Findings Of Fact Fawcett's Application. Petitioner, Fawcett, is a 254 bed acute care hospital located in Port Charlotte, Charlotte County, Florida. Its primary service area is Charlotte and DeSoto Counties, Florida. Fawcett's secondary service area includes parts of Sarasota and Lee Counties, and all of Glades County. Fawcett timely filed an application for a CON to establish an adult cardiac catheterization lab at its facility in Port Charlotte, Florida, on October 15, 1985. Fawcett's application was denied by Respondent, HRS, on February 28, 1986. Fawcett's proposed cardiac cath lab would be located in the special procedures suite at Fawcett, specifically, special procedures Room NO. 2. It is the intention of Fawcett that the cath lab operate in conjunction with the special procedures laboratory as it exists currently at Fawcett. The cardiac cath lab will have an open staff policy, meaning that any physician meeting the training and experience criteria under the medical staff bylaws will be able to participate in the lab. Regular service hours will be from 7:00 a.m. to 4:30 p.m., Monday through Friday. In addition to this, the lab will be capable of providing emergency care twenty-four hours a day, seven days a week. Cardiac cath services will be available to all persons regardless of race, ethnic minority, sex, handicap, and inability to pay who, by physician's order, are in need of a cardiac cath. Fawcett proposes to open the cardiac cath lab as soon as is practicable, setting a target date to open no later than July 1, 1987. Need. Rule 10-5.011(1)(e)12, Florida Administrative Code (1986), states that need for a cardiac cath lab is to be determined by computing the projected number of cardiac cath procedures in the service area, using a mathematical formula. "Service area" is defined as the entire HRS district, in this case District 8. Utilizing this formula, the actual use rate in the service area for the 12-month period beginning 14 months prior to the letter of intent deadline for the batching cycle is multiplied by the projected population in Year "X", the year in which the proposed cardiac cath lab would begin service, to give a projected number of cath procedures for Year "X". This projected number of cath procedures is then divided by 600 (the average number of caths required by the rule to be performed per year by existing and approved labs) to yield the number of labs needed in the District. Utilizing this formula, a mathematical need is not shown for District 8. Indeed, the rule methodology shows a need for only five cardiac cath labs in District 8 in July, 1987, and there already are seven existing and approved labs in District 8, not counting Fawcett's proposed lab. Rule 10-5.011(1)(e)6, Florida Administrative Code (1986), states that "[t]he Department will not normally approve applications for new cardiac cath laboratories in any service area unless additional need is indicated." (Emphasis added.) Mortality Rate. Charlotte County has a significantly higher mortality or death rate per 100,000 persons than either the State of Florida or the United States as a whole. Charlotte County's mortality rate is high even when compared to the rest of District 8. The mortality rate from cardiovascular disease in District $ is likewise high. The mortality rate from heart disease in District 8 is 453.2 per 100,000 deaths, with the rate for Florida being 389.4 per 100,000 deaths, and the United States 325 per 100,000 deaths. In contrast to the death rate in other District 8 counties due to cardiovascular disease, Charlotte County's rate of mortalities due to cardiac disease is 619 per 100,000 deaths. Cardiac cath has become the standard treatment modality for dealing with serious cardiovascular disease. Cardiac cath has the potential to greatly decrease deaths due to cardiovascular disease in Charlotte County, where there is a large patient population in Charlotte County who could benefit from this service. Population Growth. Charlotte County has a very high rate of population growth in relation to Florida and the rest of the United States. The rate of growth between 1986 and 1991 will be approximately 23 percent, compared to Florida's overall growth rate of approximately 11 percent and the United States' growth rate of 3 percent. Charlotte County ranks ninth in the United States in terms of population growth from 1980 to 1985 for counties with populations of 50,000 or more. A large proportion of the overall 23 percent growth rate is comprised of the elderly population, aged 65 and over. The 65 and over population is expected to grow by 31 percent between 1986 and 1991 in Charlotte County. This is compared to a projected 18 percent growth of this group in Florida, and a projected 11 percent growth in the United States as a whole for the same time period. Elderly Population. Charlotte County has a population which is heavily weighted toward the elderly when compared to Florida and the United States. An estimated 36.5 percent of the Charlotte County population is aged 65 and over, compared to 19 percent for the State of Florida and 12 percent in the United States as a whole. Fawcett is dependent on the elderly population for its patients, including in the area of cardiac-related services. The majority of cardiac cath patients in Charlotte County are taken from the 65 and over population. Upward Trend in Number of Cardiac Caths. Cardiac cath is the process of taking a sterile plastic tube and placing it into the left or right section of the heart. This allows the cardiologists to perform a combined study, obtaining pressures from the right and left ventricles, as well as injecting dye into the heart's various arteries to take pictures. These two combined studies allow the physician to make as accurate a diagnosis as possible. Cardiac cath has become very important in recent years, so much so that hospitals with advanced cardiac programs which are willing to make the commitment should have cardiac cath to ensure state of the art quality care to the patients. Cardiac cath has become a routine procedure in the treatment of heart- related disorders. Patients with a myocardial infarction (development of lack of blood flow to the heart muscle) are now immediately cathed and diagnosed. This is important in light of the major advances recently made in angioplasty, a non-surgical method of treating blocked cardiac vessels. The current treatment modality is to get information on the problem immediately and reopen the blood vessel that is obstructed to allow blood to get in the heart muscle, thereby avoiding further damage to the heart muscle. There has been a consistent trend upwards in the rate of cardiac caths performed in District 8 relative to its population. The actual use rate for cardiac caths has increased, and the 1986 use rate is higher than the use rate utilized by the rule methodology. In other words, the use rate called for in the rule understates what is actually happening in 1986. The use rate increased approximately 40 percent between 1985 and 1986. The Charlotte County area has experienced an increase in the rate of growth of cardiac caths overall. The evidence reveals an upward trend in utilization of cardiac cath on a national scale. Cardiac cath probably will become a more and more prevalent treatment modality and therefore should be more readily available, with wider application of technological advances, in the future. As more caths are done, the procedure becomes safer and more accessible to people. Medical science has now made it possible for 20 to 30 percent of all persons who suffer heart attacks to be treated without major cardiac surgery, i.e., via a technique called angioplasty, whereby an occlusion or blockage is decreased by the expansion of a balloon in the diseased vessel. Cardiac cath is a necessary step in identifying the need for the angioplasty procedure. Fawcett's Degree of Reliance on the Elderly Population and Its Cardiac Programs. Fawcett is unusual in its degree of reliance on the elderly population. Over two-thirds of all Fawcett's patients are Medicare patients (over age 65), an unusually high number of elderly patients. Approximately 20 percent of Fawcett's 1985 admissions were cardiac disease related. These patients constitute a large percentage of Fawcett's patient revenues. In an area like Port Charlotte, which is so heavily populated with the elderly, it is desirable from the standpoint of patient care to have needed cardiac cath services available to patients at their primary care hospital. Fawcett is the primary care hospital for a large portion of the Charlotte County population. New Service at Minimal Cost. Fawcett proposes to establish its cardiac cath lab at a cost of roughly $90,700. This is a relatively small capital expenditure to add a new cardiac cath service to a facility. Many hospitals must make expenditures of as much as $1,000,000 to add a cardiac cath lab to their facilities. Fawcett already has the bed capacity to handle any additional inpatients which may result from the addition of a cath lab. No recruiting of physicians or the cost associated with such recruiting would be involved. Fawcett currently has 11 cardiologists on staff. Additionally, the rule requires that a certified or board eligible cardiologist be director of the cardiac cath lab, and Fawcett has several certified cardiologists on staff who qualify for this position. Medical Center And Other District 8 Providers. Intervenor, Medical Center Hospital (Medical Center) is a 208-bed facility. 52 beds are used for substance abuse psychiatric service, 156 are acute care beds with psychiatry, oncology, and cardiac facilities. The hospital is a not-for-profit hospital. Medical Center has a Medicaid provider number and has had one for at least seven years. For 1984, Medical Center provided approximately $37,000 worth of charity care; $105,000 for 1985; and through December 4, 1986, $258,000. The amount was anticipated to be as high as $350,000 for 1986. Medical Center is in Punta Gorda, 5 1/2 miles south of Fawcett. Medical Center's primary service are is Charlotte County; it draws approximately 90 percent of its patients from Charlotte County. The remaining ten percent come from Lee, Sarasota and DeSoto, with some as far as Hardee County. The only cardiopulmonary services not offered by Medical Center are open- heart surgical procedures and angioplasty, which goes along with open-heart. There are no conditions existing at Medical Center with respect to the lab that would preclude its availability to patients who might be in need of a cardiac cath. Medical Center has an open cardiac cath lab staff. Dr. Rosenfield and Dr., Popper presently do cardiac caths at the hospital but do not perform cardiac caths at any other laboratory in the District now. From March, 1985 through June, 1986, 57 caths were performed at the Medical Center lab. But from January, 1986, through November 1986, 194 caths were performed. Medical Center estimates that they will perform approximately 250 cardiac caths during calendar year 1986, and 486 are projected for calendar year 1987, Medical Center's cardiac cath lab is currently open 8 hours a day, 5 days a week, 52 weeks a year. The maximum capacity for the cath lab is 2,080 procedures a year. It is a shared lab with the hospital special procedures room. The shared procedures have not caused Medical Center to have any scheduling problems with the laboratory yet, but optimal capacity probably is about 1040 caths per year under present conditions. The Medical Center lab is not over-utilized at this point in time. There is no reason why Medical Center could not perform the 650 projected procedures in 1987 for Charlotte and DeSoto counties; 675 for 1988, 694 for 1989, or 727 for 1990. Approval of a new cardiac cath lab at Fawcett would have an adverse economic affect on Medical Center's cardiac cath lab. Medical Center Hospital operates on a fairly tight margin for profitability. There would be potential impact on the level of indigent care offered at Medical Center if its profit margin should decline due to a loss of patients. Medical Center might not give the same amount of indigent care that it would have given otherwise. Medical Center projects, for 1987, to perform 486 procedures at $1,250 charge per procedure. If approximately 21 procedures (4.3 percent of the total) are drawn away from Medical Center in 1987, Medical Center probably would be a minus-loss situation rather than a plus-profit situation. Fawcett's projected market share of the number of the projected caths to be performed in 1987 for Charlotte and DeSoto counties, i.e., 650, would mean that Fawcett would do approximately 260 cases. Charlotte and DeSoto counties are the primary area in which Medical Center receives its cardiac cath referrals. It is probable that Fawcett would capture at least 4.3 percent of the total of referrals from Charlotte and DeSoto Counties since they project a 40 percent market share from the same area. Including the lab at Medical Center, there are seven existing or approved cardiac cath labs within District 8. The labs are accessible in terms of financial availability to individuals such as Medicaid and indigent patients as well as Medicare, insurance, and private pay. They are also geographically located such that access is available throughout the entire District. There was no evidence to suggest that over 10 percent of the District 8 population is two hours away from cardiac cath services. There is sufficient capacity at the existing labs to take on additional patients. No information was provided HRS to indicate that physicians have had patients who were unable to receive services at the existing facilities or that the quality of services within those labs was such that it was detrimental to individuals in need of a cardiac cath within the area. At this time, Medical Center's cath lab, 5 1/2 miles south of Fawcett, is underutilized. There was no evidence that District 8 existing and approved cath labs are over-utilized or that quality of care is suffering from over- utilization. Other Circumstances. The medical population is growing faster in Port Charlotte than in Punta Gorda. Fawcett and St. Joseph's Hospital are located across the street from one another and are the largest facilities in Port Charlotte. Both hospitals together have the ability to draw a large number of patients. Medical Center, on the other hand, is the smallest hospital in the area. Cardiac procedures are rapidly increasing in volume and as the number of cardiac patients in the area increase, Medical Center will be filling more and more of its beds with cardiac patients if it has the only cath lab in the county. However, Medical Center's medical-surgical beds are only 55 percent occupied, and there is ample room at Medical Center to accommodate growth in cardiac caths up to maximum capacity at Medical Center's lab. An indefinite but small number of patients choose not to have cardiac caths that are indicated because the service is not available at Fawcett, their primary care provider. A cath lab at Fawcett would enhance quality of care to those persons, alleviate the trauma of transferring to another hospital, and eliminate duplicate billing occasioned by such transfers. When Fawcett opened, it had a fully equipped intensive care unit that has been upgraded with time so that Fawcett now has a complete non-invasive cardiology program in operation. Fawcett's cardiopulmonary department has grown since the opening of the hospital. When it opened, the hospital only provided basic 12-lead electrocardiograms. Since then Fawcett has added 24-hour holter monitoring, cardiac stress testing and echocardiography, and performs two-dimensional echocardiograms. In addition, the hospital has a peripheral vascular diagnostic lab, and recently has started MUGA testing. Catheterizations are already being performed at Fawcett on a daily basis. Qualified physicians are currently catching every part of the body but the heart, utilizing state of the art procedures and equipment. The provision of cardiac cath is the next logical step in Fawcett's growth and desire to provide a full range of services to its patients. The safety of cardiac cath has been enhanced due to the increased numbers being performed, in that proficiency increases with practice. Accessibility has increased both as to numbers of physicians performing cardiac caths, as well as facilities providing the service. Also, the procedure of angioplasty is increasing in use, and cardiac cath is a prerequisite to angioplasty. Aflgioplasty is a major alternative to cardiac surgery. Fawcett is well-qualified to provide cath lab services with the idea of eventually expanding its cardiac services into other areas of cardiac care, i.e., angioplasty and open heart surgery. The addition of a cath lab at this time is a logical and necessary step toward this goal. At present, Fawcett patients requiring cardiac cath are sent to anther facility providing the service, usually Ft. Myers Community Hospital (FMCH). Fawcett's procedure when transferring a patient is to discharge the patient from the hospital. If it is an emergency situation, he or she would be transferred via the Charlotte County Ambulance Service or by Air Ambulance through an arrangement with that service out of Tampa. A transfer to FMCH could be accomplished by air ambulance in under 30 minutes if the helicopter were based at Fawcett. But the total time from the request for the Tampa-based air ambulance to arrival at FMCH is more than 30 minutes. By ground ambulance, the 31-mile trip from Fawcett to FMCH takes approximately 40 minutes. Transferring a patient in cardiac distress is not without its costs, to the public as well as the patient, the patient's family, and the doctor involved. Every time an ambulance makes that transfer, it is at a cost of several hundred dollars. The patient, the patient's family and perhaps the physician must commute from one facility to the other. Visiting can become a problem because of the travel involved. Transferring a patient also involves a risk to the patient's health because of the trauma of riding in an ambulance. Patients suffer a loss of comfort and continuity of care in having to leave familiar surroundings and familiar doctors. Dr. Collado and other cardiologists in his group, on staff at Fawcett, are unwilling at the present time to transfer patients to Intervenor, Medical Center Hospital (Medical Center), for a cardiac cath because of Medical Center's perceived lack of a proven "track record." These doctors watch a program, see how the program and its physicians perform and how the patients feel about that program, and establish their own relationship with the physician to whom they refer patients, before routinely transferring patients to that physician. Because of this, Dr. Collado presently sends all of his patients to FMCH or Lee Memorial. This is not a minor undertaking. Dr. Collado's group alone refers out at least 100 patients a year in cardiac cath, some years close to 200 patients. Without a cardiac cath lab at Fawcett, considering the medical advances made in the treatment of cardiac disease, it is envisioned that in two or three years, Fawcett will have to transfer more and more patients in order to keep up with common cardiology practices. But more and more of these patients could be transferred to Medical Center, a five to ten minute drive south in Punta Gorda, instead of to Ft. Myers as Medical Center's track record becomes more established. HRS' Policy. Before former Rule 10-5.11(15) [now 10-5.011(1)(e)] was amended, HRS locked applicants into a 1981 use rate. Under this policy, HRS would use the rate at which cardiac caths were performed in 1981 to determine need in the applied-for year. Fawcett's original application, filed in October, 1985, was reviewed and denied under this use rate. Since Fawcett's original review, however, the rule was amended in June 1986. The new rule provides that need is determined using 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 for the batching cycle. Less than two months prior to Fawcett's hearing, HRS' policy was to utilize a planning horizon that was fixed by the application's submittal date. If a formal administrative hearing was held, HRS then applied the need methodology using current population and utilization data available for the most recent 12-month period before hearing. This resulted in the use of more current data than had been used previously or, often, is used now. Three months prior to Fawcett's final hearing, HRS issued three CONs, Nos. 3539, 3964 and 3971, at the same time for the establishment of cardiac cath labs in District 6. One application was filed in October, 1984, targeting the July, 1986, planning horizon, and the other two were filed in April, 1985, for the January, 1987, planning horizon. These applications were initially reviewed under a 1981 "use rate" and denied due to lack of need under the methodology for the given horizon. Subsequently, HRS reconsidered its position on the CONs under the "use rate" as amended in the rule and utilized data from the most recent twelve month period. As a result of this review, 2 cath labs were approved in the same city, Bradenton, and another in Brandon. However, a need for all of these applications also would be shown using a strict interpretation of the current rule, as urged by HRS in this case. In this case, HRS urges a strict interpretation of the rule to lock utilization data regarding district cath labs on the 12-month period beginning 14 months before the letter of intent deadline. But HRS urges looking at current data as of the hearing date in counting approved cath labs. Long Term Financial Feasibility and Quality of Care. Fawcett's proposed project shows a profit by its second year of operation. There will be sufficient utilization of the proposed cardiac cath lab. Projected utilization of Fawcett's cardiac cath lab was derived by first multiplying the projected total population of Charlotte and DeSoto Counties (Fawcett's primary service area) for the first two years the cath lab will operate by the projected 1986 use rate to give the total number of cardiac caths for these counties. Fawcett will capture approximately 40 percent of the Charlotte County and DeSoto County cardiac cath market in its first year of operation, increasing to 50 percent in the second year. Forty percent of the total caths in Year 1 would give Fawcett 274 caths in its first year of operation. Fifty percent of the total caths in Year 2 would give Fawcett 355 total caths in its second year of operation. These projections are reasonable and obtainable. Utilization will surpass 300 procedures per year by the second year of operation, enough caths for its staff to remain proficient, satisfying both Rule 10-5.011(1)(e)'s minimum volume requirement and the sole issue regarding quality of care not already stipulated by the parties. Fawcett's pro forma for the cardiac cath project is based on reasonable and realistic assumptions: The charge per cath is $1,250 for the first year, with an inflation of 5 percent for the second year. This assumption was based upon average charges from area labs. The contractual allowances or the difference in charges and actual reimbursement for Medicare patients are based on the hospital's historical experience for Medicare patients. Uncollectible charges were forecast as 6.2 percent of patient service revenue, based upon historical experience of uncollectible charges (4.9 percent) and an assumption that approximately 2.3 percent of revenues would be service to Medicaid patients. Fawcett does not have a Medicaid provider number and will not be reimbursed for these patients, so these are treated as uncollectible. Salaries and wages were based on area averages of approximately $12.60 an hour for a trained cardiac technician at 2,080 hours a year. Employee benefits were based on the hospital's current budget of approximately 19.7 percent of salaries and wages for employee benefits. The assumption for supplies and other expenses was based on discussions with the people at the hospital and FMCH's experience. e. Repairs and maintenance depreciation assumes an eight year life on the equipment and an equipment purchase price of $90,230. g. Federal and state income tax assures an overall corporate rate for Basic American Medical, Inc. of 34 percent for federal tax, and 5 1/2 percent for State tax. Based on these assumptions, the proposed cath lab is financially feasible, with a projected net income of nearly $35,000 the first year, and $65,000 the second year. These numbers reflect the relatively low fixed cost involved in the project. In fact, Fawcett's break-even point is less than 140 cardiac caths per year. Indigent Care. Fawcett is willing to condition its CON on the provision of 5 percent care to indigent patients. But Fawcett does not have a Medicaid provider number and its commitment to provide indigent care is suspect. Currently, 4 percent of Fawcett's patients are non-paying, this includes charity indigent care and bad debt. According to HCCS data, Fawcett did no Medicaid and its deductions from revenue for charity work was only one-tenth of one percent in 1985. Without a Medicaid provider number, Fawcett would be writing off approximately $7,500 in Medicaid revenue if it provided 2.3 percent care to Medicaid patients. This is additional financial disincentive from meeting or exceeding its projected Medicaid service. As stated in its application, Fawcett's proposed policy for its cath lab will be to treat Medicaid patients in need of the service, regardless of ability to pay. But actual Medicaid care provided under the policy is dependent upon the actual number of Medicaid patients Fawcett's doctors refer for cardiac cath.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that Respondent, Department of Health and Rehabilitative Services, deny the application of Petitioner, Fawcett Memorial Hospital, for certificate of need to establish an adult cardiac catheterization lab, CON Action NO. 4313. RECOMMENDED this 6th of April, 1987 in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 6th day of April, 1987.
