on patients residing in Englewood's service area. For the period July 1992 through June 1993, there were 479 inpatient cardiac catheterizations performed on patients in the same service area. In its application, Englewood applied an aggregate market share to the total number of inpatient cardiac catheterizations performed on the residents of the proposed service area. This method distorts the projected number of inpatient procedures which could be performed by Englewood because of the variability of the market shares in each zip code. Based on the method employed in Englewood's application, Englewood would have performed 145 and 160 inpatient cardiac catheterizations in the 1991-1992 and 1992-1993 periods, respectively. When one applies the actual market share by zip code to the actual number of procedures performed on patients from each zip code, a more accurate projection based on historical data can be made as shown in the chart below. ZIP CODE MARKET SHARE 1991-1992 CATHS ENGLEWOOD SHARE 1992-1993 CATHS ENGLEWOOD SHARE 33947 53.1 percent 21 11 18 10 33981 43.8 percent 35 15 29 12 34223 50.0 percent 68 34 72 36 34224 65.2 percent 42 27 34 22 34287 6.4 percent 145 9 146 9 34293 2.0 percent 179 4 180 4 100 93 Englewood performed 50 outpatient cardiac catheterizations in 1994. This low utilization is based on the physical location of the outpatient facility in the hospital parking lot and the lack of marketing. Fifty procedures is not a representative number of the outpatient procedures which Englewood could expect if the laboratory was located inside the hospital and the program was marketed effectively. The application states that in 1992 the percentage of inpatient cardiac catheterization procedures of the total cardiac catheterizations performed in hospitals with an inpatient program in District 8 was 56.33 percent.2 Thus based on Englewood's market share by zip code, the total amount of cardiac catheterizations which Englewood could have expected in 1991-1992 and 1992-1993 would have been 177 and 165, respectively. In its application, Englewood uses three different methodologies to project the number of cardiac catheterizations Englewood could expect during its first and second year of operation. Method 1 (pgs. 28 and 32 of the Response to Omissions) subtracts the amount of catheterizations Englewood would have expected in 1991-1992 from the amount it would have expected in 1992-1993 and increases the projection each year by this amount to project the number of catheterizations for the first two years of operation. Using Method 1 would result in a decrease in the number of cardiac catheterizations each year because the number of cardiac catheterizations declined by 12 procedures from 1991-1992 to 1992-1993. Method 2 (pgs. 30 & 32 of the Response to Omissions) employs an annual increase of 8 percent. This increase is the lowest annual percentage increase of cardiac catheterizations in District 8 from October 1987 to September 1993. Using this method would result in a projection of 208 procedures for 1996 and 224 procedures for 1997. Method 3 (pgs. 31 & 32 of the Response to Omissions) uses a 12.78 percent annual increase based on the average annual percentage increase of cardiac catheterizations in District 8 from October 1987 to September 1993. Using this method would result in a projection of 237 procedures for 1996 and 267 procedures for 1997. Using any of the three methods to project the number of procedures to be performed in the second year, Englewood will not perform a minimum of 300 catheterization procedures by the end of the second year of operation of the inpatient laboratory. The Intermedic Health Center is a large multi-specialty group with a five cardiologist heart group based in Port Charlotte. Intermedic has offices in Englewood. The heart group was to begin regular office schedules in Englewood in February, 1994. The group plans to recruit one or two additional physicians to staff the office. At the time of final hearing the physicians of Intermedic's heart group performed cardiac catheterizations at hospitals other than Petitioner's because some of the cases were inpatient and some of their outpatients were uncomfortable with a portable laboratory. For 1995, Intermedic projected 90 to 100 cases; thereby resulting in some increase in business with Englewood relating to cardiac catheterizations. The population in the Englewood service area consists of a large number of residents who are 65 or older. This segment of the population is more likely to have a high demand for cardiac catheterization than a younger segment of the population. The 65 or older category is a fast growing part of the population in the Englewood service area. IMMEDIATE AND LONG-TERM FINANCIAL FEASIBILITY OF THE PROGRAM Englewood has the financial ability to fund the construction of the project. The pro forma statement contained in the CON application is flawed. Englewood has double counted a profit layer that it is already enjoying from inpatients that it transfers to an inpatient catheterization provider. Englewood does not account for the contribution margin attaching to Englewood's inpatient portion of their care before transfer. In projecting its revenues from outpatient utilization, Englewood has included in its figures outpatient catheterizations it would perform whether or not its application is approved rather than basing their pro forma on the incremental difference attributable to approval of an inpatient program. The projected revenues contained in the pro forma are suspect. First, the proposed procedure charges shown on the outpatient service revenues page of Englewood's application are high. It is unusual to find outpatient procedure charges that are higher than the inpatient procedure charges. In Table 7 in the application, Englewood asserts that patient days for Medicaid and private pay will net the highest revenues per patient day. Typically those two payor sources are at the