Findings Of Fact Parkway Regional Medical Center, Inc. (formerly Parkway General Hospital, Inc.) is a Florida corporation, wholly-owned by American Medical international, Inc., of Beverly Hills, California. Parkway is located at 160 Northwest 170th Street, North Miami Beach, Florida. Biscayne Medical Center is wholly-owned by Humana, Inc. of Louisville, Kentucky. Biscayne is located at 2801 Northeast 209th Street, Miami, Florida. Both Parkway and Biscayne are located in DHRS District XI, and both propose to establish adult cardiac catheterization capabilities in DHRS District XI. The Local Health Council for District XI has not formally adopted its district plan. Both the Parkway and Biscayne applications are consistent with the State Health Plan. (Stipulated). In March, 1983, DHRS sent a letter to hospitals throughout Florida requesting information concerning the number of cardiac catheterization procedures performed in their laboratories during the calendar year 1981 and the number of cardiac catheterization laboratories now in use. Based upon information received in response to this letter, DHRS prepared an inventory which contains the following for District XI: FACILITY NUMBER OF ADULT CATHS. NUMBER OF ADULT LABS. American Hospital of Miami 531 1 Baptist Hospital of Miami 416 1 Cedars of Lebanon Hospital 367 1 Jackson Memorial Hospital 905 1 Mercy Hospital 494 1 Miami Heart Institute 1,268 1 Mount Sinai Medical Center 872 2 South Miami Hospital 485 1 St. Francis Hospital 535 1 University of Miami Hospital & Clinics 71 0 5,942 10 Although the DHRS survey letter requested information regarding number of catheterization "procedures," some of the hospitals responded on the number of patients catheterized rather than the number of procedures. This resulted in an understatement of procedures, since some patients receive multiple procedures. Rule 10-5.11(15)(d), F.A.C., defines "procedure" as follows: Procedure means an angiographic study, a physiologic study or a therapeutic activity within a cardiac catheterization laboratory which utilizes the equipment customarily used in cardiac catheterization. DHRS plans for cardiac catheterization on a two-year planning horizon. Therefore, the need for Parkway's and Biscayne's proposals should be determined based on projected procedures and population in the year 1986, since the decision is to be made in 1984. The DHRS 1986 population projection for District XI (persons 15 years and older) is 1,529,144. The DHRS inventory reflects 5,942 adult catheterization procedures performed in District XI hospitals in 1981. Rule 10-5.11(15)(1), F.A.C., contains a formula for determining need for additional cardiac catheterization laboratories. One step in the need determination methodology is calculation of the 1981 use rate. Utilizing the 5,942 procedures contained in the DHRS inventory, the 1981 use rate for District XI is 424.73 procedures per 100,000 population. Applying the need determination methodology in Rule 10-5.11(15)(1), F.A.C., to the 1981 use rate and projected population for District XI, the number of adult cardiac catheterization procedures projected for District XI from 1981 through 1986 is as follows: YEAR POPULATION 15 AND OVER 1981 USE RATE NUMBER PROJ. PROCEDURES 1981 1,399,299 424.73 5,942* 1982 1,427,404 424.73 6,061 1983 1,455,477 424.73 6,180 1984 1,483,615 424.73 6,302 1985 1,511,721 424.73 6,422 1986 1,529,144 424.73 6,494 * Actual number of procedures reported in DHRS inventory. Current information from each of the District XI hospitals with adult cardiac catheterization laboratories shows that application of the need methodology formula in Rule 10-5.11(15)(1) understates the number of adult cardiac catheterizations actually performed in District XI in 1982 and 1983, as follows: ACTUAL PROCEDURES ACTUAL YTD PROJECTED 1982 1983 1983 Mercy 441 317 543 Cedars 401 333 571 Miami Heart 833 486 833 St. Francis 917 495 990 JMH 986 580 994 American 576 321 550 Baptist 618 517 886 S. Miami 512 417 715 Mt. Sinai 983 647 1,109 6,267 4,113 7,191 Actual Use Rate 1982 - 439.17 Projected Use Rate 1983 - 494.23 For District XI, from 1980 through 1982, the use rate increased by 9 percent in 1980, 7 percent in 1981 and 3 percent in 1982. If the number of adult cardiac catheterization procedures actually performed in 1983 is projected for a full year, the District XI use rate would have increased by 12-1/2 percent in 1983. Rule 10-5.11(15)(o) provides that additional cardiac catheterization laboratories will not be approved where they would reduce the average volume of procedures performed by existing and approved laboratories in the service area below 600 adult procedures. Assuming an average of 600 procedures per lab, utilizing the projected number of procedures for 1986 and the use rates calculated for 1981, the number of adult cardiac catheterization laboratories required in District XI for 1986 would be 0.8. In accord with DHRS' policy, the 0.8 laboratory should be "rounded up" to 1.0. Therefore, under DHRS' interpretation of Rule 10-5.11(15), correct application of the need formula demonstrates a need for 1 additional adult cardiac catheterization laboratory in District XI. Initially, DHRS took the position that the 0.8 (0.7 for 1984) should be rounded down. However, this view was corrected by later testimony which established that the DHRS procedure is to "round up" such fractions. Parkway's emergency room is the third most active in Dade County and is the major emergency room between downtown Miami and the Broward County line. Parkway's proposed cardiac catheterization laboratory will be located on the same floor as and adjacent to the coronary care unit and the emergency room. Parkway's proposed cardiac catheterization laboratory will be dedicated solely to cardiac catheterization with the capability of mobilizing 24 hours a day, 7 days a week. Parkway's proposed cardiac catheterization laboratory will contain appropriate staffing and equipment. Based upon the number of patients referred by Parkway cardiologists to other institutions in the Miami area having cardiac catheterization facilities, Parkway projects utilization of its proposed cardiac catheterization laboratory in the first year of operation to be 250 to 300, increasing to 400 in the second year. Parkway does not intend to perform coronary angioplasty in its proposed cardiac catheterization laboratory but does intend to perform streptokinase procedures on an emergency basis on patients exhibiting acute chest pain and EKG abnormalities. Parkway has a written agreement with Cedars Medical Center pursuant under which Cedars will accept open-heart surgery patients from Parkway. Travel time from Parkway to Cedars under normal conditions is fifteen minutes. Biscayne's proposed adult catheterization equipment will be installed, and the procedures will be performed, in its "Special Procedures" Room, rather than a separate cardiac catheterization laboratory. If approved, Biscayne's cardiac catheterization laboratory would be available 24 hours a day and seven days a week on an "on call" basis. However, the anticipated regular hours for the laboratory will be 7:00 a.m. to 3:00 p.m., five days a week. Biscayne will staff its laboratory with a cardiopulmonary nurse, an x- ray technician, and a registered nurse. Biscayne proposes to perform only "diagnostic" cardiac catheterization procedures for the diagnosis of coronary artery disease. Biscayne takes the position that therapeutic procedures such as streptokinase and angioplasty are not medically safe without an in-house open heart surgery program. Biscayne has a written transfer agreement with Jackson Memorial Hospital in Miami whereby all Biscayne patients requiring open heart surgery will be transferred to, and accepted by, Jackson for such treatment. The driving time between Jackson and Biscayne is twenty minutes. Biscayne projects 300 cardiac catheterization procedures in its first year of operation and 400 procedures in the second year of operation. These projections are based on the number of patients Biscayne cardiologists currently transfer to other hospitals for cardiac catheterization and an assumed capture rate of 60 percent of all potential procedures generated in Biscayne's service area. Biscayne's "special procedures" room is a multipurpose facility which will be shared with the radiology department. The latter operates three radiographic/fluoroscopic rooms (R&F) and one "special procedures" room. All four rooms are equipped for doing routine radiographic studies and special procedures. "Special procedures" as used by Biscayne refers to investigational studies for the diagnosis of medical conditions through the use of special imaging equipment, such as x-ray and fluoroscopy. About 1400 special procedures were performed at Biscayne in 1982. These procedures were performed in various areas of the hospital, including the R&F rooms, the special procedures room, surgical suites and the critical care unit. Special procedures normally take about one hour to complete. However, the procedure known as angiography is only performed in Biscayne's special procedures room. An angiogram involves an investigation of blood vessels by means of x-rays of injected substances or dyes. Last year, about 400 of the 1400 special procedures performed at Biscayne were angiograms. Angiographic studies of all blood vessels except the coronary arteries are currently performed in the special procedures room. Angiographic studies of the coronary arteries require cardiac catheterization equipment. Over a year ago, DHRS issued Biscayne a certificate of need to renovate and replace equipment in two R&F rooms and the special procedures room. Also, digital angiographic equipment was added to for the special procedures room. Per this certificate of need, Biscayne has purchased the new equipment and renovated these rooms. Construction was scheduled to be complete in October, 1983, but has been delayed. Biscayne will not have to purchase all new equipment (as will Parkway) to add cardiac catheterization capabilities to its special procedures room. Instead, special General Electric equipment will be added to the existing angiographic equipment which will enhance its capabilities to include cardiac catheterization. As a result, Biscayne can provide cardiac catheterization at a projected additional cost of $298,566 compared to Parkway's projected cost of $822,701. However, Biscayne's projection does not recognize that some of the special procedure facility costs should be allocated to cardiac catheterization. Biscayne's pro forma income statement for the cardiac catheterization project allocates 43 percent usage of the special procedures room to this function. As noted by Parkway, a 43 percent special procedures room equipment cost allocation would raise Biscayne's cardiac catheterization capability costs to $683,314. Biscayne does not intend that the inclusion of cardiac catheterization capability will lower the number of special procedures that will be done in a normal eight-hour day. The capacity of the special procedures room as stated by Biscayne's Director of Radiology and supervisor of Biscayne's proposed special procedures room/catheterization laboratory, is 6 per day, 5 days week, for an annual total of 1,560. Biscayne's CON application for the special procedures room projects 1,484 special procedures in the first year and 1,524 in the second year, allowing for 76 additional procedures in the first year and 36 in the second year. Biscayne projects 300 cardiac catheterizations in the first year and 400 in the second year, thereby exceeding the capacity of the combined special procedures room/cardia catheterization laboratory by 224 procedures in the first year and 364 in the second year. Biscayne's proposed sharing of special procedure facilities is a cost savings measure, and in this respect is superior to Parkway's proposal. Although Biscayne could mobilize its cardiac catheterization laboratory on an emergency 24 hour, 7 day basis as required by DHRS Rule (discussed below), it would likely encounter scheduling and use conflicts under true emergency conditions, or even full utilization as noted above. Parkway argues that Biscayne's shared facility plan violates American Heart Association guidelines recommending cardiac catheterization labs be dedicated solely to this use. However, the evidence did not indicate that departure from this guideline would have any adverse impact on the quality of care provided. Parkway is located in Northeast Dade County directly on the Golden Glades Interchange, where Interstate 95, the Florida Turnpike and the Palmetto Expressway intersect. The majority of Parkway's service area is in Dade county, and 86.17 percent of Parkway's patients come from Dade County. Biscayne is located in Northeast Dade County near the Broward County line. The majority of Biscayne's primary service area is within Broward county, and more than 60 percent of Biscayne's patients originate from Broward County. Broward County is within DHRS District X. Comparative statistical information demonstrates that Parkway is more fully utilized, delivers more acute care and has greater patient activity than Biscayne: BASIC STATISTICAL INFORMATION PARKWAY BISCAYNE Licensed Capacity 412 458 Beds in Service 412 330 Discharges 12,917 9,202 Average Length of Stay 9.1 days 8.1 days Patient Days 110,385 79,634 Occupancy 73.4 percent 47.6 percent Bed Mix Med-Surg. 394/72.9 percent occ. 284/65.2 percent occ. Intensive Care 18/89.9 percent occ. 26/77.5 percent occ. E.R. Utilization Visits 27,520 13,110 The Hospital Cost Containment Board (HCCB) was formed in 1979 to monitor hospital costs/charges and to encourage cost containment for Florida hospitals through public awareness and the dissemination of information to the public. The HCCB is a division of the Florida Department of Insurance. Each year, the HCCB collects the prospective budget of each hospital sixty days prior to the first day of the fiscal year for each hospital. The HCCB reviews the data and budget submitted by a hospital, and then determines to accept the budget, reject the budget, or call a public hearing to make the hospital justify its budget. All HCCB action is based on the figures and budgets submitted by the hospitals themselves. The HCCB reviews the financial data submitted to it by various criteria which it labels "screens." The "total net revenue" screen is one of the screens utilized to compare a hospital's average patient charge to others in its peer group. "Total net revenue" refers to the amount of money a hospital actually receives for services provided to patients after all deductions are subtracted. In addition, the HCCB "adjusts" its various financial screens to eliminate the effect of outpatient care and revenues from inpatient activity. Thus, the screens are labeled, for example, as "adjusted revenues" or "adjusted costs." Comparisons between Biscayne and Parkway by using HCCB calculations of data and projections submitted by the two hospitals indicate the following (1983 budgets): Cost to the hospital per adjusted admission Cost to the hospital per adjusted day Total net revenue per adjusted admission Total net revenue per adjusted day PARKWAY BISCAYNE PARKWAY OVER BISCAYNE DOLLARS PERCENT $3954 $3438 $516 15.0 percent $ 458 $ 393 $ 65 16.5 percent $4263 $3595 $668 18.6 percent $ 494 $ 411 $ 83 20.2 percent Comparisons using the same screens for 1984 budgets are as follows: PARKWAY BISCAYNE PARKWAY OVER BISCAYNE DOLLARS PERCENT $4033 $3563 $470 13.2 percent $ 498 $ 422 $ 76 18.0 percent $4346 $3726 $620 16.6 percent $ 537 $ 442 $ 95 21.5 percent Cost to the hospital per adjusted admission Cost to the hospital per adjusted day Total net revenue per adjusted admission Total net revenue per adjusted day As indicated, Parkway's costs to provide hospital services and patient charges for these services have been, and are projected to be, substantially higher than those for Biscayne. PARKWAY BISCAYNE Rate of Increase from 1980 Base Year to 1983 Budget: Per Adjusted Admission 65.1 percent 48.4 percent Per Adjusted Day 65.8 percent 42.8 percent Rate of Increase from 1980 Base Year to 1981 Budget: Per Adjusted Admission 42.4 percent 33.8 percent Per Adjusted Day 50.7 percent 36.0 percent In addition to being more expensive than Biscayne, Parkway exceeds the 80th percentile of its hospital "peer group" in most financial screens. The HCCB places each hospital in a certain peer group based on a number of factors including beds in service, physician mix, Medicare utilization, hospital services index, and median family income. The objective of peer groups is to batch hospitals with similar characteristics for comparison purposes. Biscayne and Parkway are in the same peer group for budget year 1984. Each hospital is then compared to the 80th percentile in its peer group to determine whether that hospital "breaks the screen" or exceeds the standards set by law. "Breaking the screen" means that hospital is in the upper 20th percentile in its peer group. For budget year 1983, Parkway broke the screen for cost per adjusted day and adjusted admission, total net revenue per adjusted day and adjusted admission, and rate of change increases (1980-1983) per adjusted admission and adjusted day. It should be noted that Parkway's screen breaking during this period is at least partly attributable to its 25 million dollar renovation- expansion project. For budget year 1984, however, Parkway again broke the screens for cost per adjusted day, total net revenue per adjusted admission and adjusted day, and rate of change increases per adjusted admission and adjusted day for budget years 1981-1984. Biscayne did not break any of the screens during these same time periods. As noted by the HCCB, Parkway's current profit margin is 13.5 percent compared to the 9.3 percent average for proprietary hospitals in Florida.