Findings Of Fact Lawnwood Regional Medical Center is a 225 bed community hospital in Ft. Pierce, Florida. It currently holds a CON to add an additional 50 beds. Lawnwood is owned and operated by Hospital Corporation of America, (HCA). On October 14, 1985, Lawnwood submitted a CON application for authorization to provide cardiac catheterization and open heart surgery programs at the facility. The project for both services would involve a total of approximately 10,000 sq. ft. of construction consisting of both new construction and renovation of the present facility, with a project cost of approximately $3.6 million. Lawnwood developed the project because it found a need therefor as a result of various visits to the administrator by physicians practicing in the area who indicated a growing demand for the services. The physicians in question indicated they were referring more and more patients to facilities out of the immediate area and the services in question were very much needed in this locality. The main service area for Lawnwood consists of the northern four counties of DHRS District IX, including St. Lucie, Martin, Okeechobee, and Indian River Counties. The majority of the cardiology practitioners in this service area find it necessary, because of the lack of cardiac catheterization and open heart surgery programs, to transfer patients to facilities either in Palm Beach County, which are from one to two hours away, or to facilities outside the District, primarily in Miami or the University of Florida area, which are even further. While many heart patients are not severely impacted by this, one specific class of patient, the streptokinase patient is. This procedure, involving the use of a chemical injected by catheter to dissolve a clot causing blockage must he done within a relatively short period of time after the onset of the blockage to be effective. However, this can he done outside a cardiac cath lab. A representative sampling of doctors testifying for Lawnwood indicated that during the year prior to the hearing, one doctor, Kahddus, sent 140 patients outside the district for catheterization procedures and 90 additional patients for open heart surgery. Other physicians referring outside District IX included Dr. Hayes - 4; Dr. Marjieh - 240; and Dr. Whittle - 12. Doctors indicated that the situation was so severe that some physicians practicing in the Palm Beach area, who have cardiac catheter and open heart surgery services available to them in the immediate locale are nonetheless referring patients outside the District for these procedures. No physician who does this testified, however. St. Mary's Hospital is a 358 bed not for profit hospital located in Palm Beach County. It has been issued a CON for a cardiac catheterization lab expected to come on line in April, 1987. Palm Beach Gardens Medical Center is a 204 bed acute care hospital which currently operates a cardiac catheterization laboratory and an open heart surgery program. It, too, is located in Palm Beach County. A second cardiac catheterization laboratory was scheduled to open at this facility in February, 1987. An additional cardiac catheterization laboratory is operating at Delray Community Hospital and this facility, as well as the currently existing facility at PBGMC are the only two currently operating cardiac catheterization laboratories within DHRS District IX. There are, however, other cardiac catheterization labs approved for District IX. These include the aforementioned second PBGMC lab, the aforementioned St. Mary's lab, one at JFK Hospital and one at Boca Raton Community Hospital. These latter four facilities are not yet operational. As to open heart surgery programs, only PBGMC and Delray Community Hospital have open heart surgery programs on line. JFK has been approved for an open heart surgery program. DHRS has promulgated rules for determining the need for cardiac catheterization and open heart surgery programs. These rules are found in Section 10-5.11(15) and (16), F.A.C. and establish methodologies based on use rates to determine need. The use rate for the applicable time period here, July, 1984 through June, 1985, is to be multiplied by the projected population for the District in the planning horizon, (July, 1987) which figure is then divided by 600 procedures per laboratory to determine the need for catheterization labs or 350 open heart procedures to determine the need for additional open heart surgery programs. The difficulty in applying this methodology to the current situation is in the calculation of the "use rate" used to measure the utilization of a service per unit of population. For the rule here, it is expressed as the number of procedures per 100,000 population. There is more than one way to calculate a use rate and the DHRS rules do not specify the method of calculation. An "actual use rate" is determined by applying the actual number of procedures performed within a particular geographical area in a particular time period. Data to determine an actual use rate for catheterization services or open heart surgery is not currently available in District IX, however. Applying the formula cited above to the existing figures, however, reflects a use rate of 62.3 procedures per 100,000 population in District IX. This is far below the 409.7 procedures per 100,000 population statewide. Lawnwood proposes to apply the statewide use rate rather than the District IX use rate because District IX is currently in a start up phase and does not have sufficient historical information available to provide an accurate use rate for the purpose of the need methodology. The lower the use rate, the lower the need will be shown to be. If the lower District IX rate is applied, in light of the numerous other laboratories coming on line approved already, there would clearly be no need for any additional services in either the catheterization or open heart surgery areas. Some experts offer as a potential substitute for the actual use rate a "facility based use rate" which involves determining the number of procedures performed in all hospitals within a particular geographic area for the applicable time period and dividing that number of procedures by the population of that area. DHRS evaluators employed this "facility based use rate" in their need calculations. At least one expert, however, contends that the "facility based use rate" is appropriate only when certain conditions exist. These include an adequate supply of facilities or providers in the area; historical, long-standing experience rather than start-up programs; and a lack of a high number of referrals outside of the particular area. Since these three conditions are not met here, it would seen that the "facility based use rate" would not be appropriate. In determining the statewide use rate of 409.07, Mr. Nelson, consultant testifying on behalf of Lawnwood, derived that figure by compiling utilization data for all hospitals in the state providing cardiac catheterization during the time period in question divided by the statewide population as of January 1, 1985. The resulting figure was thereafter converted into a rate per unit of population. A statewide figure such as this includes patients of all ages and it would appear that this is as it should be. Catheterization and open heart surgery services would be open to all segments of the state population and it would seem only right therefore that the entire population be considered when arriving at figures designed to assess the need for additional services. On the other hand, experts testifying on behalf of the intervenors utilized statistical manipulation which tended to indicated that the need, reflected as greater under Mr. Nelson's methodology, was in fact not accurate and was flawed. He that as it may, it is difficult to conclude which of the different experts testifying is accurate and the chances are great that none is 100 percent on track. More likely, and it is so found, the appropriate figure would be one more extensive than the population figures and resultant use rate for District IX alone and closer to the statewide rate across a broad spectrum of the population. When the fact that the older population of the District IX counties, the age cohort more likely to utilize catheterization and open heart surgery services, is greater in the District IX counties than perhaps in other counties north of that area, the inescapable conclusion must be reached that a use rate significantly higher than 62.3 would be appropriate. This may not, however, require the use of a statewide rate of 409.7. Utilizing, arguendo, the statewide use rate of approximately 409 procedures per 100,000 population results in a projected number of procedures of 4,576 in District IX if the projected population figure of slightly more than 1.1 million holds true. When that 4,576 figure is divided by the minimum number of procedures required by rule prior to the addition of further cardiac catheterization labs, (600),a need for 7.63 labs in District IX is shown. With six labs existing or approved, a net need of two additional labs would appear to exist since DHRS rounds upward when the number is .5 or higher. A similar analysis applied to open heart surgery, using a statewide use rate of 120.94 per 100,000 population results in a procedure number of 1,353 for the same population. Utilizing the DHRS rule minimum of 350 procedures per lab for open heart surgery procedures, a net yield of 3.87 programs would be needed in District IX in January, 1988. Subtracting the three existing or approved programs now in the district, and rounding up, would show a need of one additional open heart surgery program. These are the figures relied upon by Lawnwood. Accepting them for the moment and going to the issue of financial feasibility, DHRS apparently has agreed that the project costs for this facility are reasonable. Lawnwood has shown itself to be a profitable hospital and HCA is a large, well run corporation not known for the establishment of non- profitable operations. If one accepts that the actual utilization will approximate the projected utilization figures, then the operation would clearly be financially feasible. Both intervenors challenged the Petitioner's pro forma statement of earnings, but their efforts were not particularly successful. If Lawnwood can perform a sufficient number of procedures, then it should be able to break even without difficulty. Turning to the question of the impact that the opening of Lawnwood's facilities would have on the other providers or prospective providers in the area, both PBGMC and St. Mary's contend that there would be a substantial adverse impact on their existing services as well as on the prospective units already approved. Lawnwood proposes to service a portion of the indigent population with its two new operations. Were this to be done, indeed an impact would be felt by St. Mary's which is currently a substantial provider of indigent and Medicaid treatment and St. Mary's will be particularly vulnerable since it is in the start-up phase of its cardiac catheterization lab. Currently, PBGMC draws patients in both services from Martin and St. Lucie counties as well as from Palm Beach County. The percentage of patients drawn from these more northern counties is, while not overwhelming, at least significant, being 14 percent from Martin County and 9 percent from St. Lucie. Taken together, this constitutes 23 percent of the activity in these areas. St. Mary's anticipates a loss of 25 percent of its potential catheterization cases and if this happens, it will lose approximately $719,000.00 of its gross revenue in catheterization cases alone. St. Mary's further predicts that if Lawnwood's facility is opened, it will have difficulty recruiting and maintaining qualified personnel. PBGMC, figuring it's loss to be approximately $492,000.00, estimates that a layoff of nursing and other staff personnel or the redirecting them into other areas of the hospital would be indicated. PBGMC also refers to the cumulative impact not only of Lawnwood's proposal but of the other cardiac programs in the District which have been approved but are not yet on line. If all come into operation, PBGMC estimates it could lose as much as 69 percent of its activity in these areas. These negative predictions are not, however, supported by any firm evidence and are prospective in nature. From a historic perspective, it is doubtful that any lasting significant negative impact would occur to either PBGMC or St. Mary's overall operation by the opening of Lawnwood's facility. Turning to the question of staffing and its relationship to the issue of quality of care, there is little doubt that Lawnwood could obtain appropriate staffing for both its services if approved. Of the physicians already on staff at the facility, many are now certified and the hospital and the medical community plans training programs for those who are not. As to nurses and other support personnel, Lawnwood is satisfied that it can recruit from other HCA facilities and will recruit from the open market. It has a full time recruiter on staff. Quality of care is of paramount concern to the administration of Lawnwood. It has a current three year accreditation from the Joint Commission on Hospital Accreditation. It also has a quality control committee made up of both physicians and other staff members and the laboratory is approved by appropriate accrediting agencies. These same types of quality control programs would be applied to both new requested services as well. The rules in question governing the approval of cardiac catheterization laboratories and open heart surgery programs set down certain criteria for the approval of additional services which, as to the question of cardiac catheters states at subparagraph 15(o)1a that there will be no additional adult cardiac catheterization laboratories established in a service area unless the average number of catheterizations performed per year by existing and approved laboratories performing adult procedures in the service area is greater than 600. Much the same qualification relates to open heart surgery programs except that in that latter case, the minimum number would be 350 open heart procedures annually for adults and 130 for pediatric heart procedures annually. Ms. Farr, consultant for DHRS, feels that Petitioner's application would be inconsistent with the minimum standards set forth in the rule because she does not believe the Petitioner would do enough procedures in either cardiac catheterization or open heart surgery to meet the 600/350 criteria. She also contends that the proposal is not consistent with the District Health Plan, because the District plan requires the rule which addresses need be followed. Since, in her opinion, the application of the rule shows no need, there would be a violation of the District Health Plan if these proposals were approved. In the area of cardiac catheterization laboratories, of the six licensed and approved labs in District IX, only that existing currently at PBGMC is presently performing more than 600 procedures per year. Substantial testimony tending to indicate that a well organized cardiac catheterization lab can handle between 1500 and 2000 procedures per year, the 600 figure would tend to be a minimum and was so recognized by the drafters of the rule. No evidence was introduced by any party to show the numbers of open heart surgery procedures currently being performed in the three existing or approved open heart surgery programs in the District. Again, however, it would appear that DHRS criteria of 350 would be a minimum rather than an optimum or maximum figure. The parties have stipulated that as to the travel time criteria set forth in the rule for both procedures, 90 percent of the population of District IX is within two hour automobile travel time from availability to either or both procedures. It would further appear from an evaluation of the evidence, that while difficulty is experienced in arranging treatment for indigent transfer patients outside the District, little if any difficulty is experienced in arranging transfer treatment for those who can pay for the service. Little difficulty is experienced in securing treatment for these individuals in either Miami, Orlando, or elsewhere, and aside from inconvenience, there was no showing that a real, substantial health risk existed as a result of the transfer process. All things taken together, then, though the numerical evaluation under the rule process, applying a statewide use rate, tends to indicate that there is a "need" for this additional service, the subparagraph "o" criteria of 600/350 procedures requirement prior to authorization of additional service is not met.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Lawnwood's application for a CON to add a cardiac catheterization laboratory and open heart surgery program at its facility in Ft. Pierce, Florida, be denied. RECOMMENDED this 16th day of March, 1987 at Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-1539 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. By Petitioner - Lawnwood 1 & 2. Accepted and incorporated. 3 & 4. Accepted and incorporated. 5. Accepted and incorporated. 6. Accepted and incorporated. 7. Accepted and incorporated. 8. Accepted and incorporated. 9. Accepted and incorporated. 10. Accepted and incorporated. 11. Accepted and incorporated. 12. Accepted and incorporated in substance. 13. Accepted and incorporated in substance. 14. Accepted and incorporated in substance. Rejected as indicating a need for 2 additional cath labs. Rejected as calling for determination of "not normal status for District IX. Accepted in general but rejected insofar as there is an implication that non-indigent patients experience "significant" difficulty securing treatment. Accepted. 19 & 20. Accepted as to the streptokinase patients specifically. Accepted but not considered to be of major significance. Accepted and incorporated. 23 & 24. Accepted and incorporated. 25 & 26. Accepted and incorporated. 27 & 28. Accepted and incorporated. 29. Accepted. 30 & 31. Accepted and incorporated in substance. 32. Rejected as not supported by the best evidence. 33-36. Accepted and incorporated. Rejected as contrary to the evidence. Accepted. 39-42. Accepted. By Intervenor - St. Mary's 1 - 4. Accepted and incorporated. 5 & 6. Accepted and incorporated. 7 - 9. Accepted and incorporated. 10. Rejected as not supported by the best evidence. 11 & 12. Accepted and incorporated. Accepted and incorporated. Accepted and incorporated. Rejected as not supported by the best evidence. Accepted. Accepted. Accepted. 19-21. Merely a summary of testimony. Not a Finding of Fact. 22-24. Summary of testimony. Not a Finding of Fact. Accepted as ultimate Finding of Fact. Rejected. Rejected as a summary of testimony. Not a Finding of Fact. Irrelevant. Accepted. Accepted. Subordinate. 32-36. Rejected as a recitation of testimony and not Finding of Facts. 37-40. Rejected as contrary to the weight of the evidence. 41 & 42. Accepted. 43-46. Accepted. Rejected. Irrelevant. Accepted. Rejected. By Intervenor - PBGMC 1 & 2. Accepted and incorporated. Accepted except for last sentence which is irrelevant. Accepted. Accepted and incorporated. 6 & 7. Accepted and incorporated. Accepted. 9. Accepted and Incorporated. 10 & 11. Accepted and incorporated. 12. Accepted. 13-16. Accepted and incorporated. Accepted. Accepted. Rejected ultimately as contrary to the weight of the evidence. Accepted. Rejected. Accepted. 23 & 24. Accepted. 25 & 26. Rejected as contrary to the weight of the evidence. 27. Accepted. COPIES FURNISHED: Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Thomas A. Sheehan, III, Esquire 9th Floor, Barnett Centre 625 North Flagler Drive West Palm Beach, Florida 33401 R. Bruce McKibben, Esquire 1323 Winewood Blvd. Building 1, Room 407 Tallahassee, Florida 32301 Eleanor A. Joseph, Esquire Harold F.X. Purnell, Esquire 2700 Blairstone Road, Suite C Tallahassee, Florida 32314 Robert S. Cohen, Esquire 306 North Monroe Street Post Office Box 10095 Tallahassee, Florida 32302
The Issue The ultimate issue is whether the application of Venice Hospital for a CON should be approved. The factual issue is whether Venice Hospital meets the criteria set forth in the statute and rules.