bottom of the list of revenue producers than the top. Englewood's pro forma understates revenue deductions by assuming Medicaid and private pay reimbursement that is unrealistic and by failing to take into account anticipated growth in managed care. Englewood's financial expert agreed that managed care will see significant growth over the next five years. Because the pro forma overstates net revenue, it understates revenue deductions. Englewood has understated expenses. The marginal cost per case is understated, relocation expenses are understated, and the nurse manager's time is not allocated to the expense side of the pro forma. The State Agency Action Report also calls into question the adequacy of the expenses in Englewood's pro forma.3 Based on the flawed pro forma, Englewood has not demonstrated that the project is financially feasible. OTHER STATUTORY CRITERIA The costs and methods of the proposed construction, including consideration of the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction are reasonable. The proposed design of Englewood's inpatient cardiac catheterization laboratory is reasonable and appropriate. Englewood submitted the list of capital projects required by Section 408.037(2)(a) and (b), Florida Statutes (1993); the audited financial statements required by Section 408.037(3), Florida Statutes (1993); and the resolution required by Section 408.037(4), Florida Statutes (1993). I. STANDING OF VENICE AND MEMORIAL If Englewood were to establish an inpatient cardiac catheterization laboratory, both Venice and Memorial would have patients diverted from their programs to Englewood's. Based on the projections contained in Englewood's application, Venice would lose 82 catheterization procedures in the second year of operation of Englewood's proposed program, resulting in a net profit lose of $234,000. Although Englewood's application projections are inaccurate, the application does contemplate that Venice would lose procedures as a result of the implementation of Englewood's proposed program. In order for Englewood to reach its projected volume of procedures, approximately 40 to 50 procedures would have to be redirected annually from Memorial to Englewood. There is also a strong potential that Memorial would lose angioplasty and open heart surgery cases as well. Southwest Florida Regional Medical Center (SWFRMC), in Fort Myers, is owned by Columbia. It is a tertiary cardiovascular referral center for other Columbia hospitals in Southwest Florida. The development of an inpatient cardiac catheterization laboratory at Englewood would assist in the development of referral patterns from the Englewood area to SWFRMC for angioplasty and open heart surgery. It would be in Columbia's interest to encourage utilization of SWFRMC's cardiovascular services by patients residing in the Southwest Florida area.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying the application of Englewood Community Hospital, Inc., d/b/a Englewood Community Hospital's for Certificate of Need 7663 to establish an adult inpatient cardiac catheterization program. DONE AND ENTERED this 18th day of December, 1995, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of December, 1995.
Findings Of Fact The Petitioner, Medical Center Hospital, is a 208 bed not-for-profit hospital located in Charlotte County, Florida. Its primary service area is Charlotte County. It has secondary service areas including DeSoto County and the peripheral areas of Lee and Sarasota Counties, which adjoin Charlotte County. It has filed an application for a Certificate of Need authorizing it to establish a cardiac catheterization (cardiac cath) lab at its facility in Punta Gorda, Florida. After review by HRS staff personnel, the Department initially elected to deny the Certificate of Need application. HRS District 8 includes Collier, DeSoto, Lee, Sarasota, Hendry and Charlotte Counties. Charlotte County is in the approximate geographic center of that district and is the third most populous county in the district. There are 622 acute care beds in Charlotte County divided among three acute care hospitals. There are no cath labs in Charlotte County and in all of District 8, there are only three: (1) Memorial of Sarasota in Sarasota County, (2) Lee Memorial in Lee County and (3) Ft. Myers Community Hospital in Lee County. Charlotte County has a significant population of elderly citizens. This elderly portion of the population is that portion composed of persons of the age of 60 years or older. The population growth of the county and the surrounding areas has been very rapid and continues to be. Charlotte County has historically grown at a rate faster than that of the State of Florida. The county has the largest percentage of elderly persons of any county population in the United States, with approximately 34 percent of its citizens being in the elderly category. Statistically, this elderly age group has the highest degree of damage to coronary arteries and major vessels of the heart. The population of persons over 45 years of age is the broader age group of candidates for cardiac catheterization, comprising approximately 55 percent of the total population of the county. Approximately 40 percent of Petitioner's hospital patient volume, based upon its total admissions, consists of cardiac patients. This percentage is actually higher when computed in terms of patient days of care. Significantly, Medicare eligible patients, the more elderly patients, constitute the predominant number of Petitioner's hospital admissions. The 1981 and 1982 Medicare patient days were 67.16 percent of the Petitioner's total patient days. Patients in the primary and secondary service areas of the Petitioner's hospital, as well as the other two acute care hospitals in Charlotte County, who require cardiac cath services must now be referred out of that county. This referral process, with attendant delays in providing sometimes critical emergency care