Recommendation Based on the foregoing, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order granting the application of Biscayne Medical Center to establish cardiac catheterization capabilities in District XI, and denying the application of Parkway Regional Medical Center, Inc. DONE and ENTERED this 8th day of March, 1984, in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 8th day of March, 1984. COPIES FURNISHED: James C. Hauser, Esquire John H. French, Jr., Esquire Post Office Box 1876 Tallahassee, Florida 32302 Keith E. Rounsaville, Esquire Harold W. Mullis, Jr., Esquire Post Office Box 1102 Tampa, Florida 33601 Claire D. Dryfuss, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard, Suite 406 Tallahassee, Florida 32301 Jean Laramore, Esquire G. Steven Pfeiffer, Esquire 325 North Calhoun Street Tallahassee, Florida 32301 David H. Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
The Issue The issues for determination in this case are whether the following statement was made by Respondent, AGENCY FOR HEALTH CARE ADMINISTRATION; whether the statement violates the provisions of Section 120.535, Florida Statutes; whether the statement constitutes a declaratory statement under Section 120.565, Florida Statutes; whether Petitioner, ALL CHILDREN'S HOSPITAL, INC., has standing to maintain this action; and whether Petitioner is entitled to attorney's fees and costs. The alleged agency statement which is at issue in this case is: The Agency for Health Care Administration takes the position that a shared service agreement may be modified, without prior approval of the Agency, as long as each party continues to contribute something to the program, and the shared service contract remains consistent with the provisions of Rule 59C-1.0085(4), Florida Administrative Code. In addition, the Agency takes the position that modifications to a shared service agreement do not require prior review and approval by the Agency.
Findings Of Fact Petitioner, ALL CHILDREN'S HOSPITAL, INC. (hereinafter ALL CHILDREN'S), is a medical facility located in St. Petersburg, Florida, which provides pediatric hospital care. Respondent, AGENCY FOR HEALTH CARE ADMINISTRATION (AHCA), is the agency of the State of Florida vested with statutory authority to issue, revoke or deny certificates of need in accordance with the statewide and district health plans. Intervenor, BAYFRONT MEDICAL CENTER (BAYFRONT), is an acute care hospital located in St. Petersburg, Florida. ALL CHILDREN'S and BAYFRONT are located adjacent to each other and are connected by a thirty-yard tunnel. In 1969, ALL CHILDREN'S began operation of a pediatric cardiac catheterization program. ALL CHILDREN'S pediatric cardiac catheterization program existed prior to the statutory requirement for a certificate of need to provide such service. Neither AHCA, nor its predecessor agency, Florida Department of Health and Rehabilitative Services, issued a certificate of need for ALL CHILDREN'S cardiac catheterization program. Since 1969, ALL CHILDREN'S has expended at least $500,000 on upgrading the cardiac catheterization program. Since 1970, ALL CHILDREN'S has operated a pediatric open heart surgery program. ALL CHILDREN'S open heart surgery program existed prior to the statutory requirement for issuance of a certificate of need to perform such service. Neither AHCA, nor its predecessor agency, Florida Department of Health and Rehabilitative Services (HRS), issued a certificate of need for ALL CHILDREN'S open heart surgery program. By letter dated May 13, 1974, HRS specifically advised ALL CHILDREN'S that modifications to the ALL CHILDREN'S open heart surgery program were not subject to agency approval. In May of 1973, ALL CHILDREN'S and BAYFRONT entered into a shared service agreement to provide adult cardiac catheterization services. In accordance with the shared service agreement, the actual catheterizations are performed in the physical plant of ALL CHILDREN'S and with equipment located on the ALL CHILDREN'S campus. BAYFRONT contributed to the adult cardiac catheterization shared service program by providing, inter alia, patients, management, medical personnel, and pre- and postoperative care. Beginning in 1975, BAYFRONT has also provided adult open heart surgery services through a joint program with ALL CHILDREN'S with the actual surgeries being performed at the physical plant on ALL CHILDREN'S campus. BAYFRONT contributed to the adult open heart surgery shared service by providing, inter alia, patients, management, medical personnel, and pre- and postoperative care. The shared service agreement between ALL CHILDREN'S and BAYFRONT to provide adult cardiac catheterization and open heart surgical services was in existence prior to the statutory requirement for a certificate of need to perform such services. Neither AHCA, nor its predecessor agency, Florida Department of health and Rehabilitative Services, issued a certificate of need to provide such services. The cardiac catheterization and open heart surgery program operated by ALL CHILDREN'S and BAYFRONT was "grandfathered" in because the program existed prior to the certificate of need requirement. Because no certificate of need was issued to ALL CHILDREN'S and BAYFRONT for its shared adult cardiac service program, no conditions have been imposed by AHCA on the operation of the program. "Conditions" placed on certificates of need are important predicates to agency approval and typically regulate specific issues relating to the operation of the program and the provision of the service such as access, location, and provision of the service to Medicaid recipients. The ALL CHILDREN'S and BAYFRONT cardiac shared services program is the only "grandfathered in" shared service arrangement in Florida, and is the only shared service arrangement operating without a certificate of need in Florida. An open heart surgery program is shared by Marion Community Hospital and Munroe Regional Medical Center in Ocala, Florida. The Marion/Munroe program operates pursuant to a certificate of need issued by AHCA. On December 22, 1995, AHCA published a notice of its intent to approve a certificate of need for a shared pediatric cardiac catheterization program between Baptist Hospital and University Medical Center in Duval County, Florida. BAYFRONT has applied for, but has not yet been issued, a certificate of need to perform cardiac catheterization services independent of the shared services arrangement with ALL CHILDREN'S. The agency receives hundreds of inquiries each year requesting information and guidance from health care providers regarding the certificate of need application process and other requirements of the certificate of need program. On more than one occasion ALL CHILDREN'S and BAYFRONT have inquired either orally or in letters to the agency regarding whether certain changes in their adult cardiac shared services program would require agency approval through a certificate of need application. In response to a 1990 written inquiry from ALL CHILDREN'S and BAYFRONT regarding modifications to the shared services agreement, the agency (then HRS) by letter dated September 18, 1990, stated in pertinent part that "the alterations you propose still constitute shared services." The agency response went on to state that it is therefore "...determined that they (the proposed changes) have not altered the original intent." On January 31, 1991, Rule 59C-1.0085(4), Florida Administrative Code, governing shared service arrangements in project-specific certificate of need applications was promulgated. The rule provides: Shared service arrangement: Any application for a project involving a shared service arrangement is subject to a batched review where the health service being proposed is not currently provided by any of the applicants or an expedited review where the health service being proposed is currently provided by one of the applicants. The following factors are considered when reviewing applications for shared services where none of the applicants are currently authorized to provide the service: Each applicant jointly applying for a new health service must be a party to a formal written legal agreement. Certificate of Need approval for the shared service will authorize the applicants to provide the new health service as specified in the original application. Certificate of Need approval for the shared service shall not be construed as entitling each applicant to independently offer the new health service. Authority for any party to offer the service exists only as long as the parties participate in the provision of the shared service. Any of the parties providing a shared service may seek to dissolve the arrangement. This action is subject to review as a termina- tion of service. If termination is approved by the agency, all parties to the original shared service give up their rights to provide the service. Parties seeking to provide the service independently in the future must submit applications in the next applicable review cycle and compete for the service with all other applicants. All applicable statutory and rule criteria are met. The following factors are considered when reviewing applications for shared services when one of the applicants has the service: A shared services contract occurs when two or more providers enter into a contractual arrangement to jointly offer an existing or approved health care service. A shared services contract must be written and legal in nature. These include legal partnerships, contractual agreements, recognition of the provision of a shared service by a governmental payor, or a similar documented arrangement. Each of the parties to the shared services contract must contribute something to the agreement including but not limited to facilities, equipment, patients, management or funding. For the duration of a shared services contract, none of the entities involved has the right or authority to offer the service in the absence of the contractual arrangement except the entity which originally was authorized to provide the service. A shared services contract is not transferable. New parties to the original agreement constitute a new contract and require a new Certificate of Need. A shared services contract may encom- pass any existing or approved health care service. The following items will be evaluated in reviewing shared services contracts: The demonstrated savings in capital equipment and related expenditures; The health system impact of sharing services, including effects on access and availability, continuity and quality of care; and, Other applicable statutory review criteria. Dissolution of a shared services contract is subject to review as a termination of service. If termination is approved, the entity(ies) authorized to provide the service prior to the contract retains the right to continue the service. All other parties to the contract who seek to provide the service in their own right must request the service as a new health service and are subject to full Certificate of Need review as a new health service. All statutory and rule criteria are met. By letter dated October 22, 1993, ALL CHILDREN'S and BAYFRONT inquired again of the agency regarding modifications of the adult inpatient cardiac shared service program. AHCA did not respond to the 1993 inquiry, and AHCA ultimately considered the inquiry withdrawn. By letter dated February 24, 1995, BAYFRONT made further inquiry of the agency, and requested agency confirmation of the following statement: The purpose of this letter is to confirm our understanding that the Agency for Health Care Administration ("Agency") takes the position that the shared services agreement between Bayfront and All Children's may be modified, without prior approval of the Agency, as long as each party continues to contribute something to the program, and that the shared services contract remains consistent with the provisions of Rule 59C-1.0085(4) F.A.C. By letter dated March 16, 1995, the agency made the following reply to BAYFRONT from which this proceeding arose: The purpose of this letter is to confirm your understanding of this agency's position with reference to the reviewability of a modifica- tion of the shared services agreement between Bayfront Medical Center and All Children's Hospital set forth in your February 24, 1995 letter.
The Issue The issue is whether the application for the certificate of need for a cardiac catheterization laboratory filed by Humana Hospital Bennett should be approved. The proceeding is governed by Section 381.705(1), Florida Statutes (1987), and Rule 10-5.011(1)(e), Florida Administrative Code. Humana Bennett and the Department maintain that Section 381.705(2), Florida Statutes, is inapplicable to this matter, but the other parties believe that statute applies. Not all subsections of these statutes or rules are in dispute, however. According to the prehearing stipulation, the following are either not in dispute or inapplicable: 1. Section 381.705(1) (c) , (e) , (f) , (g) (h) [except for the applicant's ability to recruit health manpower resources], (i),(j),(k),(m) 2. As to Section 381.705(2), subsection (e) is not in dispute. 3. As to Rule 10-5.011(1) (e), the following subparagraphs are not in dispute: 7.a., 7.b., 7.c., 7.d., 8.a., 8.b., 9.a., 9.c., 9.d., 9.e. (II) and (III), 13., 14., and 15.b. The parties dispute whether the application of Humana Bennett meets the following statutory and rule criteria for a certificate of need: 1. Section 381.705(1) (a), (b) , (d) , [as to health manpower] (1), and (n). As to Section 381.705(2), the following: (a) , (b) , (c) , and (d). 3. As to Rule 10-5.011(1) (e) , the following: 8.c., 9.b., 9.e.(I), 10., 11., 12., 15.a., and 15.c. FINDINGS OF FACT Description of the parties and their characteristics Humana Hospital Bennett is a 204-bed, acute care medical surgical hospital located in west central Broward County. It is the westernmost facility in Broward County. It is owned by Humana, Inc., and operated or profit. Western Broward is growing faster than the mature communities on the Atlantic Coast. Humana Bennett is fully accredited by the Joint Commission on Accreditation of Hospitals, and provides an array of services for the diagnosis and treatment of coronary disease including electrocardiology, echocardiology, nuclear medicine heart studies, stress testing, and other non-invasive procedures. It does not offer open heart surgery. Humana Bennett also has a 14-bed intensive care/coronary unit, a 22-bed intermediate care unit, and a progressive cardiac rehabilitation program. The Humana medical staff is composed of 460 physicians, 28 of whom specialize in the treatment of cardiovascular disease; 24 of these 28 are board- certified in cardiology. An additional 12 physicians are board-certified in cardiovascular and thoracic surgery. About 63% of all discharges at Humana are cardiac- related. This percentage has increased over time. In fiscal year 1985 52.3% of discharges were cardiac-related. Humana Bennett has contracts with health maintenance organizations for hospital services. These include the Humana Care Plus and International Medical Center health maintenance organizations which are owned and operated by Humana, Inc. About 65,000 Broward County residents are subscribers to these plans. The Humana Bennett catheterization laboratory would involve 2,500 square feet of new construction and 750 square feet of renovation. The hospital projects that the laboratory will be operational by September 1989. The laboratory would be capable of providing a full range of diagnostic cardiac catheterization procedures, which would include a cardiac catheterization laboratory, a control area, a storage area, a darkroom, and other related preparation, recovery and support areas. The total project cost would be approximately $1,302,600. There are both diagnostic and therapeutic uses for catheterization; the therapeutic uses include angioplasty. By Department rule, only a hospital with an open heart surgery program may perform angioplasty. Humana Bennett's laboratory could perform only diagnostic catheterizations. The South Broward Hospital District was created by a special act of the 1947 Florida Legislature, Chapter 24415, Laws of Florida, as an independent taxing authority. It does not operate to produce a profit. It was created to provide health care services to the residents of south Broward County by constructing and operating health care facilities serving all types of health care needs within its boundaries. It provides services without regard to the ability of district residents to pay for health care. The service areas of South Broward's hospital (Memorial Hospital) and Humana Bennett overlap, and numerous physicians are on the staff of both facilities. If the Humana Bennett application is approved, the number of cardiac catheterizations performed at Memorial Hospital will be reduced. The catheterization laboratory at Memorial Hospital generates a substantial amount of income for South Broward Hospital District. The initiation of catheterization services at Humana Bennett would reduce revenues at Memorial Hospital without any offsetting reduction in costs at Memorial. The substantial interests of the South Broward Hospital District are affected by the application filed by Humana Bennett. Over the years, Memorial Hospital has been expanded from a 100-bed facility to a 737-bed full service hospital. It is the only hospital in south Broward County which provides cardiac surgery, cardiac catheterization, physical rehabilitation with a distinct comprehensive unit, psychiatric services, pediatric surgical services, pediatric intensive care, full service neonatology, new born intensive care and progressive care, high-risk obstetric maternity care, and residential substance abuse programs. Some of the services Memorial Hospital provides are operated at a loss. Uncompensated care amounted to 22.1% of South Broward Hospital District's gross revenue in fiscal year 1987. The District projects that $44.9 million will be spent in the current fiscal year for uncompensated care. Operating revenues and the District's power to levy property taxes pay for the services provided to indigents. Memorial Hospital is the primary provider of services to the indigent and medically needy in south Broward County. Florida Medical Center is a 459-bed acute care hospital. It provides a broad range of cardiology services, including cardiac catheterization. It currently operates three separate cardiac catheterization laboratories. The first laboratory opened in 1974, the second two were equipped in 1983. The second laboratory was fully staffed at that time but the third was only fully staffed in December 1987. FMC has the present ability to perform three cardiac catheterization procedures simultaneously in its laboratories and the staff to perform procedures in that manner. Its third laboratory was opened primarily to accommodate the desire of physicians to perform catheterizations in the morning and is also used for other purposes. Florida Medical Center is located within five to six miles of Humana Bennett and under normal driving conditions the drive between the facilities takes 