Findings Of Fact The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law the Hearing Officer would recommend that this CON be granted with appropriate conditions relating to the maintenance of staff and the level of training of the staff which must be met and maintained in order for Petitioner to continue the operation of the laboratory. DONE and RECOMMENDED this 26th day of October, 1984 in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of October, 1984. COPIES FURNISHED: Kenneth F. Hoffman, Esquire David Watkins, Esquire 646 Lewis State Bank Building Tallahassee, Florida 32301 Douglas Mannheimer, Esquire 137 North Calhoun Street Tallahassee, Florida 32302 Robert A. Weiss, Esquire The Perkins House 118 North Gadsden Street Tallahassee, Florida 32301 and Lamar Matthews, Esquire 1550 Ringling Boulevard Sarasota, Florida 33578 Courtesy Copy to: William B. Wiley, Esquire 666 Lewis State Bank Building Tallahassee, Florida 32301 =================================================================
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 Whether the Petitioner University Community Hospital's certificate of need application to establish a cardiac catheterization laboratory and open heart program in Tampa, Florida, should be approved.
Findings Of Fact On August 11, 1982, the Petitioner University Community Hospital, a non-profit hospital, (hereafter Petitioner or UCH) filed an application for a certificate of need (hereafter CON) to expend some $934,000 to establish cardiac catheterization and open heart surgical services at its 404 bed facility located at 3100 East Fletcher Avenue, on the north side of Tampa, approximately 9 miles from the Intervenor Tampa General Hospital (hereafter TGH or Tampa General). Petitioner's CON application was reviewed by the Respondent Department of Health and Rehabilitative Services (hereafter Respondent or Department) under Rule 10-5.11, Florida Administrative Code, and compared with other facilities in the Health Systems Agency, Region IV, which consisted of Pasco, Pinellas, Manatee and Hillsborough Counties. On November 30, 1982, the Department denied the Petitioner's application. The basis for the Department's denial as reflected in the State Agency Action Report, was that two hospitals in Health Services Area IV, Medical Center and Morton Plant, were below the 350 open heart procedures threshold required by Rule 10-5.11(16), Florida Administrative Code. Since Petitioner was not entitled to a CON for open heart surgery, it was not entitled to a CON for cardiac catheterization because Rule 10-5.11(15), Florida Administrative Code, which was in existence when Petitioner's application was reviewed, required that an applicant for cardiac catheterization must be able to offer open heart surgery. Following the Department's denial of Petitioner's application and prior to the final hearing, the Legislature abolished the Health Systems Agency Regions and provided instead that health planning be based on HRS Districts. Intervenor TGH, a 611 bed public hospital located on Davis Island in downtown Tampa, in the same service area as the Petitioner, and presently offering cardiac catheterization and open heart surgical services, intervened in this proceeding on the side of the Department. The Need for Cardiac Catheterization Services In the Service District Prior to the final hearing, the Department admitted to the need for an additional cardiac catheterization laboratory in Hillsborough and Manatee counties. See Petitioner's Exhibit 17. There are presently three adult cardiac catheterization labs in Hillsborough-Manatee, two at TGH and one at St. Joseph's Hospital. In the five- county area, Lakeland Regional has an approved and existing program for a total of four programs. Applying the methodology set forth in Rule 10-5.11(15), Florida Administrative Code, the Petitioner has established that a need exists for at least one additional cardiac catheterization lab regardless of whether the service district is defined to include two or five counties. As projected and calculated by Thomas Porter, a Department witness who utilized the rule methodology, five catheterization labs are need in the five-county area by the year 1985. However, based on historical data, the need formulated pursuant to the rule is probably understated. Porter's testimony was confirmed by Dr. Warren Dacus, a hospital planning consultant, who after obtaining population and projection figures from the Department and the University of Florida, Bureau of Business and Economic Research, concluded that a need existed for one additional catheterization lab in 1985 in Hillsborough and Manatee Counties. On June 16, 1983, the Department approved a CON application filed by Tampa Heart Institute (hereafter THI) which authorized the establishment of three cardiac catheterization labs. The Department's proposed agency action to award a CON to THI was challenged by the Intervenor Tampa General and St. Joseph's Hospital and is presently the subject of a pending administrative proceeding. The CON granted to THI was based on the Department's assumption that most, if not all, of its patients would come from Latin America. THI's CON application presented a unique set of circumstances which fell outside the methodology normally considered during CON reviews. Since the CON proposed to be granted to THI was administratively challenged and was based on the assumption that patients would be drawn from outside any defined service district, it is logically inconsistent and legally inappropriate to consider THI's three cardiac catheterization labs in the instant proceeding. If the CON is granted to the Petitioner, there will be sufficient utilization of the cardiac catheterization laboratory to insure quality of services as required by Rule 10-5.11(15)(i), Florida Administrative Code. Based on previous referrals to other hospitals and historical data obtained from other hospitals in the district, the Petitioner can expect to perform in excess of 300 cardiac catheterization procedures annually for the next three years following initiation of the service. The Need for an Open Heart Surgical Program in the Service District In the Hillsborough-Manatee Service District, two open heart programs presently exist, one program is located at St. Joseph's Hospital, the other is at Tampa General. The formula found at Rule 10-5.11(16), Florida Administrative Code, provides that the number of open heart procedures projected to be done in a future year is determined by multiplying the number of procedures per 100,000 population performed in the service area in 1981 by the projected population in the service area in the future year. No additional programs will normally be approved if such program will reduce the volume of an existing program below 350 surgery cases. In the service distract represented by the two-county area, there is a need for four open heart surgical programs by 1985. Using the methodology found at Rule 10-5.11(16), Florida Administrative Code, the two-county area requires the capacity to perform 1,433 open heart surgeries in 1985, which establishes a need for four programs. Although the addition of an open heart program at UCH would draw certain patients from both St. Joseph's and Tampa General, the number of open heart surgeries performed at St. Joseph's and Tampa General would not fall below 350 per year if UCH were granted a CON. In the five-county area which includes Hillsborough, Manatee, Polk, Highlands and Hardee counties, 1,587 open heart surgical procedures are projected for 1984 and 1,623 for 1985. Applying the rule methodology a need exists for five open heart programs in 1984 and 1985. Three programs, Tampa General, St. Joseph's and Lakeland Memorial Medical Center, presently exist or are approved in the five-county area. The petitioner has demonstrated a sufficient projected volume of open heart surgeries to assure quality of service under Rule 10-5.11(16)(e)(4), Florida Administrative Code. UCH can expect to perform in excess of 200 adult open heart surgical procedures during its first year of operation and within three years after initiation of the service. Moreover, UCH's surgery program will be capable of providing 500 open heart operations per year. In 1981, Lakeland Memorial performed 81 open heart surgical procedures which is significantly below the 350 procedures required by the rule. UCH's proposed program would have little if any effect on the open heart program at Lakeland Memorial, or its ability to meet minimum service levels now or in the foreseeable future. The 350 procedures per year threshold is required to ensure that cardiac surgery teams and staff remain proficient so that patient care is not jeopardized. If, due to the low number of procedures performed at Lakeland Memorial, patient care is being jeopardized, the purpose of the rule is not served by denying a CON to the Petitioner on such a basis since the grant or denial of the instant CON would have no effect on Lakeland Memorial's ability to meet the threshold. UCH's non-invasive coronary procedures including echocardiograms, stress testing and halter monitoring have been utilized by patients to a noteworthy degree. The levels of utilization for these non-invasive tests at UGH in comparison to Tampa General and St. Joseph's are as follows for the period July, 1980 to June, 1981: echocardiogram, UCH 1021, Tampa General 1,175, St. Joseph's 539; stress testing, UCH 598, Tampa General 490, St. Joseph's 371; halter monitoring, UCH 618, Tampa General 328, and St. Joseph's 290. A direct relationship exists between the volume of non-invasive coronary procedures and invasive catheterization procedures that can be expected to be performed at UCH. Approximately 30 percent of the patients at UCH are referred to other hospitals for invasive procedures following non-invasive testing. Transferring patients between hospitals for invasive procedures after non-invasive testing lessens the quality of patient care and increases the probability of duplication of testing, thus increasing health care costs. The Adequacy of she Petitioner's Proposed Facility UCH's proposed facilities for open heart and cardiac catheterization services are adequate for their intended purposes. The proposed plans and equipment lists for the cardiac catheterization lab and open heart surgical program are acceptable from a medical and planning perspective, and are similar to other facilities offering such services. UCH has or if the CON is approved will have, the necessary staff and equipment to meet the requirements of Rules 10-5.11(15)(g) and 10-5.11(16)(c), Florida Administrative Code. The Petitioner will provide the training programs set forth at Rule 10-5.11 (15)(i)(3), Florida Administrative Code. The catheterization lab will maintain the hours of operation specified in Rule 10-5 11 (15)(h)(2), Florida Administrative Code, and the open heart surgery program will operate in accordance with the requirements of Rule 10- 5.11(16)(d)(2) and (3), Florida Administrative Code. The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals as required by Rules 10-5.11 (15)(i)(1) and 10-5.11 (16)(e)(1), Florida Administrative Code. The Petitioner has a written plan projecting case loads, and projecting space, support, equipment and supply needs as required by Rule 10- 5.11(16)(e)(5), Florida Administrative Code. The Financial Feasibility of the Petitioner's Proposed Cardiac Program UCH's proposed open heart surgery program and cardiac catheterization lab are financially feasible. Funds for the project are available and no long term debt exists since the projects are to be funded out of cash. Projected net income from the service is in the 5 percent range which is conservative for a not-for-profit hospital which requires a degree of profitability to ensure that sufficient revenue is generated to meet expenses. The projected costs for the proposed cardiac catheterization lab are reasonable. The proposed renovation of the lab is part of a general large scale renovation for which UCH has secured a binding contract for the amount specified in the application. The equipment and personnel budget for the lab is also reasonable. Based upon a comparison of the proposed charges at UCH with the projected 1984 charges at Tampa General, UCH offers the least costly alternative for providing cardiac catheterization and open heart surgery services. For example, at Tampa General, the projected charge for cardiac surgery, exclusive of charges for room and ancillary services, is $1,711 compared to $1,244.81 at UCH. For cardiac catheterization, the projected 1984 charge at Tampa General is $1,338 as compared to $1,093.75 at UCH. The Petitioner's charges and proposed charges for cardiac catheterization, open heart surgery and other hospital services are comparable to other similar hospitals in the service district, and accordingly, the Petitioner has established that the requirements of Rules 10-5.11(15)(j) and 10- 5.11(16)(f)(2), Florida Administrative Code have been met. Petitioner's Proposed Cardiac Program and its Effect on Tampa General The Hillsborough County Hospital Authority, a public agency which was created by special act of the Legislature, see Chapters 67-1498 and 80-510, Laws of Florida, is required by law to treat indigent patients who are in need of immediate or emergency medical treatment. Hillsborough County is required to reimburse the Hospital Board of Trustees for the full cost 2/ of any hospital or related services provided patients properly certified as indigent. Tampa General has experienced severe monetary problems as a result of its role as provider of free medical care to indigent residents of Hillsborough County. Unfunded patients have averaged 80-100 admissions per week at a cost of $280,000-$350,000 per week to the hospital. Approximately 30 percent of the claims that the hospital files with Hillsborough County for reimbursement of indigent expenses are rejected. As a result, Tampa General has been forced to subsidize its cost of providing indigent care through added charges passed on to paying patients. Since the Hospital Authority has no taxing power, Tampa General is dependent upon funds provided by the County. Among public hospitals in Florida's major urban areas, Tampa General receives the least amount of financial assistance from local government. Tampa General has budgeted $24 million worth of free care for 1984 and this amount is projected to increase through 1988. The amount of free care provided to indigents at Tampa General is approximately 16 percent of gross revenues. Tampa General utilizes the profits it derives from the operation of its cardiac programs to subsidize the considerable amount of free care that it provides to indigent residents of Hillsborough County. In 1981, Tampa General embarked on an ambitious expansion program in order to attract additional paying patients and to remain competitive with other private hospitals in the community. In order to finance this project, the Authority issued bonds in the amount of $160,260,000. In deciding to issue these bonds, the Authority considered the revenues generated by the hospital's cardiac programs which constitute 17-18 percent of total net revenues and the relative lack of competition from other coronary programs in the Hillsborough area. In the absence of adequate funding by the State and/or County, Tampa General's cardiac program is an essential element in the hospital's plan to continue to provide free care to indigents. The subsidization or contribution margin of the cardiac program helps offset the bad debt of indigent costs which are not being reimbursed by local government. The amount of subsidization or contribution margin for each cardiac procedure performed at Tampa General in 1984 was $3,721 and is projected to increase to nearly $5,700 in 1988. However, notwithstanding the monies projected by Tampa General which it expects to be contributed by its cardiac program, it is likely that third- party payers will follow the federal government in adopting a prospective payment system based on diagnosis related groups of illnesses which will limit the amount of revenues which can be collected from private pay patients. Assuming that this occurs, the amount of subsidization derived from cardiac programs at Tampa General will be significantly decreased regardless of the outcome of the instant proceeding. The evidence regarding the effect of UCH's proposed cardiac program on Tampa General's existing program is unclear. Unquestionably, some of the patients which would have gone to Tampa General for cardiac care will go to UCH if its program is established. However, since cardiac catheterizations are increasing in volume and a direct relationship exists between cardiac catheterizations and open heart surgery, it can be concluded that while Tampa General's rate of growth would decrease, it is unclear whether its present volume would decrease significantly below existing levels. No evidence was presented that Tampa General's cardiac catheterization and open heart programs would decline below the thresholds established by rule if UCH's application were granted. The financial problems facing Tampa General are clearly serious. The hospital has taken drastic steps to attempt to control costs including eliminating staff positions and severely restricting indigent access to health care. Tampa General's problems existed prior to UCH's application for a CON and will likely continue regardless of whether the Petitioner's CON is approved. The long-term solution of Tampa General's financial problems should not be dependent upon whether UCH prevails in this proceeding. If Tampa General is to fulfill its mission as a public hospital, it must be assured of reliable and consistent course of funding for all of its operations. In enacting Chapter 80-510, Laws of Florida, the Legislature intended that the cost of indigent hospital care in Hillsborough County be borne by all of the citizens of the County, and not primarily by paying patients who by circumstance or otherwise, find themselves at Tampa General. Tampa General's reliance on its cardiac programs to finance its long- term debt and offset its indigent care losses is dependent on the existence of two factors: first, Tampa General must maintain what is essentially a monopoly on the services to be guaranteed a supply of paying cardiac patients and second, it must have the ability to pass on to its paying cardiac patients the amount needed to subsidize its other operations. Tampa General, however, no longer maintains a monopoly on cardiac programs in the Hillsborough area as evidenced by the certificate of need awarded to St. Joseph's. Moreover, the Department has stated its intention to authorize another open heart program and three catheterization labs at Tampa Heart Institute. The prospective reimbursement system implemented by the federal government which is expected to be followed by private insurers will further limit Tampa General's ability to generate excess revenues from private-pay coronary patients. The result of the inability of Tampa General to secure a long-term solution to its problems of unreimbursed indigent care is reflected in the institution of a policy limiting indigent admissions to the most serious cases. Due to this new policy limiting admissions at Tampa General to emergencies, Tampa General's and UCH's policies regarding coronary care for indigents are essentially the same. The Petitioner's Compliance with Section 381.494(6)(c), Florida Statutes It was uncontroverted that UCH's proposed cardiac services are consistent with the state health plan. Since the Department has not yet promulgated as a rule the health systems' plan for the District, the parties agree that the question of the Petitioner's compliance with the local plan is not an issue in this case. See Section 381.494(6)(c)(1), Florida Statutes. The proposed cardiac program has been approved by UCH's Board of Directors, and is an appropriate progression considering the size of UCH and the mix of cardiologists and patients at the facility. See Rule 10-5.11(2), Florida Administrative Code. The Petitioner has carried its burden by demonstrating a need for cardiac catheterization and open heart surgical services regardless of whether the service district is defined as a two or five-county area. See Section 381.494 (6)(c)(2), Florida Statutes. Utilizing a two-county area including Hillsborough and Manatee counties, the projected population in 1985 is 890,000. The 1981 use rate was 276.4 cardiac catheterization procedures per 100,000 population. Multiplying the 1981 use rate by the projected population, 2,640 catheterization procedures are projected for 1985. Dividing 2,460 by the threshold number 600, results in a need for 4.1 catheterization labs in Hillsborough and Manatee counties in 1985. Presently, three existing and approved catheterization laboratories exist in Hillsborough and Manatee counties, one at St. Joseph's and two at Tampa General. A need, therefore, exists for an additional catheterization laboratory in the two-county area. 3/ In the five-county area which includes Hillsborough, Manatee, Polk, Hardee and Highlands counties, the projected population for 1985 is 1,330,400. The 1981 use rate was 207 procedures per 100,000 population. A total of 2,693 and 2,754 procedures are projected for 1984 and 1985, respectively. Dividing 2,754 by 600 demonstrates a need in 1985 for five laboratories while four presently exist or are approved in the five-county area, one at St. Joseph's, two at Tampa General and one at Lakeland Memorial. Petitioner has therefore demonstrated a need for an additional cardiac catheterization services in the five-county area. In considering the need for open heart surgery services in the two- county area and utilizing the projected population of 890,000 and a use rate of 160.99, the projected number of open heart procedures in 1985 is 1,433. When 1,433 is divided by 350, a need exists for four open heart surgery programs in Hillsborough and Manatee counties in 1985. Since there are only two existing and approved programs in the two-county area, the Petitioner has demonstrated a need for two additional open heart surgical programs by 1985. In the five-county area, the projected 1985 population is 1,330,400. The 1981 use rate was 122 procedures per 100,000 population. Multiplying the projected population by the use rate results in 1,623 open heart procedures projected in 1985. When 1,623 is divided by 350, a need is established for five open heart surgical programs by 1985. Since only three existing or approved programs are in place, the Petitioner has demonstrated a need for two additional open heart programs in the five-county area by 1985. The Petitioner presently performs a significant number of non-invasive cardiac procedures. It was uncontroverted that UCH provides quality of care to its patients. If the Petitioner's application is approved, it can be assumed that present acceptable quality of care standards will be met in the operation of the program. See Section 381.494(6)(c)(3), Florida Statutes. The proposed project is financially feasible, and UCH has the ability to attract sufficient nurses and support staff to operate both programs. See Section 381.494(6)(c)(8) and (9), Florida Statutes. The Petitioner has argued throughout this proceeding that the initiation of cardiac service at its facility will foster competition thereby reducing health care costs in Hillsborough County. If price competition in fact existed under the present system of health care delivery, lower costs would be expected. However, with rare exception, health care consumers do not select hospitals nor do they pay their own hospital bills. Rather, third-party payers, including the federal government and private insurance companies, are responsible for reimbursing hospitals for patient costs and physicians generally determine which hospital is utilized by a patient. In an understandable effort to control health care costs, the federal government and the state have enacted a complex regulatory scheme for health care providers which limits competition and places the burden on providers of establishing that a need exists in a given area for a proposed service. To a significant extent, this scheme protects the financial interests of existing providers. This process can have an unfortunate side-effect of limiting the choices available to health care consumers and eventually could result in a diminished quality of health care. 4/ While the presence of additional hospitals in an area does not necessarily result in lower health care costs, it does create potential competition for patients through physician referrals. Hospitals have an incentive to provide quality care including state of the art equipment and competent staff, to ensure that they attract their share of patients. As a result, the preferences of physicians and health care consumers should have a greater impact in an area where health care services exist at more than one facility. The difficulty encountered in CON proceedings is attempting to balance the legitimate needs of health care consumers with the state's efforts to control costs by discouraging the duplication of unnecessary services. The Petitioner has demonstrated that its proposal is cost-effective, and should foster innovation and improvement in the delivery of health services in the service area as required by Section 381.494(6)(c)(12), Florida Statutes. The assertion by Tampa General that the expansion of its facility represents a less costly alternative is too speculative to be considered in this proceeding. While TGH is in the process of a $300,000 conversion of a pediatric catheterization lab to an adult lab, this fact was apparently either unknown or not considered by the Department at the time of the final hearing since HRS witnesses stated that Tampa General has only two adult labs.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Health and Rehabilitative Services enter a Final Order granting a CON to Petitioner University Community Hospital to establish a cardiac catheterization laboratory and open heart surgical program in Tampa, Florida. DONE and ENTERED this 5th day of March, 1984, in Tallahassee, Florida. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of March, 1984.
