The Issue Whether respondent should grant petitioner's application for a certificate of need for a ten-station chronic hemodialysis center in Broward County?
Findings Of Fact At the time petitioner's application was originally submitted, an unmet need for hemodialysis facilities appeared to exist in Broward County. The project review committee and the board of directors of the Health planning and Development Council for Broward County, Inc., recommended denial of petitioner's application and of all applications for new facilities, however. Competing applicants seeking to expand and establish a satellite were awarded certificates of need because their personnel had proven track records. Petitioner's application was tentatively denied, not because it was deficient, but because competing applications were deemed stronger. With the approval and addition of hemodialysis units since that time, Broward County has become saturated with dialysis centers, and now has significant excess capacity. As of January 1, 1981, there were eight dialysis centers in Broward County, which is coterminous with the jurisdiction of the Health Systems Agency for respondent's District VIII, the Health Planning and Development Council for Broward County, Inc. These eight dialysis facilities had, in the aggregate, 125 approved stations, as of January 1, 1981. Five free-standing stations have since been approved for Plantation Artificial Kidney Center. Respondent's Exhibit No. 3. Countywide, the 125 hemodialysis stations then existing had a utilization rate of 67 percent in January and February of 1981, winter months in which Broward County experiences an influx of seasonal residents. On January 31, 1981, there were 29 seasonal hemodialysis patients in Broward County and, on February 28, 1981, there were 38. Respondent's Exhibit No. 1. Broward County has a population of approximately one million persons. Using the formula prescribed in respondent's rules, Florida End Stage Renal Disease Network 19 projected that 353 patients would require in-center dialysis in 1980, while in fact only 339 patients required dialysis outside their homes. This need could have been met with 106 stations, on the basis of 3.2 patients per station, instead of the 125 stations that existed in Broward County in fact in 1980. For December of 1981, the projection is that 349 patients will require 109 stations; for December of 1982, it is projected that 359 patients will require 112 stations; and for December of 1983, it is projected that 371 patients will require 116 stations, on the basis of 3.2 patients per station. Respondent's Exhibit No. 3. Customarily, dialysis centers are open for business six days a week, with each machine available for two shifts daily. Dialysis usually entails three sessions weekly for the patient so that, if fully utilized, one machine could service four patients. Approximately ten hemodialysis stations in Broward County are set aside for patients with hepatitis positive antigens. These isolation stations are not ordinarily fully utilized. On this account and because of seasonal changes in the numbers of hemodialysis patients in Broward County, the health systems plan looks to an 80 percent utilization rate (on the basis of two shifts a day, even though the machines could he used for three shifts daily in an emergency). This utilization rate translates into 3.2 patients per machine. Another objective of the health system plan is that 95 percent of patients be within 30 minutes of a hemodialysis center. The annual implementation plan calls for 132 stations by December of 1982, without adding any new centers. Dialysis patients in south Florida are older than dialysis patients in north Florida, on the average. Most dialysis patients in Broward County are more than 50 years old. In 1978, Broward County's increase in patients with end stage renal disease was the highest among [Florida's] HSA areas. Petitioner's Exhibit No. 4. Historically, Broward County has had the highest acquisition rate in Florida, although the rate has fallen recently. In 1978, the acquisition rate in Broward County was approximately 138 per million population. By 1980, it had dropped to 119 per million persons. The state average for 1980 was between 105 and 110 per million. In September of 1979, 122 of the 305 persons receiving chronic hemodialysis treatments in Broward County came from Dade County and ten postal zones in the south end of Broward County. Petitioner's Exhibit No. 5. Residential growth in Broward County is occurring principally in the western part of the county. Petitioner proposes to build a ten-station hemodialysis facility at 4175 Southwest 84th Street, in Davie, Broward County, Florida. Dr. Herold, a nephrologist, would refer patients to petitioner's facility, if it is built, and if the South Broward Artificial Kidney Center fills up. Although not an expert in making such projections, Dr. Herold "would say ten [of his] patients, as a guesstimate, Deposition, p. 6, would be referred to petitioner's proposed facility annually. Dr. Zeig, another nephrologist, said three of his patients were in imminent need of dialysis, as were six patients of a former associate of his, a Dr. Levinson. Dr. Zeig testified that he would refer his patients, "upwards of eight to ten . . . in the coming year," Deposition, p. 10, to petitioner's facility, if built. In his deposition, Dr. Rose testified on April 20, 1981, that he could refer "in the range of five to maybe seven" patients to the proposed facility within "the next year." These projected patients are among the 122 persons forecast to develop end stage renal disease in Broward County in 1981 or the 125 expected to be afflicted in 1982. Respondent's Exhibit No. 3. Petitioner projects that the proposed facility could break even with eight patients. Medicare pays for about 95 percent of renal dialysis treatments, nationally. Three or four dialysis centers are within 20 minutes driving time of the site petitioner proposes. The proposed facility would be approximately six miles from Plantation Artificial Kidney Center (15 approved stations 80 percent utilized as of February 28, 1981), and only three or four miles from the Nephrology Associates' satellite facility in Pembroke Pines (four approved stations 44 percent utilized as of February 28, 1981). Located in Broward County south and east of petitioner's proposed facility are South Broward Artificial Kidney Center in Hollywood (30 approved stations 80 percent utilized as of February 28, 1981) and Nephrology Associates' main facility, which is also in Hollywood (10 approved stations 65 percent utilized as of February 28, 1981). Petitioner's Exhibit No. 