15 to 20 minutes. Florida Medical Center and Humana Bennett compete for patients within the same geographic area. Approximately 73% of the cardiac catheterizations performed at Florida Medical Center during 1987 were performed by physicians who are also on the staff of Humana Bennett. If the new cardiac catheterization service for Humana Bennett is approved, Florida Medical Center will lose patients and will therefore perform fewer catheterization procedures. Florida Medical Center would lose revenue without any offsetting reduction in its costs. The interests of Florida Medical Center are substantially affected by the CON application filed by Humana Bennett. Plantation General Hospital is a 264-bed general acute care hospital located in Plantation, Florida, which is in central Broward County. It is owned by and operated for profit by HealthTrust, Inc. It offers a broad range of cardiology services including cardiac catheterization. Its cardiac catheterization laboratory opened in April 1985. Plantation General is located approximately three and a half miles from Humana Bennett. Plantation General and Humana Bennett compete for substantially identical service areas and have overlapping medical staffs. Of the 37 cardiologists on the staff of Planation, 24 are also the on staff of Humana Bennett. Ten of 14 physicians performing cardiac catheterization procedures at Planation are on the staff of Humana Bennett. Approval of a cardiac catheterization service at Humana Bennett would result in fewer catheterizations being performed at Plantation. Plantation would suffer a loss of revenue without any offsetting reduction in costs. The interests of Plantation General Hospital are substantially affected by the CON application filed by Humana Bennett. FACTUAL FINDINGS CONCERNING THE APPLICABLE CRITERIA AGAINST WHICH THE APPLICATION MUST BE EVALUATED The criteria to be used in evaluating the application are found in statutes, and in the rules of the Department of Health and Rehabilitative Services which implement those statutes. The application will first be analyzed for consistency with Section 381.705(1), Florida Statutes, and, to the extent the rules make those criteria more specific, those considerations will be discussed in a later portion of this order. Consistency with Statutory Criteria Consistency with the state health plan and the District X local plan. Section 381.705(1) (a), Florida Statutes. a. The district health plan The District X Health Plan for 1985 is the most recent complete plan, and was the plan in effect when the Humana Bennett application was filed. it contains three recommendations relevant to approval of cardiac catheterization services. These are: Applicants for certificate of need approval should document either their intention and/or experience in meeting or exceeding the standards promulgated for the provision of cardiac catheterization and/or cardiac surgery by the appropriate national accreditation organization(s). Applicants proposing to initiate or expand cardiac catheterization or cardiac surgery must make their services available to all segments of the population regardless of the ability to pay. The provision of new cardiac catheterization or cardiac surgery programs should not be approved unless they meet or exceed the standards and criteria set forth by HRS. Humana Bennett is currently accredited by the Joint Commission on the Accreditation of Hospitals, and proposes to seek accreditation of its cardiac catheterization laboratory if approved. In 1985, Humana Bennett provided 1.2% of the total uncompensated care provided by Broward County hospitals. Humana Bennett's application, as revised in June 1987 in response to an omissions letter from the Department, proposed to provide 1% of patient days to Medicaid patients, 45% of patient days to Medicare patients, 43% of patient days to insurance patients, and 11% of patients days to private pay patients (Humana's exhibit 3, page 87).1/ Humana Bennett also has a Medicaid contract. Humana has the following emergency care policy for its hospitals Facilities will provide emergency care without regard to the patient's ability to pay. An indigent patient will be treated just as any other patient, and will receive whatever care is required to stabilize his/her condition. Non-emergency patients must make payment or arrangement for payment, before health services are delivered to them. (Humana exhibit 3, page 54.) For purposes of the Humana Bennett emergency care policy, indigent patients include "patients who are not eligible for Medicare or Medicaid, who do not have private or employer- provided health insurance, and who are unable to pay for their health care." Emergency patients are defined as patients "in a life or health threatening situation who require immediate treatment or hospitalization." After an attending physician determines that an indigent patient is stabilized, the patient is transferred to a hospital which receives government funds for indigent care; the Humana Bennett manager must approve this action before it is taken. All actions, including the attending physician's approval, are documented and maintained in the patient's business office folder. These policies indicate no substantial commitment to indigent care. Cardiac catheterization is not ordinarily an emergency procedure, but a diagnostic one. The existing emergency care policy, therefore, indicates that practically no catheterization will be done for indigents. This is inconsistent with the local health plan's requirement to make catheterization services available to all segments of the population. The application update submitted by Humana (exhibit 6, pro forma income statement) shows initial total patient revenues of $543,750, with a deduction of $27,188 for "indigent care/bad debt." This allowance is an indication of the amount the hospital expects to be unable to collect from patients it admitted with the expectation of payment. It is not the result of any community outreach to provide catheterization services to indigent residents of Broward County. The State Health Plan The 1985-87 State Health Plan discusses cardiac catheterization at pages 94 through 96. In the portion entitled "Criteria and Standards," the State Health Plan quotes from the Inter-Society Commission on Heart Disease Resources concerning the need for physical proximity and relationships between diagnostic catheterization facilities and open heart surgery programs. According to the Inter-Society Commission: ... there can be little justification for the development of these highly specialized facilities (cath labs) unless expertise in cardiology, cardiovascular radiology, and cardiovascular surgery are immediately available. Optimally therefore, catheterization laboratories should be located only in institutions with well organized and closely related programs of cardiovascular surgery. ... such an arrangement not only facilitates close inter-disciplinary cooperation and minimizes unnecessary, repetitive, inadequate, or unsafe diagnostic studies, but it also allows prompt intervention should life threatening complications develop during catheterization studies....it should be emphasized... that separation of the diagnostic laboratory from the surgical facility is less than optimal and may present serious problems. The National Health Planning Guidelines supports this emphasis through a recommendation that no new cardiac catheterization unit be opened in any facility not providing open heart surgery. (Humana exhibit 8) (emphasis supplied) Because there is no open heart surgery program at Humana Bennett, the proposal is inconsistent with the State Health Plan's clear preference for locating catheterization laboratories at facilities where open heart surgery is available. As discussed in section II B.3. of this order infra, the absence of a written referral agreement in the Humana Bennett application, identifying a facility with open heart surgery capability to which patients needing immediate open heart surgery will be transferred, is a serious deficiency in the application. 2. Availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of existing services. Section 381.705(1)(b), Florida Statutes There is no contention that existing cardiac catheterization laboratories in District X failed to provide quality care, and there is no geographic problem with the availability of catheterization services. Nothing in the Humana Bennett application would expand the availability of these services to segments of the population that are not currently being served for economic reasons. The issue of the efficiency and extent of utilization of existing services raises the question whether there is additional capacity in existing catheterization laboratories which ought to be utilized in preference to incurring the capital expenditure involved in constructing and equipping a catheterization laboratory at Humana Bennett. This consideration is related to the need calculation made under the Department rule discussed in a later portion of this order. When the Humana Bennett application was filed there were 10 existing laboratories in District X: one at Broward General, two at FMC, two at Holy Cross Hospital, two at North Ridge Medical Center, one at Plantation General, one at North Broward Medical Center, and one at Memorial Hospital. Shortly before the final hearing, Holy Cross Hospital reported that the physician who operates the catheterization laboratories there under contract with the hospital, Dr. Zachariah, had added a third laboratory. That physician opened the third laboratory for his own convenience, not because the volume of his practice required it. Florida Medical Center also added an additional laboratory for the convenience of cardiologists who practice there, which it also uses for other procedures. Expansion by existing providers can take place without certificate of need approval when the capital expenditure needed for expansion is less than one million dollars. These existing providers were able to add laboratories without the necessity of HRS approval. An additional laboratory also has been added to District X by the approval of the lab for imperial Point Medical Center, which had applied in the same batching cycle as Humana Bennett. No party objected to the issuance of that certificate of need, and therefore it should be considered in determining the statutory issue of the extent of the utilization and adequacy of like and existing health care services, because its services will be available at the planning horizon year, 1989 Humana Bennett could have prevented the consideration of that capacity by objecting to the grant of the certificate of need to Imperial Point and requiring a comparative hearing on the competing applications of Humana Bennett and Imperial Point but it decided not to do so. Some of the existing providers have argued that existing unused capacity at their facilities should be taken into consideration in determining whether there is a need for the Humana Bennett laboratory. Rule 10- 5.011(1)(e)12., Florida Administrative Code, provides in part that: The need for cardiac catheterization capacity in a service area shall be determined by computing the projected number of cardiac catheterization procedures in the service area. The capacity issue is therefore controlled by the provisions of the rule and will be discussed under the rule calculation. That competitors maintain they can provide more catheterizations than the rule projects for each provider is not legally relevant under this subsection of the statute. 3. The availability and adequacy of other health care services which may serve as alternatives to the services to be provided by the applicant. Section 381.705(1) (d), Florida Statutes. There is no persuasive evidence that there are other diagnostic procedures which serve as an alternative to cardiac catheterization which should be utilized in preference to catheterization. 4. Availability of resources including health manpower. Section 381.705(1) (h), Florida Statutes Nurses and technicians who work on cardiac catheterization teams have specialized skills and these skilled employees are difficult to recruit and retain. The proof demonstrates, however1 that Humana Bennett can staff the positions necessary for its catheterization laboratory by national recruitment and by cross-training of in-house nursing and radiology personnel. A catheterization lab requires cardiac care R.N.s, radiology technicians, and a specialized procedure/cardiovascular technician. Critical care nurses at Humana Bennett have already expressed an interest in becoming cardiac catheterization R.N.s and critical care nurses can easily be trained as cardiac catheterization nurses. Similarly, cross-training of existing radiology employees can fill the radiology technician positions. Humana Bennett has already received three resumes from cardiovascular technicians. 5. Probable impact of the proposed project on the cost of providing health services proposed by the applicant upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed. Section 381.705(1) (1), Florida statutes Humana Bennett projects gross revenue charges during the first year of operation of the catheterization laboratory of $1,450 and a net revenue per procedure in the first year of $913. The net revenue figure is lower because it reduces gross revenue by contractual allowances due to HMO/PPO discounts, and the difference between the hospital's customary charge and the amount reimbursed by Medicare or Medicaid for catheterization procedures. The gross charge for the second year of operation is $1,500 with a net revenue per procedure of $945. These projected charges are about the same as those charged by existing providers; FMC charges currently about $1,400-$1,500 with a net revenue of about $1,200-$1,300 for inpatient catheterizations. During the first four months of calendar year 1987, South Broward Hospital District (Memorial Hospital) charged about $1,431 for catheterizations. Plantation General charged approximately $2,300. Thus, there will be no increase in the charge for such procedures due to additional competition. There was no evidence from any existing provider that entry of Humana Bennett into the catheterization market would cause it to lose revenue to the point where any existing provider would withdraw from the catheterization market and thereby contract the supply of catheterization services. Providers do not have the option of simply raising charges to compensate for diminished market share because Medicare, Medicaid, and HMO/PPO charges are fixed, and open market competition will drive private pay patients to lower cost providers. Obviously, the entry of an additional provider into the market will reduce the current market share which existing providers enjoy. The certificate of need statute is not meant to protect competitors' incomes. While existing providers will be affected, the increased competition would be a positive impact, with the exception of the impact on the public health care provider, South Broward Hospital District. If the Humana Bennett catheterization laboratory is approved, South Broward Hospital District would lose approximately 50% of the catheterization procedures it now provides to persons who live in Humana Bennett's service area, and also would lose 10% of the referrals for open heart surgery or therapeutic catheterizations (angioplasty) for patients it would have served, but for the laboratory at Humana Bennett. The South Broward Hospital District would lose about $324,000 of net revenue. In 1987, South Broward Hospital District provided $41,392,000 in uncompensated care. Approximately 11 million dollars was provided by tax revenues and 30 million dollars was provided from profitable operations. This $324,000 probable loss in net revenue would add to the public hospital district's burden, but this revenue loss is not grave enough to restrict the entry of another competitor into the catheterization market in and of itself. 6. The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. Section 381.705(1) (n), Florida Statutes Humana Bennett maintains a Medicaid contract and does admit and treat Medicaid patients who present themselves. In fiscal year 1987, 5.31% of Humana's gross revenues were provided for uncompensated care, which equates to 3.15 million dollars. There is, however, no proof that this figure is anything other than money which the hospital had expected admitted patients to pay, but which, for whatever reasons, went unpaid. Accordingly, the proof is not persuasive that any portion of that 3.15 million dollar amount was generated by a conscious commitment on the part of Humana Bennett to provide hospital services to indigents on a charity basis. While prudent accounting requires a for-profit hospital to have a reserve for bad debts, it is not entitled to have its application viewed more favorably by passing off its bad debt reserve as if it were charity care. This factor, therefore, does not enhance the Humana Bennett application; neither does it detract from it. Consistency with rule criteria Service accessibility to undeserved population groups. Rule 10-5.011(1) (e)8.c. Florida Administrative Code This rule criteria requires little additional analysis to that already expressed above in Section II. A.1 and 6 of this order under Section 381.705(1)(b) and (n), Florida Statutes. While the applicant does propose to serve all persons needing catheterizations, including Medicare and Medicaid patients, the Medicaid projected utilization is only 1%, which is essentially cosmetic. It shows no real commitment to serve the medically needy and shows no commitment to indigent patients, as distinct from that group of patients which may be served but who may not pay their bills, thereby producing "bad debt" on the hospital's books. The emergency policy of the hospital is such that indigents would be eligible to be served in the unlikely event catheterization was needed on an emergency basis. The application, therefore, is sufficient to meet the requirements of this portion of the rule. The means by which it does so, however; does not enhance the application when balancing all of the statutory and rule criteria to determine whether the application should be granted. 2. Availability of health personnel. Rule 10- 5.011(1) (e)9.b., Florida Administrative Code The proof demonstrates that Humana Bennett has documented the ability to staff its cardiac catheterization laboratory under the standards in this rule. 3. Coordination of services. Rule 10-5.O11(1)(e)9.e.