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 =================================================================
The Issue Whether Cleveland Clinic Florida Hospital's application for a Certificate of Need to operate an adult inpatient cardiac catheterization program in AHCA District 10 should be granted or denied by the Agency for Health Care Administration?
Findings Of Fact The parties Cleveland Clinic Florida Hospital, ("CCFH,") is a not-for-profit corporation which owns and operates a 153 bed acute-care hospital located within the incorporated limits of Fort Lauderdale on Route A1A in the mid-section of Broward County, AHCA District 10. Among its 153 medical and surgical beds are approximately 11 beds in the intensive care unit and a similar number of intermediate care beds. CCFH is not a Level II trauma center; nor does it provide comprehensive medical rehabilitation services or the tertiary health care services of open heart surgery or organ transplantation. But, fully accredited by the Joint Commission of Health Care Organizations for Special Care Units, provision of tertiary care services in South Florida is a long-term goal of CCFH. Amisub (North Ridge Hospital), Inc., d/b/a North Ridge Medical Center, owns and operates a general acute-care hospital located in Broward County. It provides adult inpatient cardiac catheterization services as well as open heart surgery services. North Broward Hospital District, (the "District,") owns and operates hospitals in Broward County. Among the hospitals are three that provide, individually, adult inpatient cardiac catheterization services. The three hospitals, each a division of the District, are known as Broward General Medical Center, ("BGMC,") Imperial Point Medical Center, ("IPMC,") and North Broward Medical Center, ("NBMC.") In addition to cardiac cath services, BGMC provides open heart surgery services. Holy Cross Hospital is located in the northern part of Broward County within thirty minutes travel time of CCFH by emergency vehicle. It has 587 total licensed beds; 535 are acute care beds, 9 are level II NICU beds and 43 are rehabilitation beds. There is an open heart surgery program at Holy Cross and an adult inpatient cardiac catheterization program with two cardiac cath laboratories. The Agency for Health Care Administration is the single state agency authorized by Section 408.034(1), Florida Statutes, to issue or deny certificates of need, "written statements ... evidencing community need for a new ... health service [such as an adult inpatient cardiac catheterization program.]" Section 408.032(2), Florida Statutes. Other Cleveland Clinic Organizations Cleveland Clinic Florida ("CCF") is a not-for-profit corporation separate and apart from CCFH. Comprised originally of 24 or 25 physicians, most of whom came from the Cleveland Clinic Foundation in Cleveland, Ohio, it began operation in Broward County on February 29, 1988. CCF initially established an outpatient diagnostic and treatment facility on Cypress Creek Road in the eastern middle part of Broward County with the long- term aim of providing tertiary health care services in the South Florida market. It contracted for hospital services with North Beach Hospital, and with the growth of its practice, purchased the hospital in 1990. Converted into a separate not- for-profit corporation, (the applicant in this proceeding,) the hospital was re- named Cleveland Clinic Florida Hospital in 1993. In the six years since the inception of its practice, CCF has expanded into a multi-specialty group practice of approximately 85 physicians, representing more than 30 specialties. Both CCF and CCFH are subsidiaries of the same parent corporation. Although governed by separate entities, a Board of Trustees in the case of CCFH and a Board of Governors in the case of CCF, both entities' boards report to a common Board of Trustees. That board is the Executive Committee of the Board of Trustees of the parent corporation, the Cleveland Clinic Foundation. The Foundation, located in Cleveland, Ohio, is a not-for-profit corporation that serves as the sole corporate member of CCFH. Presently a multi-disciplinary group of approximately 500 salaried physicians, the Foundation is an integrated physician hospital organization, composed of hospital and clinical divisions and a research institute. In contrast to a traditional hospital environment in which a hospital governance may or may not be in accord with its service components' goals, these divisions and the research institute act in concert. The Foundation's organizations and its physicians, therefore, through collaborative effort, carry out the same mission: to provide better care of the sick, to investigate the problems of their illnesses, and to advance those who serve in like capacities. Fundamental values associated with this mission include quality, integrity, compassion, collaboration and commitment. Established in 1921, the Foundation has an extraordinarily distinguished history in cardiac care including coronary cardiac catheterization. Staff members, for example, performed the first valve transplant with bypass surgery. More pertinently, coronary angiography, a diagnostic procedure involving placement of a catheter into the heart, and which accounts for more than 80 percent of diagnostic cardiac catheterization activity, was performed for the first time at the Foundation. Today, the Foundation enjoys wide-spread recognition as a leader in cardiovascular care, research, and education. It is a major tertiary referral center for cardiac patients, treating high risk patients, many of whom have recurring heart disease. The Foundation's hospital in Cleveland has approximately 1,000 beds and is a full service tertiary care center with the exception that it does not provide obstetrics. The Foundation has seven cardiac cath laboratories used primarily for adult cardiac cath or angiography. An eighth laboratory is used to evaluate the arteries in the legs. There are approximately 17 cathing cardiologists on staff at the Foundation's hospital, compared to two on staff at CCFH. On average, 280 adult diagnostic cardiac cath procedures are performed there annually. 12. Despite the close relationship among the Cleveland Clinic organizations, CCFH is a separate entity from the others. The Foundation hospital, as outlined above, is both much larger than CCFH, and a major tertiary referral center when CCFH, at the moment, can only hope to provide tertiary services in the future. Most importantly, while advantages enjoyed by the Foundation may flow directly to CCFH because of their close relationship, the Foundation is not a co-applicant with CCFH in this proceeding. Nor is CCF a co-applicant. The applicant in this case is CCFH only. Pre-hearing Proceedings Including a Projection of Numeric Need Leading to the Agency's Intent to Grant CCFH's Application. 13. On August 6, 1993, the AHCA published in the Florida Administrative Weekly its Summary Need Projections. The Agency's publication projected a need for one additional adult inpatient cardiac catheterization program in District No party challenged the Agency's projection of numeric need. By letter dated August 19, 1993, CCFH notified the Agency of its intent to submit a Certificate of Need application for an adult inpatient cardiac catheterization program in District 10. On the same day that the letter of intent was filed with the agency, August 23, 1993, CCFH filed a copy of the letter with the Broward Regional Health Planning Council. Within fourteen days of the filing of the notice of intent with the Agency, CCFH twice published in the Fort Lauderdale Sun Sentinel a Notice of Filing. The first publication was on August 23, 1993, the second, on September 3, 1993. On September 22, 1993, CCFH filed the application with the Agency and on the same day filed a copy with the Broward Regional Health Planning Council. On October 7, 1993, the Agency acknowledged receipt of the application and informed CCFH that, "[c]ertain elements have been omitted from your proposal which are needed to implement formal review." Cleveland Clinic's Composite Ex. No. 2, Tab 3. Attached to the letter were a list of the omissions under the heading, "Omissions - Certificate of Need No. 7449." The letter informed CCFH that it was required by law to file an omissions response with both the Agency and the appropriate local health council by 5 p.m. on November 8, 1993, or else the application would be incomplete and deemed withdrawn by operation of Agency rule. On November 8, 1993, CCFH timely filed an omissions response with the Agency and a copy with the Broward Regional Health Planning Council. One week later, the Agency acknowledged receipt of the response and deemed the application complete effective November 9, 1993. On January 10, 1994, the Agency by letter to CCFH informed it of its intent to issue: Certificate of Need Number 7449 to Cleveland Clinic Florida Hospital for the establishment of an adult inpatient cardiac catheterization program at Cleveland Clinic Hospital located in Ft. Lauderdale, Broward County, District 10. Cleveland Clinic Composite Ex. No. 2, Tab 6. The letter also informed CCFH that the Agency intended to deny Certificate of Need No. 7551 for the establishment of a like program to be conducted by NME Hospitals, Inc. Outpatient Cath Lab Not Subject to CON Review At the time of hearing, CCFH had no outpatient cardiac catheterization program in operation. But, in October of 1993, CCFH requested a determination from the Agency as to whether it could establish an outpatient cardiac catheterization laboratory without certificate of need review. It received word that an outpatient lab would not require review by letter from the Agency dated October 25, 1993. Whatever one may think of the wisdom of a policy of allowing outpatient cardiac cath labs to escape CON review, (and the apparent conflict with requiring inpatient labs to undergo such review,) the Agency's determination is in keeping with the policy of this state. For its part, CCFH is committed to opening an outpatient cardiac cath lab, regardless of whether it receives the approval it seeks in this proceeding. Commencement of operation for the outpatient laboratory will occur prior to start-up of an inpatient program. At the time of hearing, the outpatient lab was expected to commence operation sometime between November, 1994 and January, 1995. CCFH's aspiration to have an inpatient, as well as an outpatient, cardiac catheterization program at its hospital supports its long-term objective of providing the tertiary services provided in open heart surgery. An inpatient program will be capable of providing immediate endocardiac catheter pacemaking in cases of cardiac arrest, and pressure recording for monitoring and evaluation of valvular disease, or heart failure. The Application Conversion of the Outpatient Lab CON Application No. 7449, (the "Application,") seeks authority to establish an adult inpatient cardiac catheterization program at the Cleveland Clinic Florida Hospital. If granted, the outpatient cardiac catheterization laboratory will be converted to inpatient use. But approval of the application will provide authority to perform diagnostic cardiac catheterization only, not therapeutic cardiac catheterization. To implement the inpatient cath program, CCFH will not incur any construction, design, or equipment costs beyond those incurred with the outpatient cardiac cath facilities. Location, Design and Equipment The proposed location for the cardiac cath laboratory has not changed since the application was submitted in September of 1993. Well situated in relation to the central supply, surgical, telemetry and intensive care areas of the hospital, the laboratory will be on the second floor of the hospital, the site of the pathology lab at the time of the application. It has the added benefit of being near where families can wait while procedures are conducted. And, near the elevator on the second floor and an adjacent post-procedure monitoring area, the location is well-suited to good patient flow. The proposed design has not changed either since the filing of the application. The design calls for special procedure x-rays, film storage, and a dark room for proper processing of films. There will be adequate and appropriate space allocated to each area of the laboratory including the patient holding area. The equipment, manufactured by Picker and Hewlett-Packard, is "state of the art." To be purchased, whether the laboratory remains outpatient or not, is x-ray equipment with the capability of cineangiography or cineangiocardiography, an image intensifier, an automatic injector, a diagnostic x-ray examination table for special procedures, a blood gas analyzer and a multi-channel polygraph. A Closed Lab Currently there are no closed cardiac cath labs in Broward County. But, CCFH intends to operate its cath program, if converted from outpatient to inpatient, as "closed," meaning use of the laboratory by medical staff will be restricted. In the case of CCFH, the restriction will allow only physicians employed by CCF to have access to the lab. Initially, medical staff will be restricted to two members of CCF. When warranted by volume of procedures, CCF will recruit additional physicians to perform cardiac catheterization procedures at the lab. Modeling the Foundation with its Assistance With the assistance of the Foundation, CCFH will model its cardiac cath program after the program in place at the Foundation, allowing for the unique needs of its patient base. The Foundation model entails guidelines and protocols that ensure procedures performed are appropriate, cost-effective, efficient, with acceptable morbidity and mortality, and in a setting that allows education, research and training of medical personnel. It involves salaried staff physicians, in a closed laboratory where the performance of the physicians, themselves, as well as of nurses and technicians are monitored and evaluated. The Foundation has developed standardized protocols for determining whether catheterization procedures are indicated, how they should be performed, and for the evaluation of patients before and after the procedure. It has also developed quality assurance, credentialing, recredentialing, and peer review protocols. Standardized protocols improve efficiency, lower costs, and contribute to better patient care. The Foundation will assist CCFH in developing standardized protocols, based on the protocols used at the Foundation. The Foundation will assist CCFH in training the staff which will perform procedures at the laboratory. The Foundation will make available staff to visit the hospital and will allow CCFH staff to participate in training at the Foundation. The Foundation's assistance should enable CCFH to implement the program expeditiously and efficiently. Other Protocols CCFH has in place a transfer protocol for the transfer of emergency patients to Holy Cross Hospital where open heart surgery and other coronary procedures not available at CCFH can be performed. Holy Cross has agreed to accept emergency transfers. Another Application In addition to the filing of the application in this case, CCFH filed another application for the batched cycle in the Spring of 1994. There are differences in the two applications because the data used by the two are different; the data for the second application being newer. The application in this case used the best data available at the time the application was prepared. Certificate of Need Criteria The criteria upon which the Agency "shall ... review applications for certificate-of-need determinations for health care facilities," Section 408.035(1), F.S., are listed in subsections (a) through (o) of the statute. In addition, Section 408.035(2), Florida Statutes, mandates the Agency to make certain findings of fact, listed in subsections (a) through (e) "[i]n cases of capital expenditure proposals for the provision of new health services to inpatients." Benefits and Absence of Harm Approval of the project is advanced by CCFH as meeting principally three public needs. First, it will further the development of the only fully- integrated health care provider in South Florida. This innovation into the South Florida market will improve quality and control cost. Second, it will improve access to services, albeit limited to cardiac care, for the uninsured population. Access to health care services for the uninsured population is one of the main needs of the health care system in Florida. Third, it will further expanded medical research and education in District 10 by allowing the Cleveland Clinic organization through the presence of CCFH in South Florida to sponsor research and postgraduate medical education in cardiology. Approval of the application will not do any harm. It will not result in any significant expenditure or duplication of equipment since CCFH has already committed to the equipment for its outpatient facility. It will not result in harm to the quality of inpatient cardiac cath services at existing providers. Nor will it cause significant financial injury to existing providers. Need in Relation to the Applicable District Health Plan and State Health Plan The State Health Plan The 1989 State Health Plan, superseded for the most part by the 1992 Interim State Health Plan, contains the latest statement at the state level of policy preferences for approval of new inpatient cardiac cath programs. The 1989 Plan lists four preferences, three of which apply to the application. The second preference applies to counties without any cardiac cath programs and so is not applicable to this proceeding. Of the remaining three preferences, CCFH's application does not conform to the third preference: "Preference shall be given to hospitals with a history of providing a disproportionate share of charity care and Medicaid patient days in the respective acute care subdistrict...". (Cleveland Clinic's Composite Ex. No. 2, Tab 4, p. 18, Testimony of Dr. Luke, Tr. 989.) The application conforms to the first and fourth preferences. The first preference is: "Preference shall be given to an applicant who proposes the establishment of both cardiac catheterization services and open heart surgical services provided that a need for open heart surgery is indicated." Id. The application conforms to this preference because CCFH has applied for authority to implement an open heart surgery program and because the "Florida Need Projections Adult Inpatient Cardiac Catheterization and Open Heart Surgery Programs and Pediatric Cardiac Catheterization and Open Heart Surgery Programs, January 1996 Planning Horizon" indicates a net need for one adult inpatient cardiac catheterization program and a net need for one adult open heart surgery program in District 10. Id. The fourth preference is: "Preference shall be given to an applicant who agrees to provide services to all patients regardless of their ability to pay." Id., p. 19. Consistent with its mission, CCFH has agreed to provide services to patients regardless of ability to pay as evidenced by its commitment to deliver 76 diagnostic caths per year to the uninsured population. The application is consistent with the goals of the 1992 Interim State Health Plan and "Healthy Homes, 1994," the 1994 Health Security Plan. Both of those plans demonstrate the intent of the State to promote improved access, quality, and cost control, based on the model of managed competition. The Cleveland Clinic is cited specifically in those plans as the type of organization that will facilitate managed competition. The District Health Plan The application conforms to both of the recommendations contained in the 1990 District 10 Comprehensive Health Plan. The application conforms to the sole