5; Respondent's Exhibit No. 1. Petitioner's facility would be next north of the southernmost of what would be five hemodialysis centers in the western part of Broward County. Petitioner proposes to offer patients "free" transportation to and from the proposed facility. At present, only one hemodialysis facility in Broward County, Plantation Artificial Kidney Center, provides transportation for patients. There was testimony, however, that Broward County would provide transportation "through coordination with each of the dialysis facilities, if needed." Block Deposition, p. 19. Some patients requiring dialysis perform dialysis themselves at home. This practice is likely to increase significantly as a result of recent advances in continuous ambulatory peritoneal dialysis techniques. Projections that 35 persons in Broward County would elect this method of dialysis in 1981, 30 in 1982, and 40 in 1983 were not shown to be unrealistic, even though Broward County's home dialysis rates have historically been extremely low. On February 28, 1981, 13 of the 350 hemodialysis patients in Broward County underwent dialysis at home. In 1978, there was only one such patient in Broward County. Eighty-seven hemodialysis patients or approximately 19 percent of the total in Broward County died in 1980. Half of the four attempts to transplant kidneys in Broward County failed in 1980. As a practical matter: patients are likely to follow their physicians' advice about which dialysis center to go to. Dr. Herold testified that he choose[s] not to use, Deposition, p. 9, Nephrology Associates' satellite facility for some unspecified medical reason. Dr. Zeig expressed similar sentiments, but also testified that "all our patients were dialysized there, Deposition, p. 8, during the time that he himself had been associated with Nephrology Associates. Dr. Zeig also testified that he had a letter from Nephrology Associates' board of directors advising him he was unwelcome there. Dr. Rose testified that he would not refer patients to Nephrology Associates' satellite facility because of "strong feelings based on medical conditions that exist that I, too, choose not to discuss." Deposition, p. 5. There was hearsay testimony to the effect that Nephrology Associates reused chemical dialyzers, but absolutely no evidence tending to show that this was not good medical practice or that any formal complaint about Nephrology Associates had been filed anywhere on any ground. Nephrology Associates is fully certified for Medicare purposes. In preparing the foregoing findings of fact, the hearing officer had the benefit of respondent's memorandum, petitioner's memorandum of law, and petitioner's proposed recommended order. To the extent petitioner's proposed findings of fact have not been adopted in substance, they have been rejected as unsupported by or contrary to the evidence; or have been deemed irrelevant.
Recommendation It is, accordingly, RECOMMENDED: That respondent deny petitioner's application for certificate of need. DONE AND ENTERED this 7th day of July, 1981, in Tallahassee, Florida. ROBERT T. BENTON, II 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 7th day of July, 1981. COPIES FURNISHED: Guyte P. McCord, III, Esquire and Cynthia S. Tunnicliff, Esquire Post Office Box 82 Tallahassee, Florida 32302 Eric J. Haugdahl, Esquire 1317 Winewood Boulevard Tallahassee, Florida 32301 Richard Baron, Esquire Suite 500 444 Brickell Avenue Miami, Florida 33131 =================================================================
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: On or about June 9, 1975, petitioner Holy Cross Hospital filed with respondent its certificate of need application for the expansion of angiographic service facilities. The applicant is a 597-bed, privately operated, nonprofit and fully accredited medical center located in Fort Lauderdale, Florida. Petitioner seeks to add to its existing facility a laboratory for cardiac catherization and coronary angiography. The application was referred to the Broward County Community Health Planning Council (hereinafter referred to as BCCHPC) for initial review, comments and recommendations. On July 14, 1975, the staff of the BCCHPC issued its Staff Analysis on petitioner's capital expenditure proposal. This document concludes that the proposal "can conceivably be construed as duplication of services." Among the factors considered by the staff were the existence of two hospital-based cardiac catherization diagnostic programs within Broward County and their capacities and utilization rates; the opening of a third hospital-based facility around mid- October of 1975; and the standards and guidelines for cardiac diagnostic centers as reported by the American Heart Association. It was concluded that the presently existing facilities were being utilized at a rate of ten percent of their combined capacity of 1,750 procedures per year, and that the third facility to be opened in mid-October would provide an additional capability of 1,000 procedures per year. (Exhibit No. 4) The Project Review Committee of the BCCHPC met on July 24, 1975, to review the petitioner's proposal. After hearing the views of both proponents and opponents to the application, this Committee voted to postpone its recommendation with the understanding that an impartial panel of experts, under the auspices of the Broward County Heart Association, would be brought in to review the needs of the community for additional angiographic services. An extension of the review period to December 1, 1975, was thereafter sought by petitioner and granted by respondent. (Exhibit No. 7.) For one reason or another, the survey was never conducted. On October 17, 1975, the staff of the BCCHPC issued its second staff summary. This second report, although differing in some figures and statistics from the first report, again concluded that current and projected utilization barely justifies the two existing facilities. It recognized the third facility to be opened shortly at North Ridge General Hospital and found that the applicant's proposal would be additionally counterproductive, reducing overall quality and increasing average cost. (Exhibit No. 5.) Thereafter, on October 27, 1975, the Project Review Committee of the BCCHPC again met to review petitioner's application. In addition to a representative for the applicant, the Committee heard the opposing views of North Ridge General Hospital, which included the presentation of an analysis as to need for additional cardiovascular diagnostic laboratory services in Broward County. This analysis was prepared by Lillian Guralnich, a biostatistician, and concluded that (based upon actual utilization