(I) Florida Administrative Code The rule requires that proposed cardiac catheterization laboratories and facilities not performing open heart surgery must submit, at the time of certificate of need application, a written referral agreement with a facility providing open heart surgery services which is within 30 minutes' travel time by emergency vehicle under average travel conditions. (emphasis supplied) It is undisputed that no referral agreement was included when Humana Bennett filed its application. Humana argues that it sought referral agreements with hospitals in the service district which offered open heart surgery, including Broward General Hospital, North Ridge Medical Center, Holy Cross Hospital, and Memorial Hospital, but none of those hospitals agreed to accept transfers from Humana Bennett. The executive director of Humana Bennett personally contacted an official of Florida Medical Center to obtain a referral agreement. That official specifically declined to enter into a referral agreement in order to prevent Humana Bennett from competing with FMC for cardiac catheterization services. There is no evidence that the other hospitals declined to enter into a referral agreement simply to block Humana Bennett's application. It may be that those other hospitals had other valid reasons for declining to enter into referral agreements. Nothing to the contrary was proven. Eventually, Humana Bennett did receive a referral agreement from the executive director of North Ridge Medical Center. It is dated January 8, 1988, six months after the Department of Health and Rehabilitative Services declared the Humana Bennett catheterization laboratory application complete. (Humana exhibit 30) Due to the absence of a referral agreement, the Humana Bennett application should have been rejected by the Department as incomplete when submitted. 4. Service costs. Rule 10-5.011(1)(e)10. Florida Administrative Code 43. The cost for cardiac catheterizations to be provided by Humana Bennett is projected to be about the same or less than the charges of current providers. The projected charges are reasonable. The application meets this portion of the rule. 5. Relationship with the state and local health plans. Rule 10-5.011(1) (e)11. Florida Administrative Code 44. This matter has already been discussed in Section II A.1. of this order with respect to statutory criteria 381.705(1) (a), Florida Statutes, and will not be repeated, except to say that the application is not consistent with the local and state health plans and therefore does not meet this rule criteria. 6. Need determination. Rule 10-5.011(1)(e)12. and 15. Florida Administrative Code The Department's rule provides that it will "not normally" approve applications for new cardiac catheterization services unless need is shown as calculated through an algorithm. See Rule 10-5.011(1)(e)6., Florida Administrative Code. The algorithm is found at Rule 10-5.011(1)(e)12., Florida Administrative Code. Several versions of how the formula should be applied were presented at the hearing. Witnesses for Humana Bennett and the Department of Health and Rehabilitative Services found need for an additional catheterization laboratory in Broward County according to their analysis of how "need" is defined in the algorithm. Health planners for FMC and South Broward Hospital District applied the algorithm in a manner demonstrating that there is no need for an additional catheterization service. The interpretations differed in two respects. First, the health planners disagreed on the number of catheterization procedures that were performed during the 12- month period that is used under the rule to establish an historical use rate, i.e., the number of procedures performed per 100,000 population in the district in the past. They also disagreed as to the number of catheterization laboratories presently operating in Broward County. The algorithm projects the number of catheterization "procedures" that will be performed for the year in which the catheterization laboratory will begin service. The laboratory obviously will not open on the date the application is filed; but at some date in the future. That future time is the "planning horizon" for which a projected use rate in the service area is determined. An actual use rate is first determined. It is the number of catheterizations performed per 100,000 population during the 12-month period which begins 14 months prior to the date the health care facility must file its letter of intent to file an application for a new service. This actual use rate is multiplied by the projected population at the planning horizon and then divided by 100,000. The result is the projected number of procedures at the planning horizon. The projection is divided by 600 in order to establish the number of catheterization laboratories that can be approved in the District. The number of existing laboratories is subtracted from that number to determine how many, if any, additional laboratories should be approved. It is important to determine the number of "procedures" performed in the applicable 12-month period to determine the actual use rate. The higher that number, the higher will be the number of projected procedures, and therefore the more likely it will be that additional laboratories may be approved. Rule 10-5.011(1) (e)2. and 4., Florida Administrative Code, defines the terms "cardiac catheterization" and "procedure" as follows: 2. Cardiac Catheterization. Cardiac catheterization is defined as a medical procedure used as a diagnostic and therapeutic tool for heart and circulatory conditions.... * * * 4. Procedure. Procedure means an angiographic study, a physiologic study or a therapeutic activity within a cardiac catheterization laboratory which utilizes the equipment customarily used in cardiac catheterization. These definitions are unclear because they are circular--a catheterization is defined as a procedure, and a procedure means a study utilized in cardiac catheterization. The term "study" is not defined by rule. Florida Medical Center contended that when a patient visited a cardiac catheterization laboratory, more than one study might take place as tubes are inserted into a blood vessel in the patient's arm or leg to diagnose circulatory conditions. Even if a patient undergoes multiple studies during one visit to the laboratory only one catheterization "procedure" takes place. In contrast, the Department of Health and Rehabilitative Services and Humana Bennett argued that if one patient underwent multiple studies during one visit, each should be counted as a different procedure. The substantive portions of Rule 10-5.011(1) (e) variously use the term catheterization or procedure. For example, in setting a minimum service volume for laboratories, Rule 10-5.011(1) (e)9.d. requires a minimum service volume defined in terms of cardiac catheterizations. On the other hand, in the need algorithm, the calculation is based upon the number of cardiac catheterization procedures. See Rule 10-5.011(1)(e)12., Florida Administrative Code. Rule 10-5.011(1) (e)15.a.(I), and c. further add to the difficulty in interpreting the rule by using the words "catheterization" and "procedure" interchangeably: There shall be no additional adult cardiac catheterization laboratories established in a service area unless: (i) The average number of catheterizations performed per year by existing and approved laboratories performing adult procedures in the service area is greater than 600;.... * * * Applications proposing to establish cardiac catheterization laboratories will not be approved if they would reduce the average volume of procedures performed by laboratories in the service area below 600 adult procedures. ...(Emphases added) The State Health Plan, Volume II, at page 95 contains a discussion which is informative on the issue of whether, in applying the need algorithm, one should count individual studies on a patient or patient visits, stating: Up until 1977 the literature showed a consensus on the need for minimum caseloads. Since 1977, expert opinion has become more divided on the issue, with many provider representatives advocating that the standards now reflected in federal and many state laws are no longer necessary and justifiable. However, a general opinion among the medical profession is that a certain minimum caseload is essential to assure quality results. ...The established federal and state minimum standards of 300 procedures annually for adult [patients] ... are believed to be adequate to maintain the expertise of the professional team engaged in this highly specialized service. (Humana exhibit 8) (Emphasis added) Thus, the term "cases," which focuses on number of patients, and "procedures" appear to be used synonymously. The National Health Planning Guidelines are referenced in the State Health Plan and were influential in the drafting of the catheterization rule. The Guidelines were published in the Federal Register on March 29, 1978, and Section 121.208(a) (1) of the Guidelines stated: There should be a minimum of 300 cardiac catheterizations,...within 3 years of initiation. in subsection (b), the Guidelines stated: Based on recommendations from the Inter-Society Commission on Heart Disease Resources, the Department [of Health, Education and Welfare] believes that a minimum level of 300 catheterizations per year is indicated to achieve economic use of resources. The report of the Inter-Society Commission on Heart Disease Resources, referenced in both the State Health Plan and the National Health Planning Guidelines, also assist in interpreting the use of the terms "catheterizations" and "procedures" in the Florida rule. That entity publishes a journal, Circulation, in which it is stated: To maintain adequate performance levels and to minimize risks, each team of physicians should perform, on the average, at least 600 adult examinations* a week, or 300 cases per annum. *An examination includes all cardiac diagnostic procedures (angiographic and physiologic studies) performed on a patient during one session in the laboratory. Report of the Inter-Society Commission for Heart Disease Resources. Circulation, Volume 53, No. 2, page 8-9 (1976) The Society's publications indicate an understanding that many patients have multiple procedures and specifically rejected a further breakdown of their caseload recommendation: in considering this matter, we have decided against further breakdown of caseload recommendations. The number of patients requiring only angiographic or physiologic evaluation is rapidly decreasing: in most cases both angiographic and selected hemodynamic studies are now performed. Therefore, in the hands of an appropriately trained and experienced team these "mixed" caseloads generally should be adequate to maintain an acceptable level of performance. Id. The Inter-Society Commission reports used the terms "procedure" and "case" interchangeably: Laboratories supporting an active coronary surgical program may generate a caseload close to 9 procedures a week or 450 cases per annum. Id. The representative of the Department of Health and Rehabilitative Services testified at the hearing, and stated her view that when referring to a minimum service volume of 300 catheterizations annually, Rule 10-5.011(1) (e)9.d. was speaking of the number of procedures, which could be 100 patients receiving 3 procedures, 150 patients receiving 2 procedures, or 300 patients receiving 1 procedure. Clearly more than one "procedure" can be performed during a visit to a laboratory, often through a single catheter inserted into a patient on a single occasion. Many of these "procedures" take just a few minutes. Each procedure or study may generate a separate billing to the patient, however. The more persuasive proof on how to properly county "procedures" under the rule was presented by FMC's expert health planner, Mr. Konrad, whose opinions are credited. Mr. Konrad had been employed with the Department of Health and Rehabilitative Services and had developed the first State Health Plan. He testified that the existing rule on cardiac catheterization came from the Inter-Society Commission for Heart Disease Resources Report, which is referenced in the Federal Health Planning Law. While the Florida rule has been amended since its first promulgation, no amendment has altered the original concept regarding the definition of procedure. According to Mr. Konrad the procedure means "a case" and all studies performed during one visit to the catheterization lab constitute one procedure. The number of cardiac catheterization procedures that were performed in laboratories in HRS District X during 1986 was 7,611. The laboratories then operating were located at Broward General, FMC, Holy Cross Hospital, North Ridge, Plantation General, North Broward Medical Center, and Memorial Hospital. The counts for the numbers of procedures performed at these laboratories were reported by the facilities to the District X Local Health Council. FMC originally reported it performed 2,166 procedures in 1986. Subsequently, officials at FMC realized their figures were erroneous and notified the Local Health Council and the Department that the correct number of procedures was 1,840. The lower figure is correct. The difference in figures is accounted for by the confusion over whether a single cardiac catheterization was a "procedure" or whether a single patient catheterized for a number of studies should have been recorded as the number of "procedures" equal to the number of studies performed. This reduces the total number of procedures performed in District X during 1986 to no more than 7,611. Fewer procedures than that were likely performed, because the Local Health Council never defined the term "procedure" for the hospitals reporting to it. Consequently the numbers are probably inflated somewhat because some hospitals incorrectly counted each study as a procedure, rather than counting only the number of patient visits for catheterization as one "procedure". The July 1986 population of Broward County was 1,165,922. This figure is divided by 7,611 to produce an actual cardiac catheterization use rate per 100,000 for District X in 1986, of 652.78. The total projected population for District X during 1989, the year in which Humana Bennett intends to open its service, is 1,234,484. When the 1986 use rate is applied to this population, the estimated number of procedures for 1989 is 8,058. This figure is then divided by 600 according to Rule 10- 5.011(1)(e)15.a.(I), Florida Administrative Code, to produce the number of laboratories needed in the District at the planning horizon, which is 13. At the time the application was submitted, there were 10 existing cardiac catheterization laboratories in the district. North Broward Hospital District filed in the same batch as Humana its application for a catheterization laboratory at Imperial Point. As stated earlier, that application was approved giving a total of 11 existing or approved laboratories. There is, therefore, a need projected by the algorithm for an additional laboratory which Humana Bennett can fill. None of the cardiac catheterization laboratories in Broward County are providing fewer than 300 adult catheterizations per year. The limitation on additional laboratories found in Rule 10-5.011(1) (e)15.a.(II), Florida Administrative Code, therefore does not prohibit the approval of an additional laboratory. Findings with respect to Section 381.705(2), Florida Statutes The prehearing stipulation indicates that Humana Bennett and HRS maintain that Section 381.705(2), Florida Statutes, is not applicable to this proceeding, while the other parties maintain that it does apply. Nothing in the prehearing stipulation explains the basis on which any party argues that this statute does or does not apply. The application discloses the total cost for the project is approximately $1,300,000. Consequently, it would appear to be a "capital expenditure proposal" as that term is used in Section 381.705(2) , Florida Statutes. The definition of capital expenditure found in Section 381.702(1), Florida Statutes, refers to the dollar limit of 1 million dollars found in Section 381.706(1) (c), Florida Statutes. Section 381.705(2) does apply, and the following findings of fact are made. 1. Less costly, more efficient or appropriate alternatives to inpatient services. Section 381.705(2)(a), Florida statutes 65. No party has proven that outpatient catheterization services are a more appropriate alternative to the catheterization laboratory purposed by Humana Bennett. Moreover, all parties have stipulated that the design and construction costs, as well as equipment costs and other miscellaneous costs in Humana Bennett's proposal are reasonable. Prehearing stipulation, section D. 4 and 5. 2. Use of the existing inpatient facilities in an appropriate and efficient manner. Section 381.705(2) (b), Florida Statutes 66. Existing catheterization laboratories are performing more than the minimum service volume prescribed in Rule 10-5.011(1)(e)9. d., Florida Administrative Code, of 300 catheterizations annually. On the average, they were also performing more than the 600 catheterizations annually required by Rule 10-5.011(1)(e)15. A. (I), Florida Administrative Code. 3. Alternatives to new construction such as modernization or sharing arrangements. Section 381.705(2) (c),Florida Statutes Given the demonstration of need pursuant to the need algorithm, the establishment of a new service is one appropriate method of meeting that need. Existing catheterization laboratories do have the capacity, however, to serve many additional patients. More extensive utilization of these facilities avoids the additional capital construction and equipment costs of opening a new cardiac catheterization laboratory. The ten existing cardiac catheterization laboratories each have the ability to perform, on the average, at least 1,000 catheterizations per year. The new laboratory at Imperial Point will also have a similar capacity. The laboratories in Broward County, therefore, have an ability to provide approximately 11,000 catheterizations per year (this ignores the intermittent use of the third "convenience" laboratories at Holy Cross and at FMC). Assuming the need for 8,060 catheterization procedures at the 1989 planning horizon, there is still an excess capacity, using only existing or approved laboratories, to provide annually an additional 2,940 catheterizations. More intensive use of existing and approved facilities would certainly be a more efficient way of providing catheterization services than is spending approximately $1,300,000 to construct and equip the laboratory at Humana Bennett. 4. Problems in obtaining inpatient care in the absence of the proposed new service. Section 381.705(2)(d), Florida Statutes There is no evidence that patients will have difficulty in obtaining cardiac catheterization services in Broward County if the proposed laboratory at Humana Bennett is not approved.
Recommendation It is recommended that the application of Humana Hospital Bennett for a certificate of need to establish a cardiac catheterization laboratory be denied. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 30th day of September, 1988. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1050 (904) 488-9765 Filed with the Clerk of the Division of Administrative Hearings this 30th day of September, 1988.
The Issue Whether Petitioners (collectively referred to as "Humana") are entitled to exemptions from the Certificate of Need ("CON") Law, to establish certain services at their facilities, pursuant to Subsection 381.713(1)(b), Florida Statutes (1989), (a provision which was repealed by Chapter 91-282, Laws of Florida). Whether Intervenors have standing to contest the exemption requests of Humana.