applicable recommendation contained in the 1993 Certificate of Need Allocation Factors Report for Broward County. That recommendation, (also the second recommendation in the 1990 plan,) requires an applicant to document its willingness to make services available to all segments of the service area population, regardless of ability to pay. The recommendation is satisfied by CCFH's commitment in the application to perform seventy-six (76) diagnostic catheterization per year to the uninsured population. Availability, Accessibility, Quality of Care, Efficiency, Appropriateness, Extent of Utilization, and Adequacy of Like and Existing Services in the Service District of the Applicant Geographic Availability and Accessibility There are twelve existing providers of adult inpatient cardiac cath services located in District 10. There are five of these providers within five miles of CCFH: Holy Cross, North Ridge, IPMC, BGMC and Pompano Beach Medical Center. Less than eight miles away are three other providers: Plantation General Medical Center, Florida Medical Center and North Broward Medical Center. A thirteenth program was approved at University Medical Center in 1994. The road system in Broward County is highly developed. There are many facilities within a few minutes drive of any resident in Broward County. In sum, even were CCFH's aspiration of obtaining approval for an inpatient cardiac cath lab never granted, there is no portion of Broward County that is without close, easy and reasonable geographic access to diagnostic inpatient cardiac care. Extent of Utilization Several providers have multiple laboratories, including North Ridge with three separate cardiac catheterization labs. Not counting the new program at University Medical Center, there are 19 cardiac cath laboratories in the District. At a minimum, a single cardiac catheterization laboratory can reasonably accommodate between 1500 and 2000 cardiac catheterizations in a single year. The nineteen labs of the providers existing and in operation at the time of hearing, therefore, had the capacity to perform between 28,500 and 38,000 cardiac catheterizations per year. During 1993, there were 14,701 cardiac caths performed at existing providers in District 10, a number, it may be safely assumed, no more than half of the capacity supported by existing providers. Individually, no existing provider operated at as much as 80 percent capacity and six of the twelve operated at less than 30 percent capacity. Excess capacity led the Agency to conclude in its State Agency Action Report, ("SAAR"): the need for an additional program cannot be supported in total, although based on current and proposed referral patterns, the impact of an additional cardiac cathe- terization program in the district on these underutilized facilities appears minimal. Cleveland Clinic Composite Ex. No. 2, Tab 6, SAAR, p. 13. The primary impact of an inpatient program at CCFH will be on BGMC and Holy Cross, where CCF physicians currently perform diagnostic caths. The adequacy of existing capacity was confirmed by testimony from the Chief of the Certificate of Need and Budget Review sections of the Agency that she is not aware of any individuals within two years of June of 1994 who have been denied access to inpatient diagnostic cardiac cath services because of lack of capacity. Quality of Care Quality assurance, peer review, and credentialing processes are established in order to ensure the highest quality of care. The objective of these processes is to reduce the possibility of unwanted events during the course of treatment. The American College of Cardiology and American Heart Association ("ACC/AHA") have established guidelines regarding the number of diagnostic cardiac catheterization procedures a physician should perform in order to maintain proficiency in the procedure. The guidelines provide, generally, that each physician perform a minimum of 150 procedures annually. And, in general, the guidelines provide that where a physician performs at multiple laboratories, a minimum of 50 procedures should be performed at each laboratory. Some hospitals in Broward County do not require physicians to meet the guidelines. For example, the clinical criteria for performing cardiac cath services at BGMC require that a physician perform as few as 25 diagnostic procedures annually. During 1992 and 1993, only two of the nineteen physicians credentialed to perform diagnostic cardiac catheterization services at NBMC performed more than 40 procedures at the facility. But the guidelines are nothing more than for the purpose of offering guidance to a director of a laboratory in making decisions for what is appropriate in terms of operator experience with regard to credentialing. They are "not written in stone." (Tr. 367.) Exceptions are justifiably made on a case-by-case basis and do not necessarily reflect on quality of care. And there are exceptions in the guidelines, themselves, made for physicians who have extensive experience, that is, more than a thousand independently prepared cases. Nonetheless, one would expect that adherence to the guidelines would enhance quality of care. With the exception of the indirect negative reflection on quality of care that failure to adhere to the guidelines might have, and which could arguably lead to an inference that quality of care was suffering in some existing providers, there was no evidence that quality of care for inpatient cardiac catheterization patients suffers in Broward County. To the contrary, existing providers in District 10 are providing good quality of care. Access for Uninsured Persons Whether on an outpatient or an inpatient basis, CCFH has committed to perform 76 cardiac catheterization on uninsured patients annually, if their application for an inpatient service is granted. On an age-adjusted basis, the use rates for the District 10 uninsured population for diagnostic cardiac catheterization services are significantly below those for the insured population. But whether the use rates signify that the uninsured population of Broward County does not have adequate access to needed cardiac catheterization services is difficult to determine. Dr. Luke, CCFH's expert in health care planning, concluded that uninsured residents of District 10 do not have adequate access. His opinion was met with forceful resistance by other experts in health care planning presented by Cleveland Clinic's opponents. Even the Agency, CCFH's supporter in this proceeding, does not share Dr. Luke's opinion. But Dr. Luke's opinion gains support form the nature of cardiac catheterization. It is a service dependent on referrals. Uninsured persons plainly have more difficulty navigating the referral chain. While there are a number of vulnerabilities in the data Dr. Luke used to reach his opinion, without doubt, there are at least 76 members of the uninsured population per year in Broward County who need cardiac catheterization services annually. Whether they would receive such services, were Cleveland Clinic's application granted, is dependant upon whether they can successfully make their way along the referral chain. CCF, as a multi-specialty practice group, has few primary care physicians, the physicians who would make the initial referral that would lead to a cath procedure at CCFH. But, CCFH and CCF will engage in a program of outreach to identify appropriate uninsured candidates for cardiac catheterization services. CCFH and CCF will inform primary care physicians and clinics of their commitment to provide care to the uninsured population, and will encourage physicians to refer candidates for diagnostic cardiac catheterization services to CCF and CCFH. This outreach program enhances the chances that District 10's uninsured in need of cardiac catheterization services will receive them but there is no guarantee that the outreach program will be successful. Nor has CCFH, in its application or otherwise, offered such a guarantee. Ability and Record of the Applicant to Provide Quality of Care The CCFH cardiac catheterization program will enhance the quality of care offered in Broward County. The CCFH program will model its quality assurance, peer review, patient care, and credentialing/recredentialing protocols upon those used by the Foundation. These protocols meet or exceed the elements necessary to a successful quality assurance program contained in "Guidelines for Continuous Quality Improvement in the Cardiac Catheterization Laboratory" by Members of the Laboratory Performance Standards Committee of the Society for Cardiac Angiography & Interventions, a committee chaired by an employee of the Foundation, Frederick A. Heupler, Jr., M.D. The Foundation's quality assurance and peer review programs provide expressly for sharing quality assurance data with all physicians who perform procedures in the laboratory. The Foundation conducts weekly conferences at which data and specific cases are discussed among all the physicians performing procedures in the laboratory. The CCF physicians who will perform procedures in the CCFH laboratory will participate in the Foundation's conferences via the Foundation's telemedicine capability. The conferences perform an important educational function because in order to bring about quality improvement, the purpose of quality assurance, it is essential to provide feedback to all the physicians, nurses and technicians involved. The closed nature of the inpatient laboratory will enhance quality of care in several ways. Low-volume operators will be excluded thereby enhancing quality control. It will be easier to assure that the physicians with access to the lab meet recommended minimum volume standards necessary to assure quality. Cooperation is enhanced in the standardization of indications for procedures, practice of procedures and protocols. And, the ability to evaluate physicians' performances for purposes of recredentialing is enhanced. CCFH's status as an academically oriented organization enhances quality of care. For example, the presence of post- graduate fellows training in cardiology not only provides support to the laboratory but through their enthusiasm and inquisitiveness provide an animated atmosphere that brings out the best in the practitioners. As well as taking time to educate the fellows, the physicians spend more time educating the nursing staff. The nursing staff, therefore, benefits, in turn, from the stimulating environment afforded by the academic orientation to be provided in the Cleveland Clinic setting. The establishment of a cardiac catheterization program at CCFH will allow the CCF cardiologists to interact clinically with the rest of the CCF staff physicians, who practice predominantly at the hospital. The collegial clinical relationship among the CCF staff physicians enhances quality of care. The CCFH program will perform a minimum of 300 procedures annually by the second year of operation, consistent with the minimum number of procedures called for by the ACC/AHA Guidelines to ensure quality of care. The CCFH program will have a sufficient number and complement of staff to provide high quality services to the patients projected to be served by the program. The number and complement of staff are sufficient to allow for rapid mobilization of an on-call team 24 hours a day, seven days per week. The staff projected for the CCFH program will include a program director, board certified or board eligible in cardiology, radiology, or with subspecialty training in cardiology or cardiovascular radiology; a physician, board- certified or board-eligible in cardiology, radiology, or with specialized training in cardiac catheterization and angiographic techniques who will perform the examination; support staff, specially trained in critical care of cardiac patients, with a knowledge of cardiovascular medication and an understanding of catheterization and angiographic equipment; support staff, highly skilled in conventional radiographic techniques and angiographic principles, knowledgeable in every aspect of catheterization and angiographic instrumentation, with a thorough knowledge of the anatomy and physiology of the circulatory system; support staff for patient observation, handling blood samples and performing blood gas evaluation calculations; support staff for monitoring physiological data and alerting the physician of any changes; support staff to perform systematic tests and routine maintenance on cardiac catheterization equipment and be available immediately in the event of equipment failure during a procedure; and support staff trained in photographic processing and in the operation of automatic processors used for both sheet and cine film. The CCFH plan for care both before and after the procedure will be of high quality. 74. CCFH's cardiac catheterization program will be capable of providing immediate endocardiac catheter pacemaking in case of cardiac arrest and pressure recording for monitoring and to evaluate valvular disease, or heart failure. The following noninvasive cardiac or circulatory diagnostic services will be available at CCFH: Hematology studies or coagulation studies; Electrocardiography; Chest x-ray; Blood gas studies; and Clinical pathology studies and blood chemistry analysis. Availability of Alternatives to the Project While there was expert opinion that an appropriate alternative would be to use the expertise of CCF physicians by operating "a high quality Cleveland Clinic program in one of the existing combined diagnostic and open heart approved facilities," (Tr. 1415,) there are disadvantages to this alternative. First, the transfer of patients from CCFH to a hospital providing inpatient cardiac catheterization services poses risks to patients and anxiety for both the patient and family. Transfer of patients also disrupts continuity of care. Second, the equipment for the laboratory has been purchased. If the project is not implemented, inpatients at CCFH will bypass that equipment and be transferred elsewhere. Third, there are no cost savings associated with the alternative since CCFH will implement an outpatient program if the inpatient program is not approved. Fourth, the South Florida community will not benefit from the research and education capabilities of CCFH and Foundation. Finally, the community will not benefit from whatever free care it might receive if CCFH is able, in fact, to make good on its pledge for the provision of free care. In contrast, the proposed program will benefit the community by enhancing the chances of improving access to the uninsured population, expanding and enhancing medical research and education, and furthering development of the only fully-integrated health care provider in South Florida, which, in turn, will improve quality and control costs. The Need For Research and Educational Facilities North Broward Hospital District has a division of academic affairs related to the training of medical students. It has established medical student affiliations with Nova Southeastern College of Osteopathic Medicine in Broward County and the University of Florida School of Medicine. Broward General Medical Center is seeking approval to establish a residency program and currently instructs third and fourth year medical students on a regular basis. These students often observe cath lab procedures at both BGMC and NBMC. By 1995, BGMC will be listed as an available point of residency in the catalog for the University of Florida School of Medicine. In addition to assisting in the education of medical students, the District is seeking national approval as a continuing medical education (CME) site. CME programs are presently approved by the Florida Medical Association. The week the hearing in this proceeding commenced, for example, the District's division of academic affairs hosted a program on emergency cardiology services sponsored by the University of Florida. Research programs serve an important function as a point of dissemination of new medical techniques. The District is engaged in secondary research. It was recently selected to participate in a multi-center lifestyle heart trial. Six sites were selected nationwide with BGMC being one of the approved sites. The program will do research regarding the reversal of coronary heart disease. The District's hospitals, moreover, have an Institutional Research Board. Any physician can propose a research program to the Board. But, despite BGMC's research activity, there are no recognized research institutions in District 10. Unlike the research in which the District is engaged which is secondary in nature, academic centers such as the Foundation, perform primary or original research. The Foundation, together with CCF and CCFH, is actively engaged in research related to cardiology. Included among CCF and CCFH's research activities are multi- center research studies, most of which are coordinated with the Foundation. The Foundation serves as the principal investigator for those studies but District 10 will benefit from the close relationship with the Foundation enjoyed by CCF and CCFH. There are substantial benefits associated with graduate medical education, including enhancing the quality of medical services provided. When patient care takes place in the milieu of education and research, as it does at the Foundation's facility in Cleveland, it enhances a hospital's opportunity to recruit physicians interested in that type of activity more than in the economics of medicine. Because of the close relationship between the Foundation and CCFH, the benefits provided by the Foundation's research and educational environment spill over to the applicant. For example, the Foundation has one of the largest cardiology residency programs in the United States. Residents from that program, as well as other Foundation residency programs, rotate to CCF/CCFH for part of their training. The number of Foundation residents rotating to CCF/CCFH has grown from 6 to 29 over five years. Most of the residents are in primary care and internal medicine programs. CCFH will provide educational benefits independent of the benefits that flow from the Foundation. There exists a need for additional graduate medical education training sites both in Florida and in District 10. Florida ranks 41st among the 50 states in the number of residents per population. To help meet this need, CCFH provides an independent residency in surgery under the guidance of CCF. It is the only accredited graduate medical education program in District 10. The proposed inpatient cardiac cath lab will further the training of graduate medical students both in Florida and Broward County by increasing their educational opportunities. The program will provide CCFH with the full diagnostic capabilities needed in order to train internists and other primary medicine specialists in evaluating and caring for cardiovascular patients. The ability of primary care physicians to evaluate and care for cardiovascular patients is critical, given the high rate of cardiovascular disease in South Florida. The provision of graduate medicine education requires institutional commitment. The applicant is so committed and its application is backed by the commitment of CCF. The approval of the application will enhance medical research and education in District 10 and the State of Florida. Availability of Resources CCFH's estimate of project costs is found on the second page of Schedule 2 on page 63 of its omissions response. A breakdown of the estimated costs appears at pages 114 and 115 of the omissions response on Table 25, AHCA Form 1455, 1993. The total of the estimate, $117,000, accurately reflects the total costs for the application. CCFH has available the $117,000 necessary to meet the costs and to finance implementation. CCFH will be able to recruit the nursing and technical staff necessary to the implementation of the project. Long-term Financial Feasibility The immediate financial feasibility of the project is not in doubt. CCFH has available funds in cash from operations with which it intends to fund the start-up of the project. The long-term financial feasibility of this project is another matter. Measured by whether the project produces a positive net income following its start up period, long-term financial feasibility should not be an impossible matter to judge within accepted norms. But, determining long-term financial feasibility in this case is difficult because of the troublesome task of sorting out the truth when experts, all duly-qualified, have opinions, either as to the underlying data and assumptions or the ultimate conclusion, that are diametrically opposed. Petitioners and intervenor attacked fervently the assumptions underlying the opinion of CCFH's expert in health care finance that the project is financially feasible in the long-term. These assumptions were, in the main, provided to the finance expert by CCFH's expert in health care planning, Dr. Luke. The attack was launched from various angles. One expert witness noted that the Agency reported in its SAAR that it was unable to determine long- term financial feasibility and that such an observation by the Agency ordinarily would lead to preliminary action by the Agency in the form of a denial. Moreover, inconsistencies between the Application and the subsequent application were viewed by experts other than Dr. Luke as "profound." (See e.g., Tr. 1300.) Conclusions reached in the application were seen as inconsistent by opposing experts when compared with data that was used to support the opinion of CCFH's finance expert, data provided by the Foundation with regard to its hospital in Cleveland, Ohio. Furthermore, internal inconsistencies in the Application were observed by experts called by CCFH's opponents. These included that CCFH overstated volume projections, overstated its service area, used a flawed charge methodology, understated its average length of stays for four DRGs related to cardiac catheterization and failed to account for expenses associated with the outpatient cath lab that would support the inpatient lab, if approved. These inconsistencies led the opponents' expert witnesses either to offer the opinion that the project was not financially feasible in the long-term or to view the data and assumptions used by CCFH's financial expert as so flawed as to prevent the expert from reaching the opinion held by CCFH's financial expert and to constitute a failure in proof by CCFH that its project is financially feasible in the long term. The flaws observed by CCFH's opponents' experts, however, were explained by Dr. Luke so that the opinion of CCFH's expert in health care finance, as best can be determined, remains valid. For example, Petitioners and intervenor pressed hard on the average length of stay assumptions provided for various DRGs. Dr. Luke conceded that the average lengths of stay provided, based on the cardiac cath inpatient treatment by CCF physicians at BGMC and other area hospitals, are "certainly shorter than the [overall] experience of other area providers." (Tr. 1100, 1101.) But, in response