rates in Dade County) a valid statistical estimate of potential cases requiring the subject diagnostic studies in Broward County is 2,500 per year, and that the existing facilities and the soon-to-be-opened North Ridge facility would provide a capacity substantially in excess of such estimated demand. Additionally, the Committee heard the view of Dr. Manuel Viamonte, a member of the Inter-Society Commission for Heart Disease Resources, that an additional catherization laboratory in Broward County would be counterproductive. A motion to accept petitioner's application was defeated by a vote of five to two, with six abstentions. (Exhibit No. 5.) The BCCHPC met on October 30, 1975, to discuss the Project Review Committee's recommendations. The Council heard a presentation in support of the proposed laboratory and were presented supporting documents. North Ridge again spoke in opposition and again presented the Guralnich analysis concerning need. The study of the Inter-Society Commission on Heart Disease Resources was also presented. Thereafter, the Committee unanimously voted, by a vote of 17-0 with two abstentions, to deny petitioner's application. (Exhibits A, C and U.) By letter dated November 24, 1975, Mr. Art Forehand notified petitioner that all the reviewing agencies (the BCCHPC, the Office of Comprehensive Health Planning, and the Office of Community Medical Facilities) had not favorably considered petitioner's capital expenditure proposal. The reason given for such unfavorable consideration was that there were three existing, underutilized cardiac catherization labs in Broward County and that the creation of an additional lab at petitioner's facility would be a duplication of services, an unnecessary capital expenditure and would not lend itself to health care cost containment concepts. (Exhibit D.) The petitioner was advised of its right to a fair hearing, stated its desire to avail itself of such right, and the undersigned Hearing Officer was assigned to conduct the hearing. Holy Cross Hospital opened on December 7, 1955, and enjoys a good reputation among both physicians and the community at large. It is a full service hospital with 597 beds, 498 of which are staffed. Last year, some 2,100 heart patients were admitted to Holy Cross. Petitioner did its first open heart surgery on November 23, 1975, and, as of January 26, 1976, had performed a total of eight such procedures. The pre-surgery catherizations were performed at other hospitals without difficulties in scheduling or transportation. Cardiac catherization is a diagnostic tool utilized to discover the condition of the coronary arteries. It is an invasive technique involving the insertion of a small flexible tube into the veinous or arterial system and passing it by way of a peripheral vein or artery into the heart or the major structures of the great vessels arising from the heart. While the first procedures began in the early 1940's, the technique is a relatively new development within the past ten to fifteen years. The procedure determines the location and severity of coronary obstructions and is a definitive method to rule out a diagnosis of heart disease. It provides a confirmation of the less risky non-invasive techniques (such as the clinical treadmill tests, radiological studies, etc.) and is a prelude to coronary artery surgery. Such a procedure would be unnecessary if the patient were unable or unwilling to undergo heart surgery. Approximately ninety percent of such catherizations are done electively, as opposed to a ten percent emergency usage. Emergency patients are generally nontransportable, but there is no problem or risk in transporting the ninety percent elective patients to other facilities for the purpose of catherization. While not mandatory, it is desirable to have heart surgery facilities and capabilities at the same hospital as the catherization laboratory. There is an inverse relationship between mortality, morbidity and complication rates and the number of cardiac catherizations performed in any given facility. When volume and experience increases, complications decrease. Also, underutilization of a cardiac catherization laboratory often results in higher patient costs and unnecessary procedures being performed. The minimally acceptable utilization rate for any given facility is 300 procedures per year. The estimates of the actual and potential need for catherization procedures in Broward County varied widely. It ranged from a high of 20,000 present potential candidates for the procedure to a low of 2,500 potential cases per year. Factors affecting need include the education of the public and physicians, the reputation and persuasive abilities of the treating physician, cost and risk to the patient, adequacy and reputation of the lab, and professional limitations. Professional opinions and philosophies differed as to the use of cardiac catherization. While one physician felt that no more than ten percent of patients with heart disease needed such a procedure, another felt that the procedure was necessary to detect the absence of heart disease as well as its presence and that every good hospital should have such a lab. There are presently three hospital-based cardiac catherization laboratories in Broward County. One lab, which opened in September of 1974, exists at Broward General Medical Center, located some eight to ten miles from petitioner. Another, opening in October of 1974, exists at Florida Medical Center Hospital, formerly called Lauderdale Lakes General Hospital and located approximately six miles from Holy Cross Hospital. A third lab was opened in November of 1975 and is located about one mile from petitioner at North Ridge General Hospital, the intervenor in this proceeding. Testimony differed as to the actual daily or monthly number of procedures capable of being performed at these institutions. The highest figure given was that of Dr. Frank Masone Sones, a world renown authority on coronary angiography. He stated that a diagnostic laboratory of this sort can easily perform ten or twelve, and under real stress, fifteen procedures per day. This would average out to 60 per week or 3,000 per year per facility if the figure of 12 were used. This figure assumes an eight-hour shift. Another physician testified that most labs could perform four catherizations per day. Actual catherizations performed at two of the existing labs in Broward County average out to be 20 per month and 33 per month. The capability figures given for the three existing facilities based upon one eight-hour shift, totalled 2,700 procedures annually. One hospital administrator testified that its lab could perform six per day on an eight-hour shift, or 120 per month. This administrator saw no difficulty with operating two shifts, should the need arise.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that the determination of the Office of Community Medical Facilities to deny petitioner's application for the expansion of angiographic service facilities be upheld. Respectfully submitted and entered this 4th day of November, 1976, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Mr. William F. Leonard Coleman, Leonard & Morrison 2810 E. Oakland Park Boulevard Fort Lauderdale, Florida 33306 Mr. Douglas E. Whitney Attorney 1323 Winewood Boulevard Tallahassee, Florida 32301 Mr. Sheldon M. Simons professional Building 3661 South Miami Avenue Miami, Florida 33133