to patients, disruption of their living routines and those of their families attending them, causes a significant adverse impact on patients in terms of costs, personal health risks, stress and overall adverse effects on the quality of patient care. The economic costs of this referral process are significantly higher than if a cardiac cath facility were located in Charlotte County, especially in terms of the duplicated services and duplicated expenses involved in care for such cardiac patients since many of the aspects of care provided by the Petitioner as the initial admitting facility are duplicated when the patient arrives at the referral facility. A referral for cardiac cath to another physician and hospital involves transfer of the patient, if the patient is already an inpatient at the Petitioner's facility or one of the other two Charlotte County hospitals. The cost of an ambulance or helicopter transfer is significant and must be borne by the patient or the patient's reimbursement provider. The patient must be admitted to the referral facility as an inpatient. This leads to an additional facility charge, not to mention additionalmental and physical stress, on the patient. In turn, another physician at the referral facility must admit the patient to that second facility. He, in turn, will charge a fee. Further, additional laboratory tests and procedures are performed at the referral facility as part of the standard patient "work-up." These include all manner of blood examinations and tests and analyses, chest x-rays, EKG's and the like. Fees are charged for all of these tests and procedures which, in the case of an inpatient requiring cardiac cath, would have already been performed at Use referring facility. Added to this duplication of costs is the stress occasioned the cardiac patient by simply having to go to another hospital at a distance from his home, to a new doctor, to have that new doctor with whom he is unfamiliar, perform a procedure that the patient is apprehensive about. Additional real-life, practical problems involving equipment breakdown can result in additional inpatient time and expense at can result in additional impatient time and expense at the referral facility, since, in the present scenario, that is the only facility in the area with a cardiac cath lab and appropriate equipment. The transporting of a high risk patient, who should not be subjected to the transfer process due to the stress an risk it poses, but must be because the cath procedure cannot be legally performed by the referring facility (Petitioner), presents a clinically significant and often unacceptable risk of death for such patients. Without the cardiac cath lab capability at Petitioner's facility, optimal care to cardiac patients cannot be provided by the physicians and facilities attempting to treat such patients in the Charlotte County area. The minimum service volume requirement (as delineated in the cardiac cath rule at paragraph (i)(4)) requires that a minimum of 300 cardiac cath procedures be performed annually in a cardiac cath lab within three years following the initiation of those services. The number of cardiac cath procedures generated from the Charlotte County area is and has been significantly high for a long period of time. Dr. Rosenfield established that from his practice alone in Charlotte County, 175 to 160 cases have been referred for cardiac cath services since January, 1983. Based on the practices of other cardiologists and physicians in the area, Dr. Rosenfield was able to establish that 400 to 500 cardiac cath procedures a year could be performed in Petitioner's lab, if authorized. In addition to the actual patients referred out of the area, for instance to Lee County, for cardiac cath services, are those patients who refuse referrals. In these instances, patients, although recommended to undergo a cath procedure, refuse to because they are afraid or otherwise unwilling to go to an unfamiliar hospital outside of their county or to an unknown physician. Dr. Rosenfield had approximately 50 to 100 cases in his practice, in 1984, he would have referred to a cardiac cath facility in Lee County or other areas, but his patients refused to accept that arrangement. In short, it was established that the Petitioner can meet the minimum service volume requirement embodied in the so-called "cardiac cath rule." The frequency of cardiac caths being performed in District 8 facilities is increasing in an unbroken trend. Catheterizations are typically performed earlier in a patient's illness and hospital stay than in former times in order to earlier and better diagnose the patient's condition. This results in a higher quality of care for the cardiac patient and lessening of the overall cost of that patient's care both by reducing the number of hospital days and avoidance of unnecessary, sometimes duplicative diagnostic tests. There is a clear national and District 8 trend in cardiac medical practice which consists of performing more therapeutic cardiac caths as a useful tool of preventive cardiac medicine. Actual recent historical utilization and demand for cardiac cath service in District 8 has not been consistent with the prediction embodied in the calculations provided for in Rule 10-5.11(15)(1), Florida Administrative Code. That rule seeks to predict future cardiac cath procedures required in a future year (here 1986) by multiplying the 1981 actual cardiac cath use rate by the 1986 projected population in the District. The resultant figure is then divided by 600 to yield the number of cardiac caths needed as determined by the rule methodology. In the instant situation however, that abstract mathematical calculation projects that 1,833 procedures would be performed in 1986, yielding "need" for three cardiac cath labs. However, in District 8, in 1983, the actual cardiac cath procedures performed, without consideration of the six months of cardiac cath procedures performed by the Lee