to the assertion that the shorter length of stay could be due to treatment at CCFH prior to the transfer to another area hospital where the cardiac cath procedure was to be performed, Dr. Luke offered two explanations. First, there was no evidence to suggest that a much larger percentage of CCF cardiac cath patients were transferred than were patients of other physicians. Second, the total length of stay in the hospital would be less if a patient were treated solely at CCFH and not transferred to another hospital because of efficiencies in scheduling and time lost in the transfer, itself. Dr. Luke's opinion, in this regard, was bolstered by analysis as to length of stay of patients under the care of CCF physicians in DRGs comparable to inpatient cardiac cath DRGS. With regard to DRG 143, (Chest pain), CCFH's average length of stay is tied for the lowest in the district. Others are the lowest. CCFH's 2.7 average length of stay for DRG 140, for example, the lowest in the District, may be contrasted with NBMC's average length of stay for DRG 140, which is 4.3, nearly 160 percent higher than CCFH's. The notion, therefore, that CCFH would have significantly lower average lengths of stay for cardiac cath patients is not inconsistent with available data. Average length of stay is the critical building block in the financial feasibility model used by CCFH in its application. But, on rebuttal, CCFH's expert in health care offered the opinion that the project is financially feasible in the long term based on a methodology under which average length of stay is eliminated as a variable. This methodology uses "Cost per Case" data. CCFH's expert compared CCF physicians' cost per case to the costs per case of both petitioners and their experts in this proceeding as well as data from three clients of the expert who provide inpatient cardiac cath services and employ casemix cost accounting systems: Holmes Regional Medical Center, Sarasota Memorial Hospital and Memorial Medical Center of Jacksonville. The outcome of the analysis was that the cost per case projected by CCFH, $2225, fell in the middle of the range of the other providers, which ran from a low of approximately $1600 to a high of approximately $3000. Based on a cost per case analysis, CCFH's health care finance expert concluded that even were the CCFH cost per case understated and turned out to be as high as the average cost per case of any of the petitioners in this case, the project would still be financially feasible in the long term. To take another of the attacks raised by petitioners, that CCFH failed in its application to take into account for expenses associated with the outpatient cardiac cath lab that would support an inpatient lab, it was not necessary that there be such consideration in the application. CCFH has committed the costs associated with constructing and equipping it outpatient cardiac cath program. This commitment makes these costs "sunk." They will be undertaken regardless of whether CCFH's application is granted or not and so are not part of the costs of the inpatient project. It is difficult to determine whether Dr. Luke or his critics are right. On balance, it seems that the matter swings in Dr. Luke's favor. In any event, the testimony on rebuttal which established financial feasibility based on a cost-per-case methodology was not overcome by the parties opposed to CCFH's application. In sum, the project will be financially feasible in the long term. The project will generate a positive net income and positive cash flow after its start-up period. The projections of utilization relied upon in evaluating the long- term financial feasibility of the program are reasonable and achievable. Those projections are based on the historical experience of CCF physicians who perform cardiac catheterization services at other Broward County hospitals. Those physicians performed in excess of 400 procedures in 1992 and 1993. There was growth of approximately 2000 diagnostic cardiac catheterization procedures performed in District 10 between 1992 and 1993. The CCF physicians will need to obtain modest increases in their market shares in order to meet the projections of utilizations. The payor mix assumptions contained in the application are reasonable and achievable. The application accounts for all operational expenses necessary to the provision of inpatient cardiac catheterization services at CCFH. The Needs of a Multidisciplinary Clinic A multidisciplinary clinic is an organization which employs salaried physicians in a variety of medical specialties to provide diagnostic and therapeutic services to its patients. The physicians practice in a collegial collaborative environment. The multidisciplinary group clinic model promotes ease and economy in the diagnosis and care of patients. The clinic model uses a unified medical record, affording each physician who comes into contact with a patient all data and information pertaining to the patient. CCF is the only multidisciplinary group clinic in South Florida. Approximately eight percent of the discharges by CCF and CCFH in Major Diagnosis Category Five ("MDC-5"), which is the cardiac diagnostic group of the International Classification of Diseases, are attributable to patients who reside outside District 10 and the service districts adjacent to District 10. For purposes of health planning, a service district is a geographic area from which at least two-third's of a health care provider's patients are expected to come. The one-third to 20 percent remainder of the health care provider's patients come from outside the service district. A service district is used in analyzing growth in population or growth in demand for services because such growth will occur most intensively within the service district. The service district for CCFH includes all of Broward County and the southern portion of Palm Beach County. On average, approximately four percent of the MDC-5 discharges for other District 10 facilities reside outside District 10 and the adjacent service districts. The difference between the percentage of CCF and CCFH MDC-5 discharges from outside District 10 and service districts adjacent to District 10 and the average percentage of other District 10 hospitals' MDC-5 discharges from outside District 10 and adjacent service districts is statistically significant. Impact on Costs and Effects of Competition The CCFH program will sharpen competition for cardiac cath services in Broward County. CCFH, in conjunction with CCF and the Cleveland Clinic Florida Health Plan ("CCFHP"), constitute a fully-integrated health care delivery system. A fully integrated system enables a person in need of any type of medical care to receive services through the system. The relationship that exists between CCFH, CCF and CCFHP are unique in the Broward County market. Fully integrated health care delivery systems have been shown generally to produce efficiencies of operations and to improve the quality of care. The Cleveland Clinic system has had a positive impact on both the quality and cost efficiency of care offered in Broward County. CCH's average length of stay for patients and average charges for treatment of common cardiac problems are, on average, the lowest in Broward County. Both in Broward County and generally, health care is moving toward an environment of managed care and managed competition. Managed care and managed competition will result in a more competitive system, which will involve providers of health services bearing risk, in terms of prospective payment or prepaid medical plans. Managed care is intended to achieve high quality and cost efficiency in the delivery of medical services. The integrated health care delivery system model in place at CCFH is well suited for an environment of managed care and managed competition. Similar models in California, for example, have proven effective in offering high quality services at a lower cost in the California managed competition environment. In order for an integrated health care delivery system to achieve the goals of lower consumer costs and high quality, it must be able to control all elements of service delivery, including the costs of delivering services. The better the system can control its costs, the more competitive it can be. If the application is approved, CCFH will be able to control all its elements of the delivery of cardiac catheterization services. The approval of the application will enable CCFH to compete more effectively in the managed care environment because of the desire on the part of purchasers in the marketplace to receive the maximum number of services available. The more comprehensive CCFHP is the more its competitive stature is enhanced in the local market for health care services. To the extent that managed care entities compete on the basis of price, lower prices for health care services will occur. CCFHP has formed an accountable health partnership, ("AHP"). AHPs are organizations comprised of a service delivery system and a financing vehicle. The CCFHP AHP recently submitted a bid to a community health purchasing alliance ("CHPA"), which entities are organized under Florida law to serve as a clearinghouse of information to purchasers of health care, including the assembling and dissemination of information on constituent AHPs to interested parties. The CCFHP bid was the second lowest of the proposals offered to both the Broward County and Palm Beach County CHPAs. While the approval of the application is likely to lower the number of procedures done at all other programs in District 10, it will not have a material adverse impact on the quality of services offered at any existing inpatient cardiac cath program in the District. For those most likely to be affected by the program, approval does not at all threaten that they will drop below 300 procedures since the number of procedures conducted in their programs is in the thousands. For other programs operating at or about 300 procedures annually, approval should not impede their ability to perform in excess of 300 procedures annually. The approval of the application will not have a material impact on University Hospital, which recently received a certificate of need authorizing the development of an inpatient cardiac cath program. The approval of the application will result in the redirection to CCFH of cases primarily from BGMC and Holy Cross. Even with the redirection of cases, both BGMC and Holy Cross will retain in excess of 1000 procedures annually, which is more than adequate to ensure a program's quality. Nor will approval have a material adverse financial impact on any of the petitioners or intervenor. Both Holy Cross and North Ridge have enjoyed substantial operating margins and are otherwise extremely solvent. In the cases of IPMC, BGMC and NBMC, it is appropriate to evaluate the impact on the District system as a whole. The District has substantial financial resources. In the contexts of these organizations' financial strength, the impact of the CCFH inpatient cardiac cath program will be inconsequential. Past and Proposed Provision of Services to Medicaid and Indigent Patients It is the policy of CCFH to accept all patients, regardless of ability to pay. In addition to its commitment to provide free services to 76 uninsured patients as a condition of approval of the application, CCFH will also seek out Medicaid patients. This conditional commitment has the potential to be a substantial contribution to alleviating problems of the uninsured in obtaining needed inpatient cardiac catheterization services. But, as stated above, there simply is no guarantee that the commitment will be fulfilled. The Decision in the Dr. John T. MacDonald Foundation Case On April 1, 1994, slightly more than two months before final hearing in this case commenced, Hearing Officer Michael M. Parrish rendered a Final Order in Dr. John T. MacDonald Foundation, et al., v. Department of Health and Rehabilitative Services, DOAH Case Nos. 91-6390R (consolidated). The issue in the case was whether Rule 10-5.032, Florida Administrative Code, is an invalid exercise of delegated legislative authority. By the Final Order, the hearing office declared only a relatively small part of the rule invalid, leaving almost the entire text of the rule intact. Rule 10-5.032 "implements the provision of section 381.706(1)(c), F.S., which provides that certificate of need shall not be required for an expenditure to provide an outpatient service." Pertinently to this case, the rule goes on to define[] the requirements for the establish- ment of inpatient cardiac catheterization services, including minimum requirements for staffing, equipment, and a need methodology for cardiac catheterization programs. A certificate of need for the establishment of inpatient cardiac catheterization services shall not normally be approved unless the applicant meets all relevant statutory criteria, including the standards and need criteria set forth in this rule. Dr. John T. MacDonald Foundation, at 8. Sub-section (8) of the rule is entitled, "Need Determination." Paragraph (c) of subsection (8), also entitled, "Need Determination," sets out the "need formula" as follows: A new adult cardiac catheterization program may be approved if the difference between the projected program volume and the number of adult cardiac catheterizations performed in the service planning area during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool, minus the number of approved adult programs times 300, is at or exceeds a program volume of 300 for the applicable service planning area. This need formula is expressed as follows: NN = PCCPV - ACCPV - APP Where: NN is the 12-month net adult program volume need in the service planning area projected 2 years into the future for the respective planning horizon. Net need projections are published by the department as a fixed need pool twice a year. The planning horizon for applications submitted between January 1 and June 30 shall be July of the year 2 years subsequent to the year the application is submitted. The planning horizon for applications submitted between July 1 and December 31 shall be January of the year 2 years subsequent to the year which follows the year the application is submitted. PCCPV is the projected adult cardiac catheterization program volume which equals the actual adult cardiac catheterization program volume (ACCPV) rate per thousand adult population 15 years and over for the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool, multiplied by the projected adult population 15 years of age and over 2 years into the future for the respective planning horizon. The population projections shall be based on the most recent population projections available from the Executive Office of the Governor which are available to the department 3 weeks prior to the fixed need pool publication. ACCPV equals the actual adult cardiac catheterization program volume for the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool. APP is the projected program volume for approved adult programs. The projected program volume for each approved program shall be 300 admissions. Id., at 14 and 15. The rule goes on in (8)(d): Irrespective of the net need calculated under paragraph (c), no additional cardiac catheterization program shall normally be granted unless ACCPV divided by the number of operational programs for the service planning area is at or exceeds a program volume of 300 patient admissions. Id., at 15. The Hearing Officer summarized the rule as follows: it, projects a number of anticipated admissions to cardiac catheterization programs in the horizon year by multiplying the current use rate (number of admissions per thousand adult population) times the projected population. If the difference between the current volume and the projected volume is greater than 300, a new program may be awarded, so long as all of the existing programs, plus the proposed program, are projected to perform an average of 300 admissions each. An approved program is assigned a value of 300 for purposes of determining the average. Id., at 15 and 16. After summarizing the rule in the Final Order, the hearing officer took it to task on the basis of a number of deficiencies, not the least of which is that the rule fails to take into account the number of cath laboratories as opposed to the number of cath programs within a district. This point is found in Finding of Fact No. 29 in the Final Order. Even the most cavalier reading of Finding of Fact No. 29 shows the point could not have been made more plainly: The rule does not take into consideration the number of individual catheterization laboratories, rather it considers the number of cardiac catheterization programs. The difference is that an individual hospital will have only one program, but it may have more than one laboratory in each program. Id., at 19. In addition to deficiencies, the rule, in the view of the hearing officer, contains a fatal flaw. It does not address the capacity of existing cardiac catheterization programs or the capacity of existing laboratories. Furthermore, its use of 300 as the threshold number of procedures was an unexplained deviation from an earlier standard of 600 procedures as the threshold. This deviation was also an "unexplained departure from the National Guidelines for Health Planning, and an unexplained departure from other published guidelines recognized as authoritative." Id., at 25. The hearing officer went on in the Final Order to find that "[a]n essential ingredient of any functional need determination methodology is a method for identifying unmet need." Id., at 26. To do so, the methodology must identify "not only ... a reasonable estimate of future need," but also "a reasonable estimate of the future capacity of existing providers to meet that need." Id. The rule's shortcomings are summarized in Finding of Fact 43 of the order: The failure of the subject rule to consider the future capacity of existing providers in calculating future need has an adverse effect upon the ability to accurately predict future unmet need and also has a potential for adverse effect upon the quality of care offered by the existing providers. The rule authorizes the approval of a new inpatient cardiac catheteri- zation program even though many of the existing programs may be operating substantially below their capacity. The addition of new programs under such circumstances has the adverse effect of tending to reduce utilization of existing facilities that are already functioning well below capacity. Id., 26, 27. Ultimately, parts of the rule were determined by the Hearing Officer to be beyond the bounds of "reasonableness" and therefore arbitrary and capricious, and hence, an invalid exercise of delegated legislative authority, see Section 120.52(8), F.S., as follows: The term "operational programs," was determined arbitrary and capricious because the term failed to take into account the number of laboratories within each program. The hearing officer wrote, "[I]llogical results [produced by the use of the term] can be avoided only by use of a methodology that takes into account the number of existing and approved laboratories." Id., at 32; The use of the phrase "a program volume of 300 patient admissions" was determined un- reasonable because it is inconsistent with the National Guidelines For Health Planning and other authoritative guidelines and because it bears no rational relationship to the actual capacity of cardiac catheterization laboratories, Id., at 33; and, Paragraph (9) of the rule was determined to be arbitrary and capricious because "it has the effect of ignoring the existence of any new laboratories added to existing facilities." Id., at 34. The effect of the hearing officer's ruling and the explanation underpinning the ruling was to turn much of the rule, and certainly the numeric need formula, into mincemeat. It clearly called for the initiation of rulemaking if AHCA wanted a rule establishing "need methodology" for calculating numeric inpatient cardiac catheterization program need. But AHCA chose to look at the Final Order in a different way, a way that one would think would occur only in a hearing officer's wildest nightmare. Instead of reading the Final Order in its entirety, and taking it as a whole in able for the order to make sense, AHCA, followed only the strict, literal, reading of paragraphs 4., and 5., on pages 35 and 36 of the order, where it is declared: That the following portions of Rule 10-5.032, Florida Administrative Code, are an invalid exercise of delegated legislatively authority for the reasons stated above: the use of the term "operational programs" at paragraph (8)(d), the use of the phrase "a program volume of 300 patient admissions" at paragraph (8)(d), and the last sentence of paragraph (9). That, with the exception of the portions of the rule described in the immediately preceding paragraph, Rule 10-5.032, Florida Administrative Code, has not been shown to be an invalid exercise of delegated legislative authority, and the chal- lenges to other portions of the rule are hereby dismissed. Id., at 35, 36. By reading the declaration of partial invalidity "literally," in the strictest sense of the word, AHCA chose to leave in effect the numeric need formula: "NN = PCCPV - ACCPV - APP." This decision was made despite the fact that nearly the entire Final Order is devoted to an explanation of why the formula is dysfunctional in ways which strike at the very heart of the Certificate of Need program. Moreover, the strictly literal reading of the Final Order by AHCA leaves a rule on the books with portions which make no sense. AHCA conceded as much, through its Chief of the Certificate of Need and Budget Review sections of the Agency, elicited during the hearing in direct examination by AHCA's own counsel: Q: ... Now, specifically, as to paragraph 59C-1.0328, I think it is (d), with the language that has been stricken by the hearing officer in the John T. MacDonald case, does that paragraph make any sense to you? A: Not without that language in there, no. It doesn't read as something that could actually function. (e.s., Testimony of Elizabeth Dudek, Tr. 1468-1469.) The remainder of the Final Order was characterized in this manner by the Agency, Well, in looking through the final order, and then discussing it with other members of my staff and the legal staff, and in determining how we actually utilize the rule and what the difference in what is stated within the final order and the rule ... there did not appear to be any language that indicated ... that we needed to review capacity, nor the number of laboratories that were there. There were some comments related to both, but the findings were only such in the final order that the provisions of (8)(d) and then of (9) were deleted. (Tr. 1470-1). Suffice it to say, as will be articulated in the Conclusions of Law, below, this hearing officer does not read the Final Order in the Dr. John T. MacDonald Foundation case in the same way as does the Agency.