The Issue Whether Respondent Cleveland Clinic Florida Hospital's Motion to Dismiss the Petition in this case, for lack of standing, should be granted.
Findings Of Fact The facts necessary for disposition of the Motion to Dismiss are not in dispute. The Public Health Trust of Miami-Dade County operates Jackson Memorial Hospital ("JMH") in Dade County (AHCA District 11). In its Petition for Formal Administrative Hearing, certified to have been served on August 19, 1998, the Trust alleged that JMH is the only provider of adult kidney transplantation services within Florida Transplant Service Planning Area 4, which includes AHCA Districts 8, 9, 10 and 11. The Trust described itself in both the Petition and an amended Petition which followed as: [A]n agency and instrumentality of Miami-Dade County, which is organized and operated pursuant to Chapter 154, Part II, Florida Statutes, and Chapter 25A of the Code of Miami-Dade County. It governs and operates Jackson Memorial Hospital and other designated health care facilities. Its address is 1611 N.W. 12th Avenue, Miami, Florida 33136. Amended Petition, paragraph 2, p. 2. The Trust and Jackson Memorial Hospital are both in Dade County, AHCA District 11. With regard to CCFH, the Petition alleged the following. CCFH is located in Fort Lauderdale, Broward County (AHCA District 10). CCFH has CON approval to construct a new facility in Weston, also in Broward County. It submitted an application for an adult kidney transplantation program at the new Broward County facility which was awarded preliminary CON approval as noticed in the Florida Administrative Weekly on July 31, 1998. It is the application for the adult kidney transplantation program at the Weston facility in AHCA District 10 which the petition seeks to have denied contrary to AHCA's preliminary approval. The Petition's allegations with regard to standing are contained in paragraphs seven and eight: As the sole provider of adult transplantation services in Transplant Area 4, Petitioner has standing to file this petition because its substantial interests will be directly affected by the Agency action for which this petition seeks review. The adverse affects to the PHT if the preliminary approval of CON No. 9026 is upheld include but are not limited to: A decrease in the number of procedures performed at JMH, which may impair research objectives and medical proficiency; A loss of needed revenue to JMH, the largest provider of indigent hospital care in Florida; An increase in the competition for professional staffing, thereby driving up the costs of performing these hospital services; and An increase in the cost to the health care system for performing transplant services through he unnecessary duplication of services. Petition for Formal Administrative Hearing, p. 3 and 4. CCFH moved to dismiss the Petition on the basis that the Trust had not alleged facts sufficient to meet the standing requirement in CON proceedings found in Section 408.039(5), Florida Statutes. In essence, CCFH asserted that the Trust had failed to allege that its adult kidney transplantation program in District 11 was within the same district as the challenged kidney transplant program of CCFH approved by AHCA for District 10. In response, the Trust informed the Agency that it had on the same date filed an Amended Petition which, differs substantively from the original petition only in paragraphs 4 and 8, concerning the issue of standing. By filing its Amended Petition, the Trust adds an additional basis for standing, and does not in any manner retreat from the basis for standing asserted in its original Petition. Public Health Trust's Response to Cleveland Clinic Florida Hospital's Motion to Dismiss, p. 2, paragraph 2. The new paragraphs four and eight in the Amended Petition, state: PHT's medical staff (including its transplantation physicians) is provided by the university of Miami School of Medicine, doing business as the University of Miami Medical Group (UMMG), under an affiliation agreement between the PHT and the University of Miami. Through the UMMG, JMH conducts various activities in Broward County as part of its adult kidney transplantation program, including but not limited to the following: UMMG sees approximately one third of all its post transplant patients at two satellite clinics in Fort Lauderdale; and UMMG through the University of Miami's Organ Procurement Organization maintains agreements with various Broward donor hospitals and provides in-service training to hospital personnel involved in organ procurement, including kidney procurement. * * * As the sole provider of adult transplantation services in Transplant Area 4, as an existing health care facility with an established adult kidney transplant program operating in both Districts 10 and 11, Petitioner has standing to file this petition because its substantial interests will be directly affected by the Agency action for which this petition seeks review. Amended Petition, pages 2 and 3. The Amended Petition was filed with the Department Clerk for AHCA on September 4, 1998, prior to the case's referral by AHCA to DOAH. Argument on the Motion to Dismiss was heard on September 28, 1998. Ruling was reserved until entry of this order.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that the Agency for Health Care Administration enter a final order dismissing the amended petition in this case of the Public Health Trust of Miami-Dade County, Florida. DONE AND ENTERED this 14th day of October, 1998, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 14th day of October, 1998. COPIES FURNISHED: Jack P. Hartog, Esquire Assistant County Attorney Jackson Memorial Hospital West Wing 109 1611 Northwest 12th Avenue Miami, Florida 33136 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs LLP 118 North Gadsden Street, 2nd Floor Tallahassee, Florida 32301 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive, Building 3 Tallahassee, Florida 32308 Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3 Suite 3431 Tallahassee, Florida 32308