Findings Of Fact Petitioners Humhosco, Inc. d/b/a Humana Hospital Brandon (Humana Brandon) in Hillsborough County applied for CON exemption to initiate open heart surgery services. Humhosco, Inc. d/b/a Humana Hospital Northside (Humana Northside) in St. Petersburg, Pinellas County, applied for a CON exemption to initiate open heart surgery and inpatient MRI services. Humana of Florida, Inc. d/b/a Humana Hospital St. Petersburg (Humana St. Petersburg), in Pinellas County applied for a CON exemption to establish a Level II neonatal intensive care unit (NICU). Humana of Florida, Inc. d/b/a Humana Hospital Pasco (Humana Pasco) in Dade City, Pasco County, applied for CON exemption to initiate inpatient cardiac catheterization. Humana of Florida, Inc. d/b/a Humana Hospital Bennett (Humana Bennett) in Plantation, Broward County applied for a CON exemption for a Level II NICU. Community Hospitals of Humana, Inc. d/b/a Humana Hospital Cypress (Humana Cypress) in Pompano Beach, Broward County applied for CON exemption to perform inpatient cardiac catheterization procedures, and for substance abuse and psychiatric beds. Community Hospital of The Palm Beaches, Inc. d/b/a Humana Hospital Palm Beaches (Humana Palm Beaches) in Palm Beach County applied for a CON exemption to perform inpatient cardiac catheterization procedures. Humana Hospital Pembroke Pines, Inc. d/b/a Humana Hospital Pembroke Pines (Humana Pembroke) in Broward County applied for CON exemptions for open heart surgery, inpatient cardiac catheterization, Level II NICU, psychiatric and comprehensive rehabilitation beds. Intervenors Adventist Health System/Sunbelt, Inc. (Adventist) filed a Notice of Voluntary Dismissal on June 3, 1991. Florida Hospital Association (FHA) is a trade association of approximately 225 hospitals in the State of Florida. The Association of Voluntary Hospitals of Florida, Inc. (AVHF) is a not-for-profit corporation representing approximately 90 private and public not- for-profit hospitals in the State of Florida. All Children's Hospital (ACH), a 144-bed children's specialty hospital with Level II and Level III NICU beds, is a Regional Perinatal Intensive Care Center (RPICC) located in St. Petersburg in HRS District 5 for Pinellas/Pasco Counties. Florida Medical Center, Ltd. (FMC) is a 459-bed acute care hospital in HRS District 10, Broward County, at which services include inpatient cardiac catheterization, open heart surgery, and short term psychiatric services. Lakeland Regional Medical Center (LRMC) is an 897-bed acute care hospital, located in Polk County in HRS District 6, with a range of cardiac services, including open heart surgery. Plantation General Hospital (Plantation), a general acute care hospital in HRS District 10, Broward County, offers cardiac catheterization and Level II NICU among its procedures and programs. South Broward Hospital District (SBHD), a legislatively-created special taxing district, operates a 737-bed Memorial Hospital in HRS District 10, Broward County, at which its services include open heart surgery, inpatient cardiac catheterization, Level II and III neonatal intensive care, short-term inpatient psychiatric treatment, and inpatient comprehensive rehabilitation. St. Anthony's Hospital is a 434-bed community hospital in St. Petersburg, Pinellas County, which is in HRS District 5, and offers inpatient cardiac catheterization. St. Joseph's Hospital is a 649-bed facility in Tampa, Hillsborough County, which is in HRS District 6, and provides inpatient cardiac catheterization and open heart surgery. St. Mary's Hospital, a 378-bed general, acute-care hospital in West Palm Beach, Florida, offers Level II and III NICU, and inpatient cardiac catheterization. Hillsborough County Hospital Authority, operates Tampa General Hospital (Tampa General) in HRS District 6, with 1,024 beds and a range of cardiac services, including open heart surgery. University Community Hospital (UCH) is located in HRS District 6, and is an existing provider of open heart surgery. Standing Adventist failed to present evidence of standing. FHA members include all of the petitioners and intervenors in this case. AVHF members include at least one member providing the same service in the same HRS District as the services which the eight Humana hospitals seek to establish by the exemption requests. ACH is an existing provider of Level II NICU in HRS District 5, the same service in the same area as proposed in the exemption request of Humana St. Petersburg. FMC provided 10% of its cardiac services in 1990 to HMP enrollees and is an existing provider of inpatient cardiac catheterization, open heart surgery, and short term psychiatric services in HRS District 10, which are, in part, the subjects of the Humana Cypress and Pembroke exemption requests. At LRMC, from October 1, 1989 through September 30, 1990, 163 open heart surgeries, 215 cardiac catheterizations, 22 angioplasties, and 1,434 other cardiology procedures were performed on patients discharged to zip codes included by Humana Brandon in its service area for its exemption request for open heart surgery. Plantation is an existing provider in HRS District 10 of inpatient cardiac catheterization, for which Humana Cypress requested exemption, and Level II NICU, for which Humana Bennett requested exemption, and both of which services are included in the Humana Pembroke exemption request. SBHD estimates the range of patients lost, as a result of approval of the exemption requests of Humana Pembroke and Humana Bennett, at between 25-344 cardiac catheterizations, 58-434 open heart surgeries, up to 232 substance abuse treatments, between 8-352 comprehensive rehabilitations, 25-1933 short-term inpatient psychiatric, and 58-1354 neonatal patients. St. Anthony's provides inpatient cardiac catheterization in St. Petersburg and Southern Pinellas County, the same service in an overlapping service area as proposed in the Humana Pasco exemption request. St. Joseph's service areas for inpatient cardiac catheterization and open heart surgery overlap those in the exemption requests of Humana Pasco for cardiac catheterization, and overlap those of Humana Brandon and Humana Northside for open heart surgery. St. Mary's is a Humana Care Plan provider for inpatient cardiac catheterization, in a service area overlapping that proposed for inpatient cardiac catheterization by Humana Palm Beaches, and for NICU at Humana Bennett, since St. Mary's is one of the designated statewide Regional Perinatal Intensive Care Centers. Tampa General is under contract to Humana HMO, PPO and insurance subscribers, and provided 116 open heart surgeries to patients included within the service area of the Humana Brandon exemption request, and projects its loss of gross revenue at $1.5 million from the approval of the Humana Brandon exemption request for open heart surgery. At UCH, which has a service area within the area proposed for open heart surgery at Humana Brandon, twenty open heart surgeries in fical year 1990, and forty open heart surgeries in the first six months of 1991 were performed on HMP enrollees, the latter generating approximately $2 million in gross revenues. Amendment of Applications for Exemption (Costs) The June 1990 Humana exemption requests failed to include the costs of the services proposed, as required by Florida Administrative Code 10- 5.005(2)(a). HRS reviewed the requests, failed to notify Humana of the omission of cost data, and failed to cite the absence of that data as a basis for its decisions. The cost of services is included implicitly within the statutory criterion for review of exemption requests, because cost may be a factor in distinguishing between services which are or are not available by exemption. Tertiary and Inpatient Institutional Health Services or Beds Subsection 381.702(20), Florida Statutes, defining "tertiary health services" was enacted subsequent to the HMO exemption in Subsection 381.713(1), Florida Statutes, without any concurrent, material amendment of the latter. NICU and comprehensive rehabilitation are included in Subsection 381.702(2), Florida Statutes, as examples of tertiary health services. Open heart surgery is included within the definition of tertiary health services in Florida Administrative Code Rule 10-5.002(66). Inpatient cardiac catheterization is an inpatient institutional health service. Short-term inpatient psychiatric and substance abuse services are included in "alcohol treatment, drug abuse treatment and mental health services" as defined in Subsection 381.702(9), Florida Statutes. Because they are within the definition of "health services" but not within the definition of "tertiary services", short-term inpatient pschiatric and substance abuse are also included within the definition of "institutional health services" which may be exempt from CON regulation if all other provisions of the HMO exemption provision are met. Certain inpatient institutional health services, such as substance abuse and psychiatric services are authorized by the issuance of licenses designating the number of approved beds which may be used in offering the service. Need methodology and physical plant requirements are factors which differ in the requirements for services offered in approved licensed beds. The HMO exemption provision encompasses inpatient services provided in licensed bed inventories, in the phrase "inpatient institutional health services." Nature and Control of Facilities Each of the eight Humana hospitals are health care facilities, as defined in Subsection 381.702(7), Florida Statutes. Each of the eight Humana hospitals are licensed acute care hospitals which primarily provide inpatient health services, as required by Subsection 381.713(1)(b)1., Florida Statutes (1989). Humana Pembroke Humana Pembroke Pines, Inc. was incorporated in December 1989. It acquired the assets of Pembroke Pines General Hospital, pursuant to an asset sale and purchase agreement, the performance of which was guaranteed by Humana, Inc. Humana Medical Plan, Inc. (HMP), an HMO, is a wholly-owned subsidiary of Group Health Insurance, Inc., which in turn is a wholly-owned subsidiary of Humana, Inc. Although HMP acquired 100% of the stock in Humana Pembroke Pines, Inc., documents filed with state and federal agencies, other than HRS and the Department of Insurance, continued to list Humana, Inc. as the insured or controlling entity. Humana first indicated to HRS that the acquisition of Pembroke Pines General Hospital would be made by Humana Hospital Pembroke Pines, Inc., with a possible change of ownership to another Humana subsidiary, and subsequently notified HRS that the acquiring subsidiary would be HMP. Based on Humana's notice that the acquisition would not result in a change in beds or services, HRS determined that the acquisition of Pembroke Pines was not reviewable under CON requirements. An internal memorandum dated February 1, 1990, indicates that Humana planned to take advantage of the HMO exemption request prior to the acquisition of Pembroke Pines General Hospital, but did not report its plans to HRS. On March 2, 1990, HRS issued a license to Humana Hospital Pembroke Pines, Inc. There is no evidence to support the assumption that HRS would not have approved the acquisition of Humana Pembroke, or that Humana's plans to utilize the HMO exemption would have invoked CON review of the acquisition and resulted in a denial of the acquisition. Humana Pembroke is controlled directly or indirectly by HMP, the Humana HMO, as required by Subsection 381.713(1)(b)2. Enrollment of 50,000 Individuals Within the Service Area Subsection 381.713(1)(b)2., Florida Statutes, required the enrollment of at least 50,000 enrollees within the HMO's service area. The term "service area" is not used in the statute on CON application review criteria. Rather that statute, in Section 381.705, Florida Statutes, uses the term "service district", which is defined in Subsection 20.19(7), Florida Statutes, as the organizational components of HRS. The term "service area" is also not used in Subsection 641.47(3), Florida Statutes; that statute defines the area in which an HMO does business as an approved "geographic area". The HMO service area, under the exemption provision, is the HMO's geographic area, because the requirement in subsection (2), that the HMO have 50,000 enrollees, otherwise would be indistinguishable from the requirement in subsection (3), that the facility's access area have 50,000 enrollees. HMP's appoved service area includes Broward, Dade, Flagler, Hillsborough, Orange, Osceola, Palm Beach, Pasco, Pinellas, Seminole and Volusia Counties, and approximates 400,000 enrollees. Facility Geographically Located So That Service Is Reasonably Accessible To The 50,000 Enrollees Accessibility standards for various services are established for CON applications by rules. There is no reason to distinguish between the standards used for the determination of accessibility to health services within the CON application process and the standards applicable to making that same determination within the CON exemption request process. Florida Administrative Code Rule 10-5.011(1)(o)6. establishes a standard of 45 minutes maximum ground travel time under average travel conditions for access to inpatient psychiatric services, which is the equivalent of a 15-mile radius for Humana Pembroke. Humana Pembroke's exemption request, filed in June 1990, as up-dated in July, identified 55,592 enrollees within a 15-mile radius of the hospital. This enrollment data was given by zip code in Attachment 3B for inpatient cardiac catheterization and in Attachment 3D for short term inpatient psychiatric services. 1/ In its September 1990 CON application for inpatient cardiac catheterization, which has the slightly longer travel time of one hour, Humana Pembroke identified a service area with zip codes which would include only 21,375 of the 55,592 enrollees. When compared to enrollment data for the same zip codes in Humana's Exhibit 41, the most recent data available, enrollment in Humana Pembroke's zip codes for inpatient cardiac catheterization services and short term inpatient psychiatric services equals 27,083 HMP members, although one zip code, 33154, does not appear on Exhibit 41. Even accepting Humana's assertion that 321 enrollees reside in zip code 33154, total enrollment would equal 27,404. Humana has failed to demonstrate that Humana Pembroke is geographically located so as to be reasonably accessible to provide either inpatient cardiac catheterization or short term inpatient psychiatric services to 50,000 HMP enrollees. Limitation of Service to HMO Enrollees HRS preliminarily determined that Humana Pembroke's exemption request for inpatient cardiac catheterization services should be granted but that the service should only be available to HMP members. The text of subsection 381.713(1)(b), Florida Statutes, does not however restrict the provision of services to HMO enrollees, and the fact that a minimum number of enrollees must be in the service area to maximize the utilization of the service by enrollees does not compel such a conclusion. Subsection 381.713(1)(a), Florida Statutes, is a similar exemption provision which requires the enrollment of 50,000 individuals in an HMO's service area and a reasonably accessible facility, but also requires that 75% of reasonably expected patients be HMO enrollees. The Legislature was, therefore, obviously aware of the issue, yet in the applicable subsection failed to include any provision conditioning CON exemption approved upon provision of services only to HMO enrollees. Exemption Requests Based On Voting Trust Agreements Humana Pasco, Humana Palm Beaches, and Humana Cypress requested exemption approval to establish various inpatient institutional health services based on the control of those facilities by HMP by virtue of a voting trust agreement. The license-holder of Humana Pasco, Humana of Florida, Inc., is a wholly owned subsidiary of Humana, Inc. The license-holder of Humana Palm Beaches, Community Hospital of the Palm Beaches, Inc., is a wholly owned subsidiary of Humana, Inc. The license-holder of Humana Cypress, Community Hospitals of Humana, Inc., is a wholly owned subsidiary of Humana, Inc. On behalf of Humana Pasco, Humana Palm Beaches, and Humana Cypress, Humana, Inc., entered into Voting Trust Agreements (Agreements) designating HMP, the Humana HMO, as trustee, but did not report the change of control to state and federal agencies. The Agreements, dated May 29, 1990, have identical substantive provisions. The term of the Agreements is ten years, terminating May 28, 2000, with a provision that Humana, Inc. may not unilaterally terminate the Agreements, although Humana, Inc. subsequently offered to terminate one of the agreements. Each Agreement authorizes HMP to hold and vote the shares of stock of the respective Humana, Inc. subsidiary. Each Agreement obligates HMP to vote the shares in the best interest of Humana, Inc. and the applicable wholly-owned subsidiary. Each Agreement requires HMP to pay over all profits and dividends to Humana, Inc., with all convenient speed. Each Agreement provides that without the consent of Humana, Inc., HMP shall not increase or reclassify capital stock; sell, lease or exchange all or substantially all property or assets; or vote to consolidate, merge, or dissolve the Humana, Inc. subsidiaries. The Agreements provide that the trustee accepts the specified responsibilities, but recite no compensation. The Humana hospitals, including Humana Pasco, Humana Palm Beaches, and Humana Cypress, have chief operating officers who are known as executive directors, who report to HMP Vice-Presidents, but the executive directors receive incentive compensation for maximizing hospital utilization, as do all their superiors throughout the chain of command, up to and including the president of Humana Inc. Humana Pasco, Humana Palm Beaches, and Humana Cypress pay management fees to Humana, Inc., as does HMP, and are directly owned by corporate entities which have the same officers and directors as HMP. By virtue of the voting trust agreement, HMP votes the shares of stock in Humana Pasco, Humana Palm Beaches, and Humana Cypress, but no operational changes in the facilities have resulted from the establishment of the voting trust agreements. HMP, as voting trustee, has control of the assets of Humana Pasco, Humana Palm Beaches, and Humana Cypress. HMP is an HMO with in excess of 50,000 enrollees in its service area. See, Findings 60 and 61, above. The standard for determining if a proposed service is geographically accessible for 50,000 enrollees is the same as that established in the rules for CON applications for the same service. See, Findings 62 and 63, above. Humana Pasco. Humana Pasco's exemption request for inpatient cardiac catheterization asserted that 74,225 HMP enrollees reside within one hour's travel time of the facility. The applicable travel time standard for inpatient cardiac catheterization subject to CON review is one hour, under Florida Administrative Code Rule 10-5.032. Areas within a forty-mile radius of Humana Pasco are within one-hour average travel time of the facility. The zip codes for enrollees in the Humana Pasco exemption request are substantially different from those included within its service area in a 1987 CON application and from Hospital Cost Containment Board data on actual utilization of the facility. Humana failed to demonstrate that 50,000 HMP enrollees have geographic accessibility for inpatient cardiac catheterization services to Humana Pasco, based on the applicable travel time standard of one hour. 2/ Humana Palm Beaches. In the June 7, 1990 Humana Palm Beaches' exemption request for inpatient cardiac catheterization services, Humana asserted that there were 58,268 HMP enrollees within a 40-mile radius, or one-hour average travel time of the facility. In the July 31, 1990 submission of corrected information, Humana's attachment 3a asserts that 50,592 HMP enrollees reside in areas within 45 miles of Humana Palm Beaches. 3/ Humana's Exhibit 41, a computer printout of enrollees for May 1990, demonstrates that the enrollees in the zip codes listed on attachment 3a of the July submission equal 49,894 HMP members. Although not determinative of enrollment in the service area, HMP's reports to the Department of Insurance on enrollment in Palm Beach County and the Hospital Cost Containment Board data on zip codes with greater than 5% actual utilization of Humana Palm Beaches also show fewer than 50,000 enrollees. Humana attempted to assert that its enrollment figures are constantly increasing. Because the number of HMP members is so close to 50,000, that assertion becomes significant. A comparative review of the individual zip code enrollments asserted in Attachment 3A to the Humana Palm Beaches' July submission to those in Humana Exhibit 41 demonstrates that some zip codes lost members, presumably due to changing residential patterns. Therefore, it is impossible to make a general assumption that HMP's growth in membership is evenly distributed across zip codes within an area geographically accessible to a hospital. Humana has failed to establish that 50,000 enrollees have geographic access to Humana Palm Beaches for inpatient cardiac catheterization services using the one-hour travel time standard for CON review. Humana Cypress. Humana asserted that 50,962 HMP enrollees are geographically accessible to Humana Cypress for inpatient cardiac catheterization, or within the one-hour travel time or 15 miles, although its September 1990 CON application for the same service defines an area including approximately half that number. Humana asserted that 68,412 HMP enrollees are geographically accessible to Humana Cypress for inpatient substance abuse and short term inpatient psychiatric services, or within the 45-minute travel time or a 15-mile radius, although its September 1989 CON applications for the same services encompass an area with approximately 41,000 of the enrollees. When zip codes in the exemption requests are compared to Humana's exhibit 41, a computer printout of enrollees for May 1990, 4/ the enrollees in the zip codes submitted in the exemption request for inpatient cardiac catheterization total 50,581 and those submitted in the exemption requests for inpatient substance abuse and short term inpatient psychiatric services total 67,812. 5/ Humana has established that Humana Cypress is geographically accessible to provide inpatient cardiac catheterization to 50,000 HMP enrollees under the one-hour travel time requirement. Humana has established that Humana Cypress is geographically accessible to 50,000 HMP enrollees under the 45 minute travel time requirement for short term inpatient psychiatric and inpatient substance abuse services.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered Dismissing the Petition to Intervene filed by Adventist based on its Notice of Voluntary Dismissal; Denying the exemption requests of Humana Brandon for open heart surgery, Humana Northside for open heart surgery, Humana St. Petersburg for Level II NICU, and Humana Bennett for Level II NICU, Humana Pembroke for open heart surgery and Level II NICU, because those services are tertiary services, not institutional health services. Denying the exemption request for inpatient cardiac catheterization and short-term inpatient psychiatric services at Humana Pembroke for failure to establish geographic accessibility to 50,000 HMP enrollees. Denying the exemption requests of Humana Pasco and Humana Palm Beaches for failure to establish that 50,000 HMO enrollees have reasonable access to inpatient cardiac catheterization services at these facilities. Granting the exemption request of Humana Cypress for inpatient cardiac catheterization, short term inpatient psychiatric services, and inpatient substance abuse services, without limiting the provision of services to HMP enrollees. RECOMMENDED this 14th day of October, 1991, at Tallahassee, Florida. Eleanor M. Hunter Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of October, 1991.