The Issue Whether disciplinary action should be taken against the license to practice medicine of Respondent, Howard E. Gross, M.D., based on allegations that he violated Subsection 458.331(1)(t), Florida Statutes, as alleged in the Administrative Complaint in this proceeding.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and the entire record in this proceeding, the following findings of fact are made: Petitioner is the state agency charged with regulating the practice of medicine in the State of Florida pursuant to Section 20.43, Florida Statutes, and Chapters 455 and 458, Florida Statutes. At all times material to this proceeding, Respondent was a licensed physician in the State of Florida, having been licensed in 1971 and issued license number ME 0017039. Respondent has never been disciplined previously. Respondent is board-certified in internal medicine (1970) and cardiovascular diseases (1973). He is an interventional cardiologist. He has practiced medicine in Orlando since 1971. For the past 10 years, he has done a high-volume catheterization practice. In the most recent one-year period, he did approximately 500 interventional procedures and 400 diagnostic procedure, and in almost all instances, the catheterization involved a ventriculogram. On or about February 18, 1997, patient L. D. L., an 84-year-old male with a history of coronary artery disease, presented to Orlando Regional Medical Center, for catheterization and possible rescue angioplasty to be performed by Respondent. Respondent performed a cardiac catheterization on the patient. During the catheterization procedure, Respondent advanced a 6-French pigtail catheter into the patient's left ventricle and performed a ventriculogram by injecting what he thought was approximately 20cc of ionic dye, utilizing a MEDRAD injector. During the catheterization procedure, Respondent noted that he did not obtain opacification of the left ventricle and noted that free air was in the left ventricle. In fact, Respondent injected the patient with approximately 15cc to 20cc of free air rather than dye. As a result, the patient suffered cardiac arrest, and his blood pressure fell to zero. Respondent initiated various life-saving measures to counter the effects of the injection of free air, which were unsuccessful, and the patient was pronounced dead at approximately 1:55 p.m., as a result of cardiac arrest brought on by an air embolus. At the time, Orlando Regional Medical Center (hereinafter "ORMC") had a policy/procedure (No. 3233-MEDRAD- 0001) for Cardiac Catheterization Laboratory (hereinafter "Cardiac Cath Lab") personnel (Respondent's Exhibit 1). It delineated specific procedures to ensure "the use and safe applications of the power injector." In particular, it states the procedure to be employed by Cardiac Cath Lab staff in loading the MEDRAD injector. At ORMC and other hospitals, Cardiac Cath Lab personnel load the MEDRAD injectors without physician supervision. As explained by both expert witnesses, loading the syringe with dye is a very simple task for a nurse or scrub tech to perform. In the instant case, the nurse loading the MEDRAD injector interrupted the loading procedure because she was concerned about the patient's lab values (kidney function) and was uncertain about what type of dye Respondent would order. Respondent was not yet in the Cardiac Cath Lab. The nurse anticipated asking Respondent which type of dye he wanted and then loading that type dye into the MEDRAD injector. When she interrupted the loading procedure, the nurse left the plunger positioned in the syringe where it appeared that the syringe had been loaded with 20 to 25cc of dye and the injector arm pointing upward. The nurse then left the Cardiac Cath lab to get her lead apron anticipating only a monetary absence from the lab. Unknown to her, Respondent entered the Cardiac Cath Lab within seconds after her departure. Respondent was not in the Cardiac Cath Lab at any time while the nurse was manipulating the MEDRAD injector. As the nurse secured her lead jacket, she was called to another patient to administer medication which required the presence of a registered nurse per hospital procedures. In the nurse's absence, the catheterization and ventriculogram of the patient proceeded. The Registered Cardiovascular Technician (hereinafter "RCT"), observing the MEDRAD injector in what appeared to be a prepared state, wheeled it to the patient's side and lowered the injector arm into a position to receive the catheter. The RCT testified that a MEDRAD injector would never be left as she found it, plunger at the 20 to 25cc mark and arm elevated, if the machine was not loaded with dye. The ionic dye used in the procedure is clear and, due to the nature of the MEDRAD plunger and casing, it is extremely difficult to tell if dye is in the syringe. Further compounding the difficulty in observing dye in the syringe is the fact that the lights in the Cardiac Cath Lab are lowered during the procedure to allow better visualization of the video monitor. While the RCT positioned the MEDRAD injector at the patient's side, Respondent was in the process of entering the catheter into the patient, manipulating the catheter in the patient, visualizing its position in the patient's heart on the video monitor and monitoring hemodynamics. Petitioner's expert witness testified that Respondent did justifiably rely on the Cardiac Cath Lab personnel to follow the procedure outlined in Respondent's Exhibit 1. The nurse and cardiovascular technician did not follow the policy/procedure and, as a result, allowed the presence of air in the MEDRAD injector. After the catheter is properly located in the patient's heart, the external end of the catheter is attached to the MEDRAD injector. Petitioner's expert witness opined the Respondent should have used extension tubing to effect the connection between the catheter and MEDRAD injector. Testimony revealed that extension tubing is used by many physicians who perform cardiac catheterization. Respondent's practice was not to use extension tubing. Both Petitioner's and Respondent's expert witnesses agreed that Respondent's choice not to use extension tubing was a "technique" choice and did not fall below the "standard of care." Petitioner's expert opined that Respondent should have been present in the Cardiac Cath Lab to observe the loading of the MEDRAD injector. Testimony revealed that at ORMC and other hospitals it was the Cardiac Cath Lab staff's responsibility to load the MEDRAD injector without the direct supervision of physicians and that physicians are rarely in the lab when the MEDRAD injector is loaded. The "standard of care" does not require the physician to watch the loading of dye or the expulsion of air from the syringe in the loading process. Petitioner's expert opined that Respondent should have performed a test injection (a process where a small amount of dye is injected into the heart prior to the main injection). Respondent's expert testified that under certain circumstances (none of which is applicable to the instant case) test injections were appropriate; those circumstances occur less than 5 percent of the time. Electing not to perform a test injection in the instant case does not fall below the "standard of care." Petitioner's expert opined that Respondent should have observed a "wet to wet" connection between the catheter and the MEDRAD injector to ensure that no air is in the system. This is accomplished by withdrawing a small amount of blood from the catheter into the MEDRAD injector. Small air bubbles may appear between the blood and dye and are then "tapped" to rise to the top of the syringe. However, Respondent performed the "wet to wet" connection and did not observe anything unusual. He has historically performed some "wet to wet" connections where no air bubbles were present between the blood and dye as it appeared in this case. The RCT confirmed that Respondent performed the "wet to wet" connection, looked for air in the syringe, and tapped on the syringe to loosen and expel air bubbles. Respondent's expert witness testified that he performed an experiment creating a "wet to wet" connection with air in the MEDRAD injector syringe instead of dye. He found that the miniscus formed by blood and air in the syringe has an identical appearance to blood contacting dye in the syringe. The "wet to wet" connection between blood and air in the syringe has the same appearance as a "perfectly clean", "wet to wet" connection between blood and dye in the syringe. Respondent's expert witness testified that from five to ten percent of the time a "perfectly clean", "wet to wet" connection occurs in which no air bubbles appear between the blood and dye. Petitioner's expert witness testified that the physician must make absolutely certain that no gross amount of air is injected into the patient, and, relying on his view that the Respondent as the physician was the "captain of the ship," he testified that "the injection of this volume of air during the ventriculogram fell below the cardiology "standard of care." Petitioner's expert rendered his opinion based upon his examination of the hospital records. Respondent's expert rendered his opinion based upon his examination of the following: Administrative complaint with supporting documents. Dr. Allen Seals' (Petitioner's expert) report and deposition. Agency for Health Card Administration investigative report. ORMC's Code 15 report. Respondent's February 21, 1997 memo for peer review purposes. Hospital records. Death résumé. ORMC's MEDRAD policy/procedure. Experimentation with a catheter and MEDRAD injector. Respondent's expert testified that Respondent met the standard of care in the instant case because he practiced medicine with that level of care, skill, and treatment which is recognized by a reasonably prudent similar physician as being acceptable under similar circumstances. Based on the totality of the evidence presented, the undersigned rejects the expert opinion of Dr. Allen Seals, M.D., Petitioner's expert witness, and accepts as being more credible the testimony of David P. Browne, Jr., M.D., Respondent's expert witness.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order finding that Respondent is not guilty of violating Subsection 458.331(1)(t), Florida Statutes, as alleged in the Administrative Complaint. DONE AND ENTERED this 13th day of February, 2001, in Tallahassee, Leon County, Florida. JEFF B. CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of February, 2001. COPIES FURNISHED: Ephraim D. Livingston, Esquire Agency for Health Care Administration Post Office Box 14229 Tallahassee, Florida 32317-4229 Robert D. Henry, Esquire Martin D. Buckley, Esquire Ringer, Henry & Buckley, P.A. Post Office Box 4922 Orlando, Florida 32801-4229 Tanya Williams, Executive Director Department of Health Board of Medicine 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1701 Theodore M. Henderson, Agency Clerk Department of Health 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1703 William W. Large, General Counsel Department of Health 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1703
Findings Of Fact Case Status On October 15, 1986, Petitioner, Holy Cross Hospital, Inc. (Holy Cross), filed an application with the Respondent, Department of Health and Rehabilitative Services (Department), for a certificate of need to establish an inpatient cardiac catheterization laboratory at its existent acute care hospital in Broward County, Florida. On June 12, 1987, the Department published notice in the Florida Administrative Weekly of its intent to deny Holy Cross' application, and Holy Cross timely petitioned for formal administrative review. Intervenors, Zachariah P. Zachariah (Zachariah), North Ridge Medical Center (North Ridge), Florida Medical Center (FMC), and North Broward Hospital District d/b/a North Broward Medical Center, and Broward General Medical Center (North Broward), current providers of cardiac catheterization services in Broward County, sought and were granted leave to intervene in this proceeding. The standing of these intervenors, with the exception of Zachariah, is not in dispute. Background Holy Cross is a private, not for profit, general acute care facility located at 4725 North Federal Highway, Fort Lauderdale, Broward County, Florida. Currently, Holy Cross operates 574 general acute care beds and 23 intensive rehabilitation beds. Holy Cross has, since 1974, operated an open-heart surgery program at its facility. In 1974, Holy Cross sought leave of the Department to establish a cardiac catheterization laboratory at its facility. That application was denied. As a consequence of that denial, Holy Cross actively solicited physicians to establish such a program within its hospital. In August 1976, Holy Cross negotiated a ten-year lease with Zachariah whereby it leased him 2,833 square feet of space on the third floor of the hospital for use as a cardiac catheterization laboratory. Zachariah purchased the necessary equipment, and has operated a cardiac catheterization laboratory at Holy Cross since 1976. In March 1985, following Zachariah's expansion of his laboratory facilities, he and Holy Cross executed a new lease agreement to continue the operation of his laboratory within the hospital. This lease was for 6,956 square feet of space on the third floor of the hospital and was for a five year term commencing October 15, 1985, with a five year renewal option. Currently, Zachariah has three cardiac catheterization laboratories within the space he leases at the hospital. The proposed facility Holy Cross proposes to renovate and dedicate, as a cardiac catheterization laboratory, 2,500 square feet of existing hospital space immediately adjoining Zachariah's existing catheterization laboratories. The physical renovations are estimated to cost $315,000 and equipment to cost $600,000 for a total capital expenditure of $915,000. The laboratory, as proposed, is capable of providing a range of angiographic studies and physiologic studies without the need to move patients to perform related procedures. Holy Cross currently has the capability of providing immediate endocardiac catheter pacemaking in cases of cardiac arrest, and the proposed laboratory will likewise have such capability available to it. Currently, approximately 13 physicians practicing at Holy Cross possess such skills. Holy Cross currently provides, and will continue to provide, a ranged of non-invasive cardiac or circulatory diagnostic services within its health care facility, including: hematology studies and coagulation studies; electrocardiography; chest x-ray; blood gas studies; clinical pathology studies and blood chemistry analysis; nuclear studies pertaining to cardiology; and echocardiography. Additionally, Holy Cross currently provides, and will continue to provide, the following services within its facility: pulmonary function testing; and microbiology studies. As sited, the proposed cardiac catheterization laboratory will be readily accessible to the population of Broward County. Accessibility does not, however, present a problem in Broward County since all approved facilities are located strategically throughout the county. The hours of operation for the proposed laboratory will typically be either 8:00 a.m. to 4:00 p.m. or 9:00 a.m. to 5:00 p.m., with the capability of rapid mobilization of the study team for emergency procedures 24 hours a day, 7 days a week. Holy Cross is fully accredited by the Joint Commission of Accreditation of Hospitals (JCAH) for special care units, as well as its intensive and cardiovascular intensive care unit. The parties have stipulated that the staffing requirements proposed by Holy Cross are reasonable, and that it will be able to recruit the necessary staff. Currently, Holy Cross maintains an ongoing program of staff education and skills upgrading. Additionally, Holy Cross maintains an ongoing educational program for the community whereby citizens Acre afforded the opportunity to learn what specialty services are provided by the hospital. These programs will continue to be provided by Holy Cross. The proof established that Holy Cross can be reasonably expected to perform a minimum of 300 cardiac catheterizations annually within three years following its initiation of service. The proof further established that the average number of catheterizations performed each year by existing and approved laboratories performing adult procedures in the service area was greater than 600 and that, if the Holy Cross application is approved, the average volume of procedures performed by those laboratories would not be reduced below 600 procedures each year. The service cost proposed by Holy Cross is comparable to similar institutions within the service area when patient mix, reimbursement mechanisms and cost accounting methods are taken into consideration. Need determination The Department has established by rule the methodology whereby the need for cardiac catheterization capacity in a service area shall be determined. Pertinent to this case, Rule 10-5.011(e) 12, Florida Administrative Code, provides: Need Determination. The need for cardiac catheterization capacity in a service area shall be determined by computing the protected number of cardiac catheterization procedures in the service area. The following formula shall be used in this determination...