Findings Of Fact St. Luke's Hospital Association d/b/a St. Luke's Hospital ("St. Luke's"), in Jacksonville, Florida, is the applicant for certificate of need ("CON") number 6924 to establish an adult liver transplantation program. St. Luke's is a 289-bed general acute care hospital, providing open heart surgery and bone marrow transplant services. Since the fall of 1987, St. Luke's has been affiliated with the Mayo Clinic- Jacksonville, outpatient research facility, which is a subsidiary of the Mayo Foundation. Other Mayo clinics and affiliated inpatient hospitals are located in Rochester, Minnesota and Scottsdale, Arizona. St. Luke's is located in AHCA District 4 for Baker, Nassau, Duval, Clay, St. John's, Flagler, and Volusia Counties. The District 4 local health council supports St. Luke's proposal. St. Luke's is located in service planning area one, which includes all of north Florida from the Georgia and Alabama lines to a line between Gainesville and Orlando. By rule, the state is divided into four organ transplant service planning areas. Rule 59C-1.044, Florida Administrative Code. The Agency for Health Care Administration ("AHCA") is the state agency responsible for the administration of CON laws. AHCA has the power to issue, deny or revoke CONs, pursuant to Subsection 408.034(1), Florida Statutes (1992 supp.). Shands Teaching Hospital and Clinics, Inc. ("Shands") is an existing provider of adult and child liver transplant services, located in Gainesville, which is also in service planning area one. Shands is a 560-bed teaching hospital for the University of Florida Medical School, with over forty clinical programs, kidney, liver and heart transplant services, and approval to initiate a lung transplant program. Shands is a disproportionate share provider of Medicaid services. There are two other existing providers of adult and child liver transplant services in Florida, Tampa General Hospital and Jackson Memorial Hospital in Miami, both of which are also disproportionate share Medicaid providers. Tampa General is in service planning area two and is affiliated with the University of South Florida Medical School. Jackson Memorial is a tertiary care referral center in service planning area four, affiliated with the University of Miami Medical School. There are no liver transplant programs in service planning area three for East Central Florida. Shands liver transplant program began in 1985. Between 1985 and 1987, two adult liver transplant surgeries were performed. No liver transplant surgeries were performed at Shands in 1987, 1988 and 1989. In 1990, there were ten, in 1991, sixteen, and in 1992, thirty-one liver transplant surgeries at Shands. Tampa General's liver transplant program began in 1986 and 1987, when two surgeries were performed. In 1992, there were four liver transplant surgeries at Tampa General, and ten to twelve were anticipated for 1993. Jackson Memorial's program began in the late 1980's. There, thirty-two liver transplant surgeries were performed in 1991, thirty-seven in 1992. Jackson Memorial was approved recently as a program for teaching fellows of the American Society of Transplant Surgeons. The Mayo Clinic-Jacksonville is a not-for-profit corporation which operates as an outpatient facility, and is approximately 9 miles from St. Luke's, its affiliate hospital. The clinic has approximately 130 physicians covering a wide range of specialties and sub-specialties for adult patients. About fifty percent of the patients admitted to St. Luke's are referred by physicians within the Jacksonville community. The remaining fifty percent are referred by physicians at the Mayo Clinic-Jacksonville. St. Luke's Hospital handles all inpatient services for Mayo Clinic-Jacksonville physicians. St. Luke's seeks to establish a new adult liver transplantation program at its facility in Jacksonville, Florida, for projected capital costs of $3,188,000. The new program would be located in service planning area one, which is a regional service planning area that includes AHCA Districts 1, 2, and 3 except for Lake County, and District 4 except for Volusia County. See, Finding of Fact 1, supra. St. Luke's would establish its liver transplant program under the Mayo Clinic-Rochester protocols and training programs, as it did its bone marrow transplant program. Residents from Mayo Medical School and the University of Florida have access to educational programs at St. Luke's. Services will be provided to patients who cannot pay or have medicaid coverage in total minimum amounts of $300,000 in the first year, $400,000 in the second year, and $500,000 in subsequent years, with average charges per case expected to be approximately $200,000. In addition, St. Luke's will seek medicare certification when eligible, although St. Luke's is not a disproportionate share Medicaid provider. St. Luke's and other Mayo facilities use satellite telecommunications and five digit telephone communications among their physicians. Coordination with Mayo Clinic-Rochester liver transplant research services is expected. By prehearing stipulation, the parties agreed that St. Luke's provides good quality care, has the personnel, resources, and funds to accomplish the project, and qualifies as a research hospital. The parties disagree whether St. Luke's proposal is needed, and can reach projected volumes. AHCA does not publish a fixed need pool for liver transplant services. Need is determined in accordance with general statutory criteria for review of CON applications and the organ transplantation rule, Rule 59C-1.044, Florida Administrative Code. Rule 59C-1.044(7)(d) requires an applicant to demonstrate the ability to perform a minimum of five (5) liver transplants within two (2) years of CON approval. AHCA agrees that St. Luke's provided sufficient documentation in its application to demonstrate compliance with the standard. The rule also requires an applicant to demonstrate that the new liver transplant program will improve patient access. St. Luke's projects that it will perform 15 liver transplants during its first year of operation and 30 during the second year. St. Luke's expects that 45 percent of its liver transplant patients will be residents of service planning area one, 35 percent will be statewide patients and 20 percent will be out-of-state patients. For some residents of service planning area one, St. Luke's will provide an alternative to going out-of-state or to Gainesville, thereby, improve their access by eliminating the time and expense involved in patient and family travel. St. Luke's also plans