Findings Of Fact A. whether the "Grandfather" Issue Should Be Determined. The Petitioner, Mease Hospital and Clinic (Mease), operates a 278 bed hospital in Dunedin, a 100 bed hospital in Countryside, and a medical clinic. All are located in north Pinellas County, in the North Pinellas subdistrict of HRS District 5. In 1982, Mease applied for a certificate of need to equip and operate a cardiac catheterization laboratory (CCL). At the time, Mease was of the view that a CCL would be a new service and would therefore require a certificate of need. When Mease determined that approval would not be likely under then current rules, Mease withdrew its application because it understood that a final denial legally would preclude Mease from re-applying for three years. On July 11, 1986, the Respondent, HRS, entered a Final Order adopting a Recommended Order and acknowledging that Humana Hospital Northside, also located in Pinellas County, HRS District 5, continuously had been providing cardiac catheterization services since before July 1, 1977, the effective date of certificate of need regulation of CCLs, and therefore was not required to obtain a certificate of need for a CCL as a new service. Final Order, Humana Hospital Northside v. Department of Health, etc., 8 F.A.L.R. 3910 (DHRS July 11, 1986). When Mease reviewed the Humana Northside Final Order and final hearing transcript, it concluded that it, too, should be "grandfathered." Mease was doing the same type catheterization procedures as Humana Northside. Mease decided to re-apply for a certificate of need both on the basis of need for a CCL at Mease and on the basis of the "grandfather" claim. In October, 1986, Mease filed the pending certificate of need application. In addition to the more typical components of a CON application, the Mease application states in pertinent part: EQUIPMENT/SERVICE TYPE: Mease Hospital and Clinic maintains that the Cardiac Catheterization Program is not a new service, as procedures similar to those performed at Humana Northside, which was recently approved on a grandfathering basis for cardiac catheterization have been performed at Mease Hospital and Clinic in Dunedin for more than 20 years. * * * ADDITIONAL PROJECT DETAILS/REMARKS: Mease Hospital and Clinic believes its historic performance of procedures identical to those for which Humana Northside was grand fathered a cardiac catheterization lab is sufficient to justify similar action, resulting in approval of Mease' proposal. HRS' State Agency Action Report (SAAR) was completed in April, 1987. It evaluated the Mease proposal as a typical certificate of need application and denied it on the basis of lack of need. There was no direct mention of the "grandfather" claim, but the SAAR concludes in pertinent part: "Deny a certificate of need for [the Mease] project [among others] in its entirety... Reasons for decision: Insufficient need for an additional cardiac cath lab." Mease's petition for formal administrative proceedings on the denial does not specifically address the "grandfather" claim, either. During the pendency of this proceeding, Mease continued to seek a "grandfather" exemption apart from this proceeding. But Mease's prehearing proceedings in this case were conducted in a way that indicated its assumption that the "grandfather" issue would be determined by final agency action in this case, if not before by informal means. The other parties recognized this assumption and were not prejudiced by Mease's failure to formally specify the issue in its pending petition for formal administrative proceedings or by amendment to it. By letter dated November 23, 1987, HRS finally responded to Mease's continued efforts to obtain "grandfather" status and denied the request. Mease still did not amend its petition for formal administrative proceedings (nor did it file a new, separate petition in response to the November 23 letter.) But it continued to conduct prehearing procedures in a manner so as to have the "grandfather" claim heard as part of this case. HRS and the Intervenor, Morton Plant Hospital, Inc. (Morton Plant) first objected on the record to consideration of the "grandfather" issue in this case in the Prehearing Stipulation filed on January 6, 1988. The "grandfather" issue should be determined in this proceeding. Whether Mease Has A "Grandfathered" CCL. Before July 1, 1977, and continuously since, Mease has operated a special procedures room at its Dunedin hospital. The special procedures room is the largest room in the x-ray department, with adjoining rooms that contain sinks for sterile technique and housing computers. Equipment in the room includes an x-ray generator with a high MA capability to do moderately rapid sequence films and fluoroscope. There is a table of special design to allow movement in all directions to facilitate fluoroscopy. Three different film changers are used. The room contains a large array of catheters, wires and needles for use in the catheterization process. There is a defibrillator monitor, pressure monitors, and various physiologic monitors also in the room. Finally, there is a digital vascular imaging ("DVI") machine to facilitate the computerized processing of digital subtraction studies. The DVI machine has been used to perform coronary arteriographies. During the time the special procedures room has been operational, it has been staffed with persons specifically trained in critical care of patients, with special knowledge of cardiovascular medication and catheterization type equipment. There has always been ample support staff available for patient observation, handling blood samples, performing blood gas evaluations and monitoring physiological data. The catheterization team usually consists of the physician, a special procedures nurse (an R.N. with critical care training) and at least two dedicated radiographer technologists with special knowledge of the equipment. A special procedures log is maintained by physicians using the special procedures room. Procedures typical of those contained on the log prior to and consistently since 1977 include renal arteriograms, pulmonary arteriograms, cerebral arteriograms and femoral arteriograms. Pulmonary arteriograms involve passing a catheter through a right side chamber of the heart into the lungs; the other procedures do not involve passing a catheter into the heart. Pulmonary angiograms, right ventriculography and right atrial injections are all currently performed at Mease in the radiology laboratory. Right heart catheterization procedures are being performed in the CCU units and the special procedures lab at Mease. The special procedures room is not used by radiologists or cardiologists to do any therapeutic or diagnostic studies of the left chambers of the heart. Unlike procedures such as pulmonary arteriograms, in which the catheter is inserted into or through a chamber on the right side of the heart, fluoroscopy is required for insertion of a catheter into a chamber of the left side of the heart. With fluoroscopy, left heart catheterization procedures involve no significantly increased danger to the patient. Left heart catheterization procedures require faster film sequencing equipment for fluoroscopy because the left heart is a higher pressure (faster flow) system than the right heart chambers. Mease's cardiologists perform these procedures in a CCL at either Morton Plant or Largo Medical Center in Clearwater. The Mease special procedures room does not have, and has not had, the more sophisticated equipment needed to perform catheterization procedures in the left chambers of the heart. The sophisticated equipment needed for left heart catheterizations customarily is part of a CCL. It is commonly understood that a CCL is a laboratory which includes this equipment and uses this equipment for left heart catheterizations. Mease shared this understanding until it learned of the Final Order in Humana Hospital Northside. It never contested the omission of cardiac cath services from its hospital license, never reported cardiac cath procedures to the local health council and applied for a CON for a CCL in 1982. On review of the Humana final order and the record of the case, Mease correctly concluded that its special procedures room was being operated in the same way as Humana Northside's. Mease also concluded that it, too, was entitled to "grandfather" status. But the Humana final order points out: The respondent HRS offered no evidence to dispute the fact that petitioner has indeed been providing cardiac catheterization services on a regular and continuous basis from pre-July 1, 1977 to the present time. Instead, HRS takes the position that since petitioner never reported to the Local Health Council that it was performing such services, it is now somehow estopped from claiming a "grandfather" exemption from Certificate of Need review. There is competent and substantial evidence demonstrating that petitioner began performing cardiac catheterization procedures prior to July 1, 1977, at a time when Certificate of Need review was not required, and has continued to perform such services on a regular basis. Accordingly, petitioner was exempt from Certificate of Need review when it initiated such services and continues to maintain that exempt status so long as it regularly and continuously performs such services. In this case, there was persuasive evidence disputing that Mease has been operating a CCL. Mease's special procedures room had some, but not all, of the equipment customarily used in cardiac catheterization. Its special procedures room is not the kind of room customarily used to perform cardiac catheterization procedures. This is why Mease never before claimed entitlement to "grandfather" status but rather presumed that it did not have a CCL and would need a CON to open a CCL. Mease has not been operating a CCL continuously since July 1, 1977. Need For Mease's Proposed CCL. Mease filed the pending CON application in October, 1986. At the time, the local health council for District 5 was reporting an inventory of four CCLs: St. Anthony's; Morton Plant; Largo; and All Children's. Mease also knew that HRS had entered a final order in July, 1986, recognizing "grandfather status" for Humana Northside and allowing Humana Northside to upgrade its CCL by adding up-to-date equipment required for left heart catheterization procedures. At the time of the State Agency Action Report (SAAR) denying Mease's application in April, 1987, HRS was aware of, and also counted in the inventory at the time of the SAAR, a second CCL at Morton Plant which was added without CON review. The second Morton Plant CCL became operational in July, 1986, but was not reported to the local health council until early 1987, and was not reported by the local health council until September, 1987. A second CCL also opened without CON review at Largo Medical Center. But the evidence was not clear when the second Largo lab opened. It was not reported to, or by, the local health council before the SAAR either, and HRS did not count it in the inventory for purposes of the SAAR. Since the SAAR, two additional CCLs have been approved without CON review at Bayfront Hospital/All Children's Hospital in St. Petersburg. Finally, on November 24, 1987, the District Court of Appeal, First District, rendered an opinion reversing HRS' final order denying an application for a CON for a CCL at Bayonet Point Regional Medical Center in Pasco County in District 5. This CCL was approved for purposes of meeting the need existing as of 1986. The actual District 5 CCL use rate for the period July, 1985, through June, 1986, using local health council data, was 308.47 procedures per 100,000 population. The year in which the proposed CCL would initiate service, but not more than two years into the future, is July, 1988. The District 5 population in July, 1988, is projected to be 1,124,986. The number of procedures projected for District 5 in July, 1988, is 3470. Allocating 600 procedures per CCL, 3470 procedures would create a numerical need for 6 CCLs in District 5 in July, 1988. The local health council did not report any procedures done at the "grandfathered" CCL at Humana Northside, and none were included in the data for the time period July, 1985, to June, 1986. Counting the "grandfathered" Humana Northside CCL in the inventory at the time of the SAAR without attributing any procedures to it for purposes of calculating the use rate for July, 1985, to June, 1986, amounts to a recognition that Humana Northside, while given "grandfather" status based on the facts presented in DOAH Case No. 84-4070, was not in fact operating a CCL continuously since July, 1977. Refusal to attribute procedures to Humana Northside reflects a rational policy decision in this case not to perpetuate the error resulting from the apparently less-than-adequate HRS presentation of its case in the Humana Northside case. There was evidence officially recognized in this case without objection--namely, the Final Order, Bayonet Point Medical Center v. Department of Health and Rehabilitative Services, 8 F.A.L.R. 4342 (DHRS 1986)--that 1200 Pasco County (District 5) residents were being referred to Tampa for cardiac catheterization and open heart surgery in the year preceding June, 1986. (300 were open heart surgery patients.) But there was no evidence to prove how many of the 900 cardiac catheterization patients who were referred to Tampa in the period July, 1985, to June, 1986, would have had the procedure performed in District 5 if Bayonet Point had a CCL. It necessarily follows that there was no evidence to prove that any additional cardiac cath procedures for Pasco County patients performed in District 5 as a result of the Bayonet Pont CCL will not be absorbed by and performed at the Bayonet Point CCL. District 5 has the highest percentage of 65 and over population in the state (29.7 percent for calendar year 1986), but next to the lowest number of catheterizations per thousand of all the districts in the sate. District 5 also has a large cohort of population age 45 to 64. Over 50 percent of the population in District 5 is in the age cohort for which cardiac catheterization is most frequently needed as a diagnostic or therapeutic tool. Seasonal fluctuations increase the elderly winter population. Resident death rate from heart disease is almost 50 percent higher in District 5 than it is for the state of Florida. These factors combine to create an actual use rate in District 5 that, for the past two years (1986 and 1987) has exceeded (or, for 1987, was projected to exceed) the projected horizon year (July 1988) use rate derived from using the 1985 use rate data. The actual use rate for January through September 1987, when extrapolated for the entire calendar year of 1987, shows that the number of procedures expected to be actually performed in District 5 in 1987 is 46 percent (approximately 1,000 procedures) greater than the number of procedures projected to be needed in July 1988 using the 1985 use rate. The projection of procedures for July 1988 is 700 procedures less than actually occurred in District 5 in 1986. Use of July, 1985 to June, 1986, use rate in a demographic configuration like that found in District 5 underestimates projected procedures for July, 1988. Some trends in health care and area population growth do not support the addition of a cath lab at Mease. While the population of north Pinellas County, where Mease is located, is equal in age distribution to south Pinellas County, the new growth in north Pinellas and Pasco is younger than south Pinellas. Increased use of non-invasive diagnostic procedures, such as MRI and CAT scan, will reduce the growth of cardiac cath procedures in the future. The growth in the use rate in cardiac caths is in the number of therapeutic caths, which by rule are required to be done in a facility with open heart surgery and therefore cannot be done at Mease at this time. Indeed, the number of right heart caths being done at Mease has remained constant over the past several years. Also, death from heart disease is decreasing due to improvements in life style. All the cath labs in District 5 are within a two hour drive time of 90 percent of the population in District 5. Morton Plant is six miles from Mease Dunedin. Mease Countryside is twelve miles from Morton Plant and eight miles from Mease Dunedin. One-third of the Mease cardiologist's patients are at Mease Countryside and for catheterization these patients would have to be admitted at or transported to Mease Dunedin where the proposed lab would be located. There is sufficient capacity in the existing cath labs to serve growth in the near future. Approximately 600 more procedures could be done at Morton Plant. There is no problem scheduling caths at Morton Plant. There has been some difficulty getting beds for Mease patients before and after the procedure, but Morton Plant just opened new ICU beds with specially trained nurses to accommodate Dr. Gibbs' patients. The existing labs in District 5 are financially accessible. A significant number of the labs are located in not- for-profit hospitals that serve all types of patients. E.g., Morton Plant, which has an overlapping service district with Mease, offers twice the number of Medicaid days as Mease. In addition, as previously mentioned, new approved labs at Bayfront/ALL Children's (2) and Bayonet Point (1) will be coming on line to provide additional capacity (and bring the total number of CCLs in District 5 to ten.)