Memorial Lab in 1983 (annualized), were actually 2,089 procedures, significantly in excess of the need calculation the rule demonstrates for the year 1986, three years later. Utilizing the Department's rule-based mathematical calculation of need, it would be 1990 before enough procedures are projected to warrant a fourth cardiac cath lab in the District. In 1990, 2,128 procedures would be projected by the rule. Actual 1983 procedures, again only including six months of operation of the Lee Memorial Lab without annualizing that six month's experience, fall only 39 procedures short of what the formula shows to be the 1990 "need." If Lee Memorial's 1983 procedures were annualized, the resultant number of District 8 procedures in 1983 is 2,255, more than the Respondent's projected 1990 "need." Thus, the situation established for District 8 in Charlotte County is clearly a "not normal" factual situation, in that the Department's rule methodology shows for 1986, the "horizon" year at issue, and indeed even for 1990, that less procedures will be "needed" than the Petitioner established have already been performed in a single year, i.e. 1983. Thus, due in part to the high percentage of elderly patients who have more frequent need of cardiac cath procedures in the Charlotte County and District 8 population, the need calculation provided for in the above rule clearly does not mesh with nor address what the actual need is already. It is also significant to note that the actual numbers of cardiac cath procedures performed in District 8 cath labs in 1981, as compared to the numbers of unverified procedures reported to HRS, clearly result in a showing of a need for a fourth cath lab consistent with the need determination formula. Six- hundred thirty-three cardiac cath procedures were performed in 1981 at the Ft. Myers Community Hospital and Memorial Hospital of Sarasota. These procedures were "right heart" cath procedures which were included within complete Catheterizations or other Catheterizations procedures, which were counted as one procedure for reporting to HRS, but which in actuality involve separate procedures and billing. The addition of 633 procedures to the 1,482 procedures reported to and employed by HRS in its calculations herein results in a total of 2,115 actual 1981 procedures. Thus, the revised 1981 use rate results in a total of 2,511 projected procedures, for a 1986 horizon year need of 4.2 cath labs. The 1984 real utilization rate reveals in turn, as projected through the year end of 1984, an immediate need in District 8. This is predicated on the Department's acknowledged policy of granting one cath lab for each 600 procedures. If the 2,274 procedures actually experienced in 1984 in District 8 is divided by 600 there results a need of 3.79, or four, cath labs for 1984 based upon the 1984 actual utilization rates. It is also noteworthy that if 1983 actual use rates are utilized, the resulting computation reveals the need for four cath labs for the year 1986. The additional basis upon which the Respondent, HRS opposes the grant of the application is the feared inability of the Petitioner to meet the requirement of Rule 10-5.11(15)(i)5.a. which requires that cardiac cath labs in a facility not performing open heart surgery must submit with their CON applications a written referral agreement with a facility providing open heart surgery within 30 minutes travel time by emergency vehicle under average travel conditions. The Petitioner's application however, (Exhibit 5 in evidence) shows that indeed written referral agreements for open heart surgery between the Petitioner and Memorial Hospital of Sarasota and Ft. Myers Community Hospital have been executed. Ft. Myers Community Hospital is accessible from the Petitioner's location in 20 to 25 minutes travel time by an emergency vehicle, with normal driving time of 30 to 35 minutes. In the context of financial feasibility and control or economy in health care costs to the public, it is established that the Petitioner presently has space available in its existing facility and substantially all of the equipment necessary to perform cardiac catheterization procedures. The cost of its proposed lab will be a maximum of $87,000. That cost includes purchase of new equipment and modifications to the existing examination table.1 It is significant that the cost of this project is substantially less than that which existing health care providers may spend without undergoing certificate of need review, as long as they do not seek to offer a new service. The cost of the project is minimal in relation to the benefits to be derived by patients of the health care service area by institution of the additional cardiac cath service represented by this application. In a similar vein, no issue has been raised concerning the financial feasibility of the Petitioners installation and operation of the proposed cardiac cath lab service.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record and the candor and demeanor of the witnesses, as well as the pleadings and arguments of the parties, it is, therefore RECOMMENDED: That a Certificate of Need authorizing the installation and operation of a cardiac catheterization laboratory for its facility at Punta Gorda, Charlotte County, Florida be issued to Adventist Health Systems/Sunbelt, d/b/a Medical Center Hospital. DONE and ENTERED this 9th day of May, 1985 in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of May, 1985. COPIES FURNISHED: William B. Wiley, Esquire 666 Lewis State Bank Building Tallahassee, Florida 32301 Gary L. Wilkins, Esquire 590 Harbor Blvd., Northwest Suite 204 Port Charlotte, Florida 33952 John M. Carson, Esquire Department of Health and Rehabilitative Services 1317 Winewood Blvd. Building 2, Room 407 Tallahassee, Florida 32301 E. G. Boone, Esquire and Robert T. Klingbeil, Esquire Post Office Box 1596 Venice, Florida 34284 David H. Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