to apply to cooperate with the organ procurement organizations established in Florida and the Southeastern United States, and would expect to recruit leaders of a transplant team, a transplant hepatologist and transplant surgeons, within three to six months. St. Luke's argues that its proposed liver transplant service is needed because (1) a significant number of livers procured in Florida are used for out- of-state transplants, (2) Florida has a large number of patients in need of liver transplants, (3) patients needing liver transplants are having to leave Florida for the service, and (4) existing Florida liver transplant services are inadequate. In 1990, there were 175 adult and pediatric livers obtained in Florida, but only 15 of those were transplanted in Florida. In 1992, there were 223 adult and pediatric livers obtained in Florida and 56 transplanted in Florida. Based solely on population growth with the procurement efficiency remaining the same, only an additional 18 to 22 livers will become available in Florida by 1996, or up to 245, according to St. Luke's expert. In 1996, St. Luke's proposed program would become operational, however, the three existing programs will be transplanting up to 225 of those in the state by that time. Expert testimony established that substantially more donors than patients are needed to select those that match. Florida also has a large pool of potential transplant patients with end stage liver disease. Approximately 515 of those under the age of 65 died in 1990, of which only 9 were children. Testing that number against National Cooperative Transplantation study estimates of 59.1 per million, or 600 in Florida, demonstrates the reasonableness of the estimate of the number of patients with end stage liver disease. Although some may be eliminated due to other complicating conditions, this group is the total pool from which qualified transplant candidates could be selected. For service planning area one, the potential pool of patients is 172, which is also prior to screening to determine actual candidacy for transplants. Until late 1992, Shands would also routinely refer hepatitis B patients to Pittsburgh due to special protocols required for their treatment, but that referral pattern no longer exists because of Shands' ability to treat those patients. In 1990, there were 90 transplants for Florida residents, or 6.9 per million, in contrast to the national use rate of 10.7 per million population. Of the 90 Florida residents receiving liver transplants, 21 surgeries were performed in Florida, the rest were performed out-of-state. Only 17-20 percent of potential Florida transplant patients are on Florida waiting lists, the rest are on waiting lists elsewhere, particularly Pennsylvania and Nebraska. The percentage of patients leaving Florida decreased from 75 percent in 1990 to 50 percent in 1992. Rule 59C-1.044(7)(d), the organ transplant rule applicable to liver transplants, does not include minimum volumes for existing providers, unlike the heart and kidney transplant subsections of the rule. In general, St. Luke's believes the establishment of its Mayo- affiliated program will enhance procurement of livers in Florida, increase access principally by stemming out-migration, enhance medical education and research, and introduce a more efficient, more cost effective provider to the system. There is no evidence that the existence of St. Luke's program will have a positive impact on the state's procurement of organs, which already exceeds all except two or three other states in the country. St. Luke's also asserted that its program would have greater success than existing Florida programs. Survival rates at Mayo-Rochester have increased from 85 to 87 percent, despite the acceptance of more complex cases after the first 20 surgeries. Expected survival rates, taking into account the serverity of cases, are approximately the same for Tampa General and Jackson Memorial as for Mayo-Rochester. In terms of actual outcome, however, Jackson Memorial's survival rate is 58.8 percent and Tampa General's is 25 percent. At Shands, the survival rate is 73 percent. After successful outcomes in seven of the first ten transplant patients, Jackson Memorial became less selective and less successful. More selective screening of liver transplant patients was reinstituted at Jackson Memorial in 1991, the same year that the University of Miami was approved for a liver transplant surgery fellowship. Jackson Memorial now ranks in the top five in terms of transplant survival rates. St. Luke's is a 289 licensed bed hospital, which operated 208 beds in 1992, in marked contrast to the average size of 636 beds for hospitals reporting to the United Network of Organ Sharing ("UNOS"), which coordinates the distribution of organs among its members. UNOS hospitals also averaged 4.6 solid organ transplant programs, such as liver, heart, kidney and lung, which share tissue typing laboratories and immunology services. No other solid organ transplant programs exists at St. Luke's. Nevertheless, St. Luke's must be given favorable consideration under state health preferences, for having an existing organ transplantation program which is defined by AHCA's rules to include bone marrow. See Finding of Fact 37. St. Luke's proposal was also criticized due to its occupancy levels and patient payer category mix. St. Luke's operated at approximately 55 percent occupancy in 1992, in contrast to 80 percent occupancy at Shands and other hospitals with solid organ transplant programs. While 50 to 55 percent occupancy is typical for general acute care hospitals in Florida and does not, in and of itself, indicate that a hospital is operating inefficiently, occupancy rates at teaching hospitals tend to exceed that of general acute care hospitals. St. Luke's patient mix includes in excess of 60 percent medicare, or over age 65. The vast majority of liver transplant patients are under age 65. Few persons over 65 have been qualified as viable liver transplant candidates. By contrast, Shands' payer mix overall and for liver transplants in 1991, was 23.7 percent medicare, 33.5 percent medicaid, 30.8 percent commercial, and 11.9 percent other; however, Shands Medicaid percentage includes services not available at St. Luke's, such as obstetrics services which alone account for 22 percent of the Medicaid category. Although organ procurement in Florida is extremely efficient, the gap is narrowing between those transplanted in Florida as compared to elsewhere. In addition, every organ procured in Florida is checked first against Florida, next regional, and finally, national waiting lists to match donors to recipients by