(Emphasis added). In the instant case, the proof established that between July 1985 and June 1986 7,017 cardiac catheterization procedures were performed in the service area. The population estimates from the Office of the Governor, dated January 1, 1986, demonstrate an adult population within the service area of 962,987 for January 1986, and 1,009,557 for July 1988. Utilization of this data in the methodology prescribed by the rule, calculates that 7,356.3 catheterization procedures will be performed in July 1988 (the horizon year). When divided by the 600 procedure standard, there is a need for 12.26 cardiac catheterization laboratories in the service area to support the projected number of adult procedures in July 1988. At the beginning of the review cycle for the Holy Cross application the inventory of cardiac catheterization laboratories in the service area (Broward County) was as follows: Zachariah-3, Florida Medical Center (FMC)-3, North Ridge Medical Center-2, North Broward Medical Center-1, Broward General Medical Center-1, Plantation General Hospital-1, and Memorial Hospital-1, for a total of 12 laboratories. However, one of Zachariah's laboratories and one of Florida Medical Center's laboratories are backup laboratories, and no more than two laboratories are ever utilized or capable of being utilized at those facilities simultaneously. Pertinent to this case, Rule 10-5.011(e)1, Florida Administrative Code, provides: A cardiac catheterization laboratory is defined as a room or suite of rooms in a hospital which has the equipment, staff and support services required to perform angiographic and physiologic cardiac catheterization procedures, and which is customarily used to perform cardiac catheterization procedures. The number of cardiac catheterization laboratories in a hospital is equal to the number of patients who can undergo the catheterization procedure simultaneously... (Emphasis added). Accordingly, the proof demonstrates that for purposes of calculating the need for cardiac catheterization capacity in Broward County under the rule methodology that there existed 10 cardiac catheterization laboratories in the service area for this review cycle. Therefore, there exists a numeric need for 2.26 additional cardiac catheterization laboratories in Broward County. Consistency with State and Local Health Plans Pertinent to this case, the local health plan, District X, provides, as its general policy number 3, that: Services provided by all proposed and existing facilities should be made available to all segments of the residential population regardless of the ability to pay. Priority #1 - Services and facilities should be designed to treat indigent patients to the greatest extent possible, with new project approval based in part on a documented history of provision of services to indigent patients. Priority #2 - Applicants should have documented a willingness to participate in appropriate community planning activities aimed at addressing the problem of financing for the medically indigent. With specific regard to cardiac catheterization, the local health plan contains the following pertinent recommendations: 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. The provision of new cardiac catheterization surgery programs should not be approved unless they meet or exceed the standards and criteria set forth by HRS. Holy Cross currently holds a Medicaid contract with the state, and proposes that its cardiac catheterization laboratory will be available to all persons in need and independent of their ability to pay. Holy Cross is not, however, an historic provider of significant indigent care, nor does it propose significant indigent care at its proposed laboratory. According to its application, the patient day percentage breakdown at its laboratory will be as follows: medicare-59.6 percent, medicaid-1.0 percent, insurance-36.0 percent, private pay-1.7 percent, and indigent-1.7 percent The proof demonstrates that Holy Cross' basic policy is to serve in a Christian-like manner, and to serve the indigent with open arms, respect and caring. In application, however, Holy Cross' "approach" to indigent care is "if they show up, we treat them." Clearly, Holy Cross does not actively promote the availability of its services to the indigent, and it offered no proof that it participated in any community planning activities aimed at addressing the problem of financing for the medically indigent. There was no proof, however, that indigent patients in Broward County (District X) were being denied cardiac catheterization care, notwithstanding the fact that over one-half of the laboratories in the county, (Zachariah, FMC, and North Ridge) have provided little or no medicaid or indigent care within the past 2 years. Under the circumstances, Holy Cross' failure to dedicate more resources toward indigent care is less significant than it might otherwise be if such need existed. However, it must still be concluded that the Holy Cross application is not consistent with the local health plan since its proposal to provide the services regardless of ability to pay is, in view of its "approach" to serving that segment of society, an obligation that will rarely, if ever, be fulfilled. To the extent the Holy Cross application may fail to comply with statutory and rule criteria, as hereinafter discussed, it is also not consistent with the local health plan. The state health plan devotes a section to cardiac catheterization, and the Holy Cross application conforms to the recommended minimum annual average of catheterization procedures, and the recommended physical proximity between open-heart surgical capacity and cardiac catheterization laboratories. The plan also provides as a goal, to assure the appropriate availability of cardiac catheterization and open-heart surgery services at a reasonable cost. As previously noted, the costs proposed by Holy Cross are reasonable. However, in view of Zachariah's existing facilities, the proposal does little of significance to enhance availability. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services in the service district. The demand for cardiac catheterization services in the district has been increasing at a significant rate over the course of the past five years. Between 1982 and 1983 the number of cardiac catheterizations performed in the service area increased over 20 percent (from 4,162 to 5,009), between 1983 and 1984 there was an approximate decrease of 1 percent, between 1984 and 1985 there was an increase of 17.8 percent, between 1985 and 1986 there was an increase of 38.9 percent, and between 1986 and 1987 a projected increase of approximately 27 percent. Annualized data for 1987 demonstrates that 9,810 procedures will be performed in 1987. The historic demand for catheterization services within the district is a reliable proxy, and demonstrates that the demand for such services will increase by at least 20 percent in the year 1988. Such increase will result in the need to accommodate an additional 1,962 procedures in the year 1988, or 981 procedures by Holy Cross' planning horizon of July 1988. Accordingly, by July 1988 the district should experience a demand for approximately 10,791 procedures. During 1987, the existent facilities within the district were projected to perform the following number of procedures: Zachariah - 1,166, FMC - 2,134, North Ridge - 2,382, Broward General Medical Center - 1,430, Plantation General - 702, North Broward Medical Center - 532, and Memorial Hospital - 1,464. The maximum capacity of a cardiac catheterization laboratory is between 1,000 and 1,400 procedures annually, depending upon the mix of patients, the skills of the cardiologist, and the hours of operation of the laboratory. North Ridge's expert, Deborah Krueger, conducted a survey of existing facilities to discover what they considered to be the maximum number of procedures they could accommodate in each of their laboratories. While not wholly reliable, as hereinafter discussed, the responses regarding the maximum number of procedures that could be accommodated in each laboratory of the existing facilities was as follows: Zachariah - 1,000, FMC -1,250, North Ridge - 1,300, Broward General Medical Center - 1,040-1,248, Plantation General - 1,000, North Broward Medical Center - no response, and Memorial Hospital - no response. Comparing the number of procedures projected for existing facilities in 1987 with the results of Ms. Krueger's survey could lead one to conclude that there is an unused capacity within the district to accommodate up to 2,584 additional procedures in 1988. Such conclusion is not, however, supported by the proof. Notwithstanding Ms. Krueger's survey, the proof demonstrated that FMC is currently at capacity. North Ridge, which estimated it could perform 1,300 procedures per lab, is projecting 2,382 procedures in 1987, only 219 procedures less than its estimated maximum capacity. Yet, the North Ridge medical director is the only physician currently performing catheterizations at the hospital, and is sometimes doing up to 17 a day and working 12 hour shifts. Under the circumstances, to suggest that North Ridge is not currently at capacity is not credible. The only facilities with available capacity are Zachariah, Plantation General, and North Broward Medical Center. These facilities have the capacity to handle an additional 1,600 procedures in 1988: Zachariah (834), Plantation General (298), and North Broward Medical Center (468). Accordingly, there exists excess capacity within the district for the relevant time frame. As previously noted, there exists no accessibility problem within the district, and there is no proof that any patient has experienced any serious problem in obtaining catheterization services. There is, further, no dispute concerning the quality of care provided by existing facilities, and no issue raised concerning the efficiency and appropriateness of existing services. The ability of the applicant to provide quality of care and the applicant's record of providing quality of care Holy Cross has been a provider of a broad range of services within the district since 1959. The parties stipulated that the staffing requirements proposed by Holy Cross were reasonable, that it would be able to recruit the necessary staff, and that it had the necessary resources for project accomplishment and operation. Accordingly, no issue was raised concerning Holy Cross' ability to render quality care. Therefore, it is concluded that Holy Cross has provided, and will continue to provide quality care for its patients. Availability and adequacy of alternative services There was no evidence that any alternative service (a non-inpatient catheterization laboratory) is available within the district to satisfy the need for inpatient cardiac catheterization. Probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources. Holy Cross and Zachariah have, since 1976, enjoyed a mutually beneficial arrangement, albeit one of landlord and tenant. At Holy Cross' request, Zachariah established a catheterization laboratory within the hospital's facility, and has since added two additional laboratories. But for a limited number of physicians, Zachariah's laboratory enjoys significant support from and is generally accepted by the physicians on the Holy Cross medical staff. Holy Cross has certainly benefited from this arrangement by being able to provide catheterization services for its patients within the facility, and as a referral base for its open-heart surgery program. Holy Cross does not contest the quality of care offered by Zachariah, nor does it point out any credible reason why their existing arrangement cannot continue to satisfy the needs of Holy Cross and the residents of the district as a whole. Holy Cross' rationalization for its need to initiate inpatient catheterization services is that Zachariah's service is a "closed" laboratory, and that if it were permitted to establish such services its laboratory would be "open." An open laboratory, Holy Cross asserts, would increase accessibility and improve quality of care. Holy Cross' contentions, and the proof it advanced to support them, are not credited. While the proof did establish that Zachariah's laboratory was closed, the proof also demonstrated that the laboratory proposed by Holy Cross would be closed. Further, quality of care, utilization, and accessibility are not favorably or unfavorably impacted within the district by virtue of whether a laboratory is classified as open or closed. Holy Cross' proposal is, essentially, a duplication of an existing program, sited within its own facility, that has the apparent capacity to meet the needs of Holy Cross and the community at large. Under the circumstances, the cooperative arrangement between Holy Cross and Zachariah offers a more economical alternative than Holy Cross' proposal. The need in the service district for special equipment and services not accessible in adjoining areas. There was no proof offered that any need existed in the service district for special equipment and services which are not reasonably and economically accessible in adjoining areas. The need for research and educational facilities. No proof was offered concerning the need for any research or educational facilities. Further, no proof was offered that Holy Cross proposed any such programs, or that its services would be available to health professionals for training purposes. Use of resources. The Department asserts that the proposed project is a waste of hospital space, a valuable resource, that could be more appropriately utilized in light of Zachariah's existing facility than through dedication as a catheterization laboratory. No proof was offered, however, to demonstrate what other health service would be a more appropriate use of such resource. The immediate and long-term financial feasibility of the project The immediate financial feasibility of the project is not at issue since the parties have stipulated that Holy Cross has the available resources for project accomplishment and operation. At issue, however, is the long-term financial feasibility of the project. Holy Cross premises its financial feasibility analysis on its projection that it will achieve 800 catheterization procedures in its first year of operation, and 850 procedures in its second year of operation. Holy Cross proposes a patient day percentage breakdown as follows: medicare - 59.6 percent, medicaid - 1.7 percent, insurance - 36.0 percent, private pay - 1.7 percent, and indigent - 1.7 percent. The rate per procedure advanced by Holy Cross is $1,000 during the first year of operation, and $1,050 during the second year of operation. Based on the foregoing assumptions, the Holy Cross pro forma statement of revenue and expenses projected a $57,700 net income at the conclusion of its second year of operation. That pro forma contains, however, several errors which must be considered. First, its bad debt assumption of $12,000 was understated by $24,000. Second, its overhead allocation of $183,600 was overstated by 50 percent ($91,800). Third, its expense line item for supplies failed to reflect a 5 percent inflation factor which results in a supply expense of $223,000 instead of the $213,000 projected by Holy Cross. Fourth, Holy Cross inappropriately adopted a 40 year depreciation schedule, as opposed to 20 years, for its renovations resulting in an understatement of depreciation by $8,000 per year. Adjusting the Holy Cross pro forma for the foregoing errors and omissions demonstrates that the proposed project will generate a net income of $107,000 at the conclusion of its second year of operation if it can attain its projected 850 procedures. Whether Holy Cross can attain such level of service is, however, problematic. By July 1988 there will be only 981 new cardiac catheterization procedures demanded within the district. Existing facilities with capacity will be competing for those procedures along with Holy Cross, and all facilities will be striving to maintain their share of the current market. Under the circumstances, it is not reasonable to conclude that Holy Cross can attain its projection solely from increased demand but, rather, that it must likewise compete with existing providers for a portion of their existing market share. Zachariah, whose existing laboratories are located on the same floor and adjacent to the facility proposed by Holy Cross has the capacity to accommodate up to 834 additional procedures. There is no dispute regarding the quality of care offered by Zachariah, and his service enjoys significant support from the physicians on the Holy Cross medical staff. To penetrate the catheterization market, Holy Cross must therefore not only disrupt physician referral patterns district wide, but must also disrupt such patterns within its own facility. Holy Cross did not, however, advance any plan to market its proposed service. To demonstrate its ability to attract referrals, Holy Cross undertook a physician survey which, if accepted, would demonstrate that it could capture 269 to 327 procedures. Such survey was not, however, independently verified and was otherwise not a reliable indicator of project utilization. At best, it demonstrated interest in an alternative facility, but its utilization projections were merely speculative. Holy Cross also pointed to the recent success of Plantation General as indicative of the reasonableness of its 850 procedure projection. Plantation General initiated its catheterization services in April 1985. Notwithstanding the fact that it was located in close proximity to FMC, had no open-heart surgery program, and had no referral base, Plantation General attained 759 procedures by the end of 1986. Juxtaposed with Plantation General, Holy Cross has a long-standing open-heart surgery program and broad physician referral base. While the Holy Cross analogy is inviting, it is unpersuasive. While Plantation General may have been at 795 procedures by the end of 1986, its 1987 performance dropped to 702. Additionally, North Broward Medical Center initiated service in January 1986, and it is projected to only reach 532 procedures by the end of 1987. On balance, the proof fails to demonstrate that Holy Cross can reasonably expect to attract the necessary referrals to reach its projection of 850 procedures, or any lesser number of procedures, that would render its project financially feasible in the long term. Needs of entities providing service to individuals not residing in the service district. There was no proof that Holy Cross provided a substantial portion of its services or resources to individuals not residing in the service district such as to demonstrate special needs and circumstances for its proposed project. The probable impact of the proposed project on the costs of providing cardiac catheterization services. Holy Cross stipulated that all intervenors, except Zachariah, have standing to participate in this proceeding. Accordingly, it is established, except for Zachariah, that the initiation of the proposed service will substantially adversely impact the existing cardiac catheterization programs at those facilities. There was, however, no reliable proof that such competition would adversely affect the supply of catheterization services. Likewise, there was no competent proof that such competition would improve the delivery of health services. Regarding Zachariah, the proof demonstrated that he would lose patients if the proposed service is initiated. While the magnitude of his loss could not be quantified because dependent on future events, it must be concluded that since Holy Cross would disrupt the existing referral patters he has established with Holy Cross' medical staff, Zachariah's program would be substantially adversely affected by the proposed project. Costs of Construction. The parties stipulated that the costs for construction and equipment are reasonable.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered denying Holy Cross' application for a certificate of need to initiate inpatient cardiac catheterization services. WILLIAM J. KENDRICK 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 12th day of February, 1988.