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that HRS enter a final order: (1) denying Mease's request for recognition of a "grandfathered" CCL at its Dunedin hospital; and (2) denying its application for a CON for a CCL at its Dunedin hospital, CON Action No. 5108. 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 12th day of May, 1988.
The Issue Whether the Respondent committed the acts alleged in the administrative complaint contrary to Section 458.331(1)(t), Florida Statutes.
Findings Of Fact (Stipulated) The Respondent is and was at all times material to the allegations a licensed physician in Florida, holding license number ME 0050839 issued by the state. The Respondent was a board certified internist and board certified cardiologist practicing with Diagnostic Cardiology Associates at St. Vincent's Medical Center (St. Vincent's) at the time of the events which gave rise to these allegations. On or about June 25, 1988, W.V., referred to in the complaint as Patient #1, was admitted to St. Augustine General Hospital in St. Augustine, Florida. W.V. was a 68 year old male with a history of heart problems including four bypasses performed in 1977, a pacemaker implantation in 1979, chronic obstructive pulmonary disease, and prior prostate surgery. W.V. was determined to have had an acute myocardial infarction for which he was treated at St. Augustine General Hospital for five days. As W.V.'s condition improved, he was encouraged to walk at St. Augustine where he complained of chest pain and weakness. A echocardiogram showed segmental wall motion disturbance involving the posterior wall of the heart. A second electrocardiogram was performed which showed ventricular pacemaker rhythm and ST-T wave changes. On this basis, given his history and myocardial infarction, he was referred for a cardiac catheterization to St. Vincent's where his earlier heart surgeries had been performed. The patient was monitored during his hospitalization in St. Augustine, and did not show any signs of arrhythmias. On June 30, 1988, W.V. was transferred to St. Vincent's and received through the Emergency Room, where he was interviewed by the Respondent. After giving the Respondent a brief outline of his problems, W.V. was placed on a general medical floor for the evening, and scheduled for cardiac catheterization the following day. Cardiac catheterization and its risks were explained to W.V., who signed the patient consent forms authorizing the procedure. On the morning of July 1, 1988, after examining the patient and finding no changes, the Respondent performed on W.V. a cardiac catheterization, which verified the recent acute myocardial infarction, the blockage of two of the bypasses, damage to the heart muscle serving the lungs, and high vascular resistance with severe pulmonary hypertension. The patient tolerated the procedure well and showed no signs of arrhythmias during or after the procedure. The test results indicated that he could not benefit from surgery or angioplasty. W.V.'s primary health threat was from congestive heart failure, a condition likened to drowning in one's own fluids. (Tx-129, line 1.) A patient suffering from congestive heart failure will call for assistance from the nursing staff, as one of the expert's phrased it, "he would have been crawling out the door on his hands and knees calling for the nurse." (See Dr. Gilmore, Tx-130, line 8.) Conversely, heart failure alone would not have caused the patient to have chest pains, unless the patient developed elevated pressures to the point where pulmonary hypotension caused chest pain. However, the chest pain in such a case is not caused by clogged arteries or an impending heart attack, but by build up of fluid in the lungs which causes the heart to work harder to pump the blood through the lungs. (Dr. Campbell, Tx- 107, line 16.) The Respondent's post-catheterization order initially directed that W.V. be moved to a monitored bed following the procedure. The purpose of monitoring a patient is to observe, document and ultimately treat cardiac rhythm disturbances. (Dr. Gilmore, Tx-117,line 6.) Approximately 75 percent of post- catheterization patients were placed on telemetric monitoring (monitoring or telemetry hereafter). Monitored beds existed on 3 East (eight monitored beds), 5 East (eight monitored beds), Coronary Care Unit (eight monitored beds), Intensive Care Unit (12 monitored beds), and open heart unit which, although monitored, would not take catheterization patients. Notwithstanding the number of monitored beds, the critical piece of equipment is the monitor because each room on a monitoring unit was set up to receive telemetry. The monitor is a small radio transmitter that relays information from leads attached to the patient to receivers in each room. The monitors are removed by patients upon discharge, thrown into the laundry, and into the trash. They also require repair. As a result, the actual number of monitors varied from the planned number of monitored beds. Upon completion of the catheterization, the catheterization nurse would advise the nurse in charge of placing patients that the cardiac catheterization patient was ready for admission to the hospital, and whether the doctor had ordered a monitored or unmonitored bed. If the doctor had ordered a monitored bed and one was not available, the placement nurse would ask the admitting physician whether the patient being admitted really needed monitoring given the critical number of monitored beds available and the necessity to poll the treating physicians of all the monitored patients to see if any could be taken off monitoring. Inferentially, the Respondent considered the status of his other patients who were being monitored. If the physician deemed the patient's need for monitoring critical, then the placement nurse would poll the physicians of all other monitored patients, and request that they reassess the needs of their patients on monitoring. (See Lipsky Deposition, Page 26) The unit which normally received post-catheterization patients, 5 East, had eight monitored beds and eight unmonitored beds which were used as "stepdown" beds for patients taken off monitoring so that the monitors could be changed, but the patient retained in the same bed. Not only were all the monitored beds occupied on 5 East, the post-catheterization unit, but that unit had almost a full census. (See Lipsky Deposition, Page 20 - Page 26) The hospital's procedures required cardiac catheterization patients to remain in the catheterization laboratory until a monitored bed was available if the doctor stated that the patient was to go to a monitored bed. The catheterization patient would be held in the catheterization laboratory where there was a shortage of nursing care until a bed was found. Contrary to the experts' testimony which presumed the authority of the Respondent to place the patient in a monitored bed, it was the placement nurse who placed the patient once the doctor ordered a monitored bed post-catheterization. No evidence was received regarding her authority to place patients requiring monitoring in the ICU or CICU. Typically, doctors reassessed their patients' need for monitoring during morning rounds, and those that were stable were removed from monitoring so the monitor became available for a more critical patient. (See Libsky deposition, Page 24, line 20) W.V. catheterization was completed at approximately 11:00 a.m., following morning rounds when a maximum number of monitors should have been available; however, no evidence was received when a monitor would have been available. Testimony revealed that the wait could be as long as two hours for a monitored bed. During that time, under hospital protocols, W.V. would have remained in the catheterization lab. Contrary to facts assumed by the Petitioner's experts, the Respondent's options for placing the patient were: to place the patient in an unmonitored bed on the cardiac floor, or to retain the patient in a monitored bed in the holding area where he would be monitored by the cardiac catheterization nurse until the patient placement nurse found a monitored bed. The Respondent did not retain the patient in the cardiac catheterization area because the nurses could not adequately monitor W.V. and perform their other duties. The Respondent did not place W.V. in the Cardiac Care Unit or the regular Intensive Care Unit to obtain monitoring because it was not his function to place the patient. The only way he could have placed W.V. in CICU or ICU would have been to change W.V.'s status to justify the overall intensive care of the patient. However, this would have been unsupportable if questioned given the patient's condition which was stable upon admission six days after the myocardial infarction, and remained stable after the procedure. See Dr. Edwards Depostion, Page 41, line 19 et seq. Staffing levels on 5 East at the time of W.V.'s hospitalization were one nurse to four or five patients. There were five nurses, a charge nurse, and nursing assistant, and 22 beds on the unit. (See Lipsky Deposition, Page 72, line 15.) The Hospital's Standing Order 01-009 provided that "The critical care nurse, in consultation with the charge nurse, may initiate the following (list of nursing interventions) and notify the physician as soon as possible in the event of an acute deterioration [of] patient status and in the absence of a physician." (See Burnsed Deposition, Page 112, line 4) The Hospital Standing Order 01-017 provided "Any changes in the patient's condition will be called to the attention of the attending physician and appropriate consulting physicians. The emergency standing orders may be initiated by the nursing staff, but the physician must be informed of their use." (See Burnsed Deposition, Page 113, line 10) The Respondent placed the patient on 5 East, the cardiac care floor, in an unmonitored bed at approximately 11:50 a.m., as indicated by the notation on the patient's chart "nonmonitored," which indicated a change from the initial orders. (See Cavin Deposition, Page 34, line 7 and Page 35, line 7 et seq.) There was no order that W.V. should not be resuscitated. The Respondent's standing orders called for the patient's vital signs, together with shortness of breath and chest pain, to be monitored every 15 minutes for four hours. This was done until 3:15 p.m., when the monitoring was reduced to every 30 minutes. The Respondent advised the cardiac catheterization nurse, Mary Cavin, who accompanied the patient to the floor, of his findings, to include evidence of a recent myocardial infarction, and the patient's response to the procedure. (See Cavin Deposition, Page 19-20) Ms. Cavin identified her handwriting on the charts describing the Respondent's findings. However, these notes do not mention the recent myocardial infarction. The referenced notes were not sufficiently identified to check in the patient's charts. W.V. was taken to 5 East by Mary Cavin. Ms. Cavin had worked in this area at St. Vincent's for three years. Cardiac catheterization nurses were described by one of the experts as being among the best trained nurses in the profession, who because they work with the medical staff continuously during the procedures, are aware of the physician's findings and the patient's status. They pass this information along to the floor nurses when they transport the patients back to the floor. Ms. Cavin did not remember specifically W.V., but testified in her deposition regarding her normal practice when delivering a patient. She advised the staff on 5 East how the patient did during the catheterization, and what the findings had been. However, as stated above, in Cavin's notes she did not mention the recent myocardial infarction, and it is unclear whether she mentioned this to the staff of 5 East. The record is unclear to whom Ms. Cavin reported W.V.'s condition; however, Ms. Burnsed received a report on W.V. when she came on duty from Carolyn Johnson, the nurse who had cared for W.V. on the preceding shift. Ms. Burnsed was advised by Ms. Johnson that W.V. was stable post-catheterization, that he had previous open heart surgery, and that one of his grafts was blocked, but "had good collateral circulation to that." Further, Johnson advised Burnsed that W.V.'s vital signs were good, and he had no problems. Johnson did not mention the recent myocardial infarction suffered by W.V. Although Ms. Burnsed could not specifically remember her actions, her general course of action was to do a complete assessment upon starting the shift, make sure her patients were all right and having no problems, and orient them about the call light and calling her. Her physical assessment of W.V. revealed an apical heart rate of 72, respiration 18, and blood pressure of 100/70. W.V.'s vital signs were monitored by the staff of 5 East every 15 minutes as ordered by the Respondent until 3:15 p.m., when this was reduced to every 30 minutes. At 5:00 p.m., the Respondent saw W.V., who had no complaints and was stable. Ms. Burnsed found W.V. up going to the bathroom at 5:30 p.m., and got him back into bed explaining that it was important that he stay in bed because of his incision for at least 24 hours. Ms. Burnsed checked W.V.'s incision, and found that it was not bleeding at that time. At 7:00 p.m., Ms. Burnsed administered Lasix to W.V., and W.V. asked for and was provided sleeping medication at 9:00 p.m., at which time, Ms. Burnsed took W.V.'s vital signs which were essentially unchanged and stable. At 9:20 p.m. the patient's charts reflect that he was complaining of mild shortness of breath (SOB), and pains in his chest. Pursuant to the Respondent's orders, Ms. Burnsed administered nitroglycerin, 150 grains times one, after checking his blood pressure to insure it was within limits for the administration of nitroglycerine, and oxygen via nasal cannula, two liters, pursuant to emergency orders. This relieved the patient's symptoms. Ms. Burnsed did not report to the Respondent that W.V. had suffered mild shortness of breath and chest pain because the nitroglycerin and oxygen relieved his symptoms. The decision to notify or not to notify the treating physician was described as a nursing judgment based upon the nurse's assessment of the patient's condition after being medicated and placed upon oxygen. (See Lipsky Deposition, Page 56, line 8 et seq.) Ms. Burnsed did not consider the patient's condition to have deteriorated given his response to the medication, and did not notify the Respondent. Subsequent to administering the nitroglycerin and oxygen, Ms. Burnsed spoke with W.V.'s wife on the telephone. It is intimated in the depositions that Mrs. W.V. called to advise that her husband had called complaining of shortness of breath and chest pains and an inability to get anyone to assist him; however, no evidence was submitted regarding the content of the conversation between Ms. Burnsed and Mrs. W.V. Five to ten minutes after speaking with W.V.'s wife, Ms. Burnsed returned to W.V.'s room, where she found him resting in bed without complaint. W.V. stated that he wanted to go to sleep. Ms. Burnsed did not remember checking his vital signs on this second visit, and it is most probable that she did not because he was trying to go to sleep. Ms. Burnsed checked W.V. at 10:10 p.m., and found he was not breathing, had no pulse, and was unresponsive. The Cardiac Resuscitation Team was called, and responded. Despite their efforts, W.V. was pronounced dead at 10:50 p.m. Although a partial autopsy was performed which confirmed the findings of the catheterization and the diagnosis of a recent myocardial infarction, the cause of death was not precisely determined. It was assumed by the experts that W.V. did not die of congestive heart failure because he would have complained more. Therefore, the experts concluded that his death was relatively sudden, most probably brought on by an arrhythmia or perhaps a stroke. There was a suggestion that the Respondent did not put W.V. on a monitor because he had a pacemaker. While patients with pacemakers are at no less risk of developing arrhythmias than patients without pacemakers, there was no evidence that this was a consideration of Respondent in placing the patient on a cardiac floor following cardiac catheterization. It was general practice to place cardiac catheterization patients who exhibited signs of cardiac pathology on telemetry for 24 hours following the procedure. The initial orders of the Respondent were consistent with this practice. Testimony was received from the Petitioner's experts was that the Respondent's care was substandard because he did not place the patient on monitoring as they would have done by placing the patient in the emergency room, or the intensive care unit, or the cardiac intensive care unit to obtain telemetry monitoring, or retain the patient in the cardiac catheterization area pending the availability of a monitored bed. Their assumptions regarding the doctor's authority were inconsistent with the procedure for placing patients at St. Vincent's which was the function of the placement nurse. The Petitioner's experts also testified that placing a patient on telemetry notified the nursing staff that the patient required special attention. The Respondent's witnesses were more credible in stating that placing a patient on telemetry was not the way to indicate to nursing staff that the patient required special attention. The testimony of Respondent's witnesses that intensive care personnel were not as well trained as personnel on the cardiac floor to deal with cardiac emergencies is not credible. Both groups of personnel, if not equally versed in cardiac care, are sufficiently skilled in steps to be taken in the event of a cardiac emergency that there would be no appreciable difference in the care provided. Placing the patient in the regular intensive care unit or the cardiac intensive care unit would have required changing the patient's medical status be changed, and there was no change in the patient's condition which would have warranted the change. The patient was extremely ill upon admission, and his prognosis was very poor. W.V. was going to die because of his cardiac condition and chronic pulmonary congestion unless he had a stroke. His condition was irreversible in the opinions of the various experts; however, he would have been released the day following the catherization and treated medically for his problems. The Petitioner's experts opined that the Respondent's decision not to place W.V. in a monitored bed was substandard care because they felt that there was an ethical duty to monitor the patient in the absence of orders directing that efforts not be made to resuscitate notwithstanding the dismal chances for success. Their opinion assumed the Respondent could direct the placement of the patient in a monitored bed on a specific unit within a relatively short period of time because of all the monitored beds in the hospital. The Respondent's experts opined that the decision not to monitor W.V. was within the acceptable standards of medical care by physicians under similar circumstances, i.e., retain the patient in the catherization laboratory where nursing care would have been inadequate pending availability of a monitored bed for up to two hours. Their opinion considered the circumstances at St. Vincent's, and is deemed more credible.