size, weight, blood type and severity of illness. Priority is given for a match on the Florida waiting list. Expert witnesses for AHCA outlined the potential negative impact on Shands and Jackson Memorial from the establishment of St. Luke's liver transplant program. Of the 31 adult patients receiving liver transplants at Shands before December 1992, 18 came from a service area which overlaps that of St. Luke's. If St. Luke's reaches the estimated 15 cases for year one, with 12 of those from Florida, 4 of those would otherwise likely be transplanted at Jackson Memorial, and most of the remaining at Shands. Shands and Jackson Memorial reasonably anticipate losing predominantly commercial, managed care, and CHAMPUS transplant patients to St. Luke's. If a program at St. Luke's could reverse out-of-state referral patterns, that would not alleviate the Medicaid case loads because only two Florida residents in the Medicaid payer group received transplants in other jurisdictions. Taking only Shands Medicaid patients from District 4 would also not alleviate its disproportionate share burden, because only one patient in that group has been transplanted at Shands. The loss of well-funded adult patients leaves Shands and Jackson Memorial with the state's under-funded adults and children, who are under-funded at a higher percentage than adults. In addition, the greatest shortage of donor livers is experienced in pediatric programs. The loss of adult livers to an adult-only program can adversely impact pediatrics, since small adult or cut-down livers can be used for children. Historically, kidney transplants increased in the 1970s and then leveled off in the mid-80s. Like livers, most kidneys are obtained from cadaveric donors which will not keep pace with demand. Cadaveric donors must be brain dead, but must still have hearts beating to provide an undamaged liver. Currently, a total of 19,000 patients are on waiting lists for cadaveric organs, in contrast to 10-12,000 cadaveric transplants performed. The surplus of liver donors over potential recipients on waiting lists is 1,100. As liver transplantation increases rapidly, donor availability has already become the most significant limitation on further expansion, as happened with kidney transplants. At the University of Miami organ donors decreased form 115 in 1987 to 86 in 1992. Since kidney transplant services began at Methodist Hospital in Jacksonville in 1989, the number of kidney transplants performed at Shands has been reduced by 20 to 25 each year. Shands has reached sufficient volumes to secure managed case contracts to perform kidney transplants which were previously referred out-of-state. Transplant surgeons at Shands who perform liver transplants also perform kidney transplants. Shands plans to add one transplant surgeon. With that addition Shands can double the number of liver transplants. Reasonable projections are that 50 liver transplant surgeries a year will be performed at Shands for the next few years, and 75 to 100 a year after 1995, 40 to 50 at Tampa General after the next three to five years, and up to 100 a year within the next few years at Jackson Memorial. As the liver transplant programs mature, referral patterns are shifting to favor the provider nearest the patient. The Organ Procurement Organization for north, northeast and central Florida retrieved 36 adult and pediatric livers in that area in 1992, 32 of which were transplanted at Shands. St. Luke's failed to demonstrate that its program can reverse the effect of Florida procured livers being transplanted elsewhere in residents of other states. If, as St. Luke's projects, it will bring 20 percent of its patients from out-of-state to put on the Florida waiting list. In its review of St. Luke's proposal, AHCA used allocation factors in its District 4 report for 1990-1991. St. Luke's is in compliance with those factors related to (1) location in a major metropolitan area, (2) proposing to serve a wide geographic area, (3) financial accessibility, (4) written relationships with other health care providers, (5) agreeing to abide by CON conditions, and (6) agreeing to serve hard-to-place patients. St. Luke's is not in compliance with factors related to (1) cost efficiency and (2) improving geographic access problems. AHCA found partial compliance for St. Luke's current treatment of HIV patients, and because of not proposing liver transplants for HIV patients. St. Luke's should have been given full credit for HIV service if it is currently serving those patients. HIV patients are not candidates for liver transplants. State health plan preferences for organ transplant programs are applicable to the review of St. Luke's proposal. The preferences met by St. Luke's application are (1) proposed service to patients regardless of ability to pay, (2) already having a bone marrow transplant program, and (3) implementation of provisions of the Uniform Anatomical Gift Act. St. Luke's application does not qualify for preferences for (1) disproportionate share providers, (2) teaching hospitals, (3) UNOS members, or (4) NIH approval or Medicare designation. In general, AHCA asserted and established that the developing three university-based liver transplant programs are an existing alternative to St. Luke's proposal, are underutilized, and that St. Luke's has failed to demonstrate any problems with access to the existing facilities. St. Luke's is not proposing a joint or cooperative service, as that has been interpreted by AHCA, since it is the CON single applicant. The services proposed by St. Luke's are economically, geographically and programmatically accessible in an adjoining area, District 3, which includes Shands in Gainesville. St. Luke's included a research and training component of its proposal, but showed no need for any unique research or training programs that are not or cannot be conducted at either Jackson Memorial, Shands or Tampa General. St. Luke's failed to demonstrate that its proposal would provide competition that would foster quality of care or cost-effectiveness. Although Mayo Clinic-Rochester has better outcomes at lower charges than the Florida facilities, substantial doubt was raised based on the history of liver transplant services, whether success can be duplicated without the transfer of all major participants in a transplant team. Proposed average adult case charges, trended forward with declining average lengths of stay, are approximately equal at Shands to those proposed at St. Luke's. St. Luke's historically has provided less than one percent of its patient days to Medicaid patients. The commitment has been constant, but not significant in comparison to similar hospitals