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED: That the charges against the Respondent be dismissed. DONE and ENTERED this 2nd day of June, 1995, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of June, 1995. APPENDIX The parties filed proposed findings of fact which were read and considered. The following states which of those findings were adopted, and which were rejected and why: Petitioner's Recommended Order Findings Paragraph 1-3 Paragraph 1-3. Paragraph 4 Paragraph 5. Paragraph 5 Paragraph 3. Paragraph 6 Paragraph 6. Paragraph 7 While true, this finding is unnecessary to a consideration of the issues. Paragraph 8 Paragraph 7. Paragraph 9 Paragraph 9. Paragraph 10 Paragraph 32. Paragraph 11 Subsumed in Paragraph 37. Paragraph 12 Subsumed in Paragraph 38,39. Paragraph 13 Rejected as contrary to more credible evidence. Paragraph 14 If arrythmias were undetected, they would have been irrelevant to consideration of the patient's condition. Paragraph 15 Subsumed in Paragraph 9. Paragraph 16 Paragraph 46. Paragraph 17 Subsumed in Paragraph 9. Paragraph 18 Contrary to more credible evidence; See Parag 48. Paragraph 19 Rejected at Paragraph 43. Paragraph 20 Rejected at Paragraph 40. Paragraph 21 Rejected as contrary to more credible evidence; See Paragraph 12. Paragraph 22 Accurately states the expert's credentials, but is not relevant to consideration of the issues. Paragraph 23 Rejected as contrary to more credible evidence; See Paragraphs 42 and 47. Paragraph 24 Subsumed in Paragraphs 9,12,47-49. Paragraph 25 Rejected at Paragraph 16. Paragraph 26 See comments to Paragraph 22. Paragraph 27 See comments to Paragraph 23. Paragraph 28 While the may have been a national standard of care, there was not a national set of circumstances which impact the issue of whether the Respondent adhered to the appropriate standard of care. Paragraph 29 Subsumed in Paragraph 47. Paragraph 30 Subsumed in Paragraph 24. Paragraph 31 Subsumed in Paragraph 9. Respondent's Recommended Order Findings Paragraph 1 Paragraph 4,5. Paragraph 2,3 Paragraph 6. Paragraph 4 Paragraph 6,4. Paragraph 5 Paragraph 9. Paragraph 6 Rejected as contrary to most credible evidence; See Paragraphs 12-14. Paragraph 7-10 Subsumed in Paragraphs 17-19. Paragraph 11 Accurate; however, the patient was stable upon admission. Paragraph 12 Subsumed in Paragraph 46. Paragraph 13 Paragraph 46. Paragraph 14 Paragraph 24. Paragraph 15 Subsumed in Paragraph 25-28. Paragraph 16 Paragraph 24. Paragraph 17 Paragraph 31. Paragraph 18 Subsumed in Paragraph 33. Paragraph 19 Paragraph 37. Paragraph 20 Subsumed in Paragraph 46. Paragraph 21 Paragraph 38,48. COPIES FURNISHED: Hugh R. Brown, Esq. Agency for Health Care Administration 1940 N. Monroe St. Tallahassee, FL 32399-0792 Michael J. Obringer, Esq. Osborne, McNatt, Shaw, et al One Enterprise Center 225 Water St., Ste. 400 Jacksonville, FL 32202-5147 Marm Harris, M.D. Executive Director Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792 Jack McRay, Esq. Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The petitioners and intervenors each own and operate hospitals in Broward or Dade Counties. Each facility has applied to the respondent for a Certificate of Need for approval to construct and operate a cardiac catheterization service at their respective bSopitals. Each application was denied on the ground that the challenged Rule 10-5.11(15), Florida Administrative Code, did not reveal a need for further cardiac catheterization laboratories in the respective service districts. A cardiac catbeterization laboratory is a specialized x-ray room designed for taking pictures of the heart or doing procedures referrable to the heart. Cardiac catheterization encompasses both diagnostic and, more recently, therapeutic procedures or maneuvers. As a diagnostic procedure, cardiac catheterization is the most reliable test for determining the presence of coronary disease. Within the last 3 to 5 years, cardiac catheterization labs have been used to perform therapeutic procedures, such as the installation of an enzyme to dissolve a clot, the use of PTCA (percutaneous transluminal coronary angioplasty) to open up blockages and the placement of permanent and temporary pacemakers. With wider acceptance of bypass surgery and new advances in anpioplasty, the use of cardiac catheterization has increased in recent years. At this point in time, the effect of other emerging technologies, such as NMR (nuclear magnetic resonance), upon the use of the cardiac catheterization technique cannot be determined. Prior to the adoption of the current challenged rule, HRS's predecessor rule reguired denial of an application for a Certificate of Need for a proposed new cardiac catheterization laboratory unless all existing labs in the service area were performing more than 500 catheterizations per year. The prior rule also reguired the existence of or approval for an open heart surgery service at the applicant's facility. In August or September of 1982, HRS started a review of this rule which ultimately led to the adoption of the oresent challenged rule. As pertinent to the issues raised in this proceeding, the challenged Rule 10-5.11(15) contains a formula methodology for determining the need for new cardiac catheterization laboratories in a service area. The formula requires the utilization of a base year use rate (the number of procedures per hundred thousand population in the service area) to be multiplied by the projected population in the service area in the year in which the proposed lab would initiate service, said year not to be more than two vears into the future. Such multiplication results in the number of catheterization procedures projected to be delivered at the time of initiation of the proposed new service. The rule further provides that no additional cardiac catheterization laboratories may be established in a service area unless the average number of catheterizations performed per year by existing and approved labs performing adult procedures in the service area is greater than 600. The challenged rule specifically states that HRS will consider applications in context with applicable statutory and rule criteria, and will not normally approve new labs unless additional need is indicated by the above formula and unless the 600 average procedures per lab reguirement is met. Rule 10-5.11(15)(f). The current rule deletes the requirement for open heart surgical potential at the applicant's facility. During the rule-making process which spanned from July or August of 1982 through January, 1983, the HRS Office of Health Planning and Development held informal meetings with representatives of the medical community and health planners, and considered the criteria and standards included in the national guidelines, in other states and in various health systems plans. Medical journals were consulted and numerous written comments were received from interested perSons. Several variations of the rule evolved, and a public hearing was held on December 10, 1982. Based on the manv public comments received, changes in the rule were made. These changes were published, the final rule was filed with the Secretary of State on January 24, 1983 and Rule 10-5.11(15) became effective on February 14, 1983. Throughout the rule-making process, HRS weighed and considered different methodologies for predicting the future need for cardiac catheterization services. The use of an historical base year as opposed to the most current or recent year use rate was considered and was the subject of considerable public comment. It was finally determined that a 1981 base year use rate figure would be adopted, and a one time data collection effort was under taken by HRS for this purpose. This effort was not completed until after the challenged rule was adopted. Although recognizing that the use of a current or most recent year use rate would be preferable to and more accurate than the use of a static use rate, HRS was hampered by the fact that it no longer had the data gathering mechanism or manpower to obtain ongoing current information regarding cardiac catheterization utilization. Therefore, 1991 is the latest and most current year for which a complete data base of utilization is available. There is some support for the proposition that the continued increase in the utilization of cardiac catheterization procedures may tend to level off or even decrease as a result of emerging technologies and a decline in the rate of coronary disease. Balanced against this are the factors of increasing population, increased aging of the population and a wider acceptance of catheterization procedures, both diagnostic and therapeutic, on the part of physicians and patients. It is therefore difficult to predict with any degree of certainty whether utilization in the future will increase or decrease. It was the intent of HRS to design a need determination methodology which would pace the approval of new cardiac catheterization labs while observing what is occurring in that area of medicine. The actual experience in Broward and Dade Counties has been a steady increase in the use rate of catheterization procedures performed from 1977 through 1983. The rate of increase for the United States as a whole, while present in each year between 1977 and 1981, with the exception of 1978, has not been as great as that experienced in Broward County. The application of the rule's need determination formula to Broward County, while permitting one additional lab, appears to under-estimate the need for cardiac catheterization services in that area. By employing the 1981 use rate, the formula projects fewer procedures for Broward County in 1984 than actually occurred in the year 1982. The estimated number of procedures for 1983, based upon the actual procedures performed during the first eight or nine months of 1983, exceeds the 1982 number by almost 1,000. Broward County's rate of increase in the utilization of cardiac catheterization procedures is much greater than the rate of increase either for the United States or for the State of Florida. This may be at least partially explained by the fact that the neighboring Palm Beach area has only one cardiac catheterization lab and there is a need in that area, even under the rule's methodology, for as many as five labs. There was no evidence presented that the existing labs in Broward County are overcrowded or unavailable to area residents. A cardiac catheterization procedure takes, on the average, one to one- and-a-half hours. Therefore, the actual capacity of any particular laboratory is well in excess of 1,000 procedures per year. In 1981, the statewide average for annual number of procedures performed per lab was 581. For quality of care reasons, a minimum of 300 procedures per year per lab is necessary. Studies regarding the cost effectiveness of labs at different levels of usage indicate that the main economies of scale accrue up to the number 400 and additional, less pronounced economies of scale continue to accrue to as high as about 700. Any consideration of costs must also include the costs of trans-porting a patient from a facility without a lab to an existing lab and the costs of increased lengths of hospital stay if delays occur because a lab is not available. As long as the cost of instituting a new lab does not exceed the capital expenditure threshold of Section 381.494(1)(c) Florida Statutes, (presently $600,000.00), an existing facility which presently offers cardiac catheterization capabilities could open a second laboratory without going through the Certificate of Need process and thus be exempt from the challenged rule and its method for determining need. This, of course, would allow an existing facility to have an advantage over new competitors who seek to enter the market to fill a demonstrated need. As a practical matter, such a situation would only occur when an existing facility already has a special procedures room and is willing to forfeit that room for the purpose of performing cardiac catheterization. Such a "loophole" is not a result of the challenged rule. The Certificate of Need thresholds are set by statute and the rule comes into effect only when a Certificate of Need is required. The Economic Impact Statement (EIS) prepared for the challenged rule, (as well as for Rule 10-5.11(16) pertaining to open heart surgery programs) does not attempt or purport to analyze the overall financial impact upon providers, prospective providers or consumers of regulating the number of cardiac catheterization labs in a service area. Instead, it attempts to give an estimate of the economic impact which the amended rule will have in comparison to the prior rule on the subject. Given the fact that the prior rule reguired a facility to have existing or approved open heart surgical capabilities and required every existing lab in the service area to perform at least 500 procedures per year before a new lab could be approved, it can be concluded that the new rule actually liberalizes the need demonstration requirements for a Certificate of Need. The EIS concludes that, other than the printing and distribution costs of the rule to the agency, no economic impact is anticipated as a result of this amendment. The EIS states that "Though the full extent of the economic impact is indeterminable, the rule is expected to contain health care costs by assuring optimal utilization of existing cardiac catheterization . . ., and by avoiding large capital outlay expendi- tures for unnecessary, duplicative services." The effect on competition and the open market is estimated as follows: "Consistent with the purpose of the Certificate of Need law, the proposed rules will restrain the development of costly excess cardiac catbeterization and open heart surgery capacity. The proposed rules permit the development of competitive new services among area cardiac catbeterization laboratories and open heart surgery programs when need for additional capacity is indicated by the need formula and the level of utilization of existing capacity." Absent from the EIS is a detailed statement of the data and method used in making the estimates of costs and benefits to persons directly affected and the estimate of impact on competition and the open market. However, the record of the rule-making proceeding clearly reveals that cost and benefit considerations were reviewed by those responsible for promulgating the challenged rule. It is clear from the testimony adduced in this hearing, as well as the documents received into evidence pertaining to the public comments and letters received by HRS in the rule-promulgation process, that factors involving cost efficiency, increased patient costs, optimal and actual utilization, lab capacity and guality of care were considered by HRS. Such considerations led to numerous changes in the language utilized in the rule. While the EIS perhaps could have been more explicit in specifying the possible economic impacts of these considerations, the fact that actual dollar amounts are not assigned to these considerations does not render the EIS inadeguate. The challengers to the rule offered no more specifics than that contained in the EIS as to the economic impact resulting from the rule. The impacts enumerated by the economic expert presented by the challengers in this proceeding result more from the fact of regulation itself than from the operation of the challenged rule.