that are grouped by the Health Care Cost Containment Board. Medicaid services at Shands, in 1990, were approximately 29 percent. In liver transplant services, Shands' Medicaid shares are approximately 41 percent for adults and over 68 percent for children. In 1990, St. Luke's performed charity care for two percent of its total patient days. Shands charity care was 6 1/2 percent. There is no showing that residents of organ transplant service planning area one will lack access to liver transplantation if the St. Luke's proposal is not granted, with the anticipated increase in volume at Shands. The state consultant who reviewed St. Luke's proposal erroneously concluded that it was not needed, in part, based on standards of the National Cooperative Transplant Study, which recommends volumes between 20 to 50 surgeries. On that basis, he concluded that Shands was underutilized. There was no determination by AHCA whether the standard applied to adult programs, or combined adult and child transplant programs. There is also confusion about the purpose of the standards. Similarly, Medicare certification guidelines of liver transplant programs requires 12 cases, CHAMPUS requires 10, and the National Task Force in Organ Transplantation guideline suggests 15, but these levels are generally for insurance purposes, rather than being over operational minimum or optimal level. The SAAR also fails to discuss prospective donor limitations. The state also failed to include Tampa General in its analysis of existing programs, due to its failure to report any utilization from between 1989 through 1991. The omission of Tampa General from its analysis could have only been more positive for St. Luke's since organ availability is the ultimate constraint on transplant programs. St. Luke's raised questions about the legal status of the liver transplant program at Tampa General, and whether it met the requirements for grandfathered providers, especially for their pediatric programs. Whether or not Tampa General's program should be recognized does not affect the negative impact to Shands of competition for donors and certain patients in service planning area one. St. Luke's expert established that Shands' liver transplant program is currently profitable, considering a positive margin for adult cases which more than covers a negative margin for pediatric cases. Based on the method used for calculating the margin, estimates range from $676,000 in 1992 to in excess of $1 million when Shands reaches 50 cases. Currently, Shands is capable of undertaking a substantial capital expansion financed from its reserves, anticipated patient revenues and the issuance of tax-exempt bonds.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency For Health Care Administration enter a final order denying the application of St. Luke's Hospital Association for a certificate of need (number 6924) to establish an adult liver transplantation program. DONE AND ENTERED this 22nd day of February, 1994, in Tallahassee, Leon County, 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 22nd day of February, 1994. AHCA APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-5111 The following rulings are made on the parties' proposed findings of fact: 1,2. Accepted in Finding of Fact 1. Accepted in Finding of Fact 8. Accepted in Finding of Fact 9. Accepted in Finding of Fact 2. Accepted in Findings of Fact 1 and 10. Accepted in Finding of Fact 17. Accepted in Finding of Fact 10. Accepted in Findings of Fact 1 and 10. 10,11. Subordinate to Finding of Fact 31. Subordinate to Findings of Fact 31 and 43. Accepted in Finding of Fact 29. 14,15,16. Subordinate to Findings of Fact 20 and 29. 17. Accepted in Findings of Fact 26 and 29. 18,19. Accepted in Finding of Fact 43. Accepted in Conclusions of Law. Accepted in Finding of Fact 14. Accepted in Finding of Fact 15. Accepted in Findings of Fact 16 and 46. Accepted in Finding of Fact 19. Accepted in Finding of Fact 31. Accepted in Findings of Fact 19 and 22. Accepted in Finding of Fact 34. Accepted in Finding of Fact 31. 29,30. Subordinate to Finding of Fact 31. Subordinate to Finding of Fact 29. Subordinate to Findings of Fact 29 and 30. Accepted in Finding of Fact 30. 34,35. Subordinate to Finding of Fact 30. Accepted in Findings of Fact 21 and 30. Accepted in Finding of Fact 21. Subordinate to Finding of Fact 30. Accepted in Finding of Fact 25. Accepted in Findings of Fact 35 and 37. 41,42,43. Accepted in Finding of Fact 35. 44,45. Accepted in Finding of Fact 37. 46. Accepted in Findings of Fact 3, 4, and 39. 47,48. Accepted in Finding of Fact 3. Accepted in Finding of Fact 5. Accepted in Finding of Fact 7. Accepted in Finding of Fact 6. Accepted in Finding of Fact 25. 53,54. Accepted in Finding of Fact 7. Subordinate to Finding of Fact 7. Accepted in Finding of Fact 25. Accepted in Finding of Fact 23. Accepted in Finding of Fact 29. Accepted in Finding of Fact 39. Accepted in Finding of Fact 33. 61,62. Accepted in Finding of Fact 33. 63,64. Accepted in Finding of Fact 4. Accepted in Finding of Fact 40. Accepted in Findings of Fact 11 and 40. Accepted in Finding of Fact 41. Accepted in Finding of Fact 11 and 42. 69,70,71,72,73,74. Subordinate to Findings of Fact 11 and 42. 75. Accepted in Findings of Fact 17 and 34. 76,77. Issue not reached. Accepted in Finding of Fact 41. Accepted in Findings of Fact 39 and 43. Accepted in Findings of Fact 1, 3, 17 and 30. 81,82,83. Subordinate to Finding of Fact 30. Accepted in Finding of Fact 44. Accepted in Findings of Fact 30 and 44. 86,87. Subordinate to Findings of Fact 30 and 44. Rejected in Findings of Fact 35 and 43. Accepted in Findings of Fact 35 and 43. Subordinate to Findings of Fact 35 and 43. 91,92,93. Accepted in Finding of Fact 30. Accepted in Findings of Fact 35 and 43. Accepted in Finding of Fact 11. Subordinate to Finding of Fact 11. 97,98. Subordinate to Findings of Fact 11, 28, 44 and 45. Accepted in Finding of Fact 11. Accepted in Finding of Fact 44. Accepted in Findings of Fact 11 and 44. Subordinate to Finding of Fact 44. Accepted in Finding of Fact 30. 104,105. Accepted in Finding of Fact 39. 106. Accepted in Findings of Fact 41 and 46. St. Luke's Hospital Association 1. Accepted in Finding of Fact 1. 2,3. Accepted in Preliminary Statement. 4,5. Accepted in Finding of Fact 13. 6,7,8,9,11,12. Accepted in Finding of Fact 1. 10. Subordinate to Finding of Fact 1. Accepted in Findings of Fact 1, 11 and 25. Subordinate to Finding of Fact 20. Subordinate to Finding of Fact 1. Accepted in Preliminary Statement and Finding of Fact 1. Accepted in Finding of Fact 14. Accepted in Finding of Fact 11. Subordinate to Finding of Fact 50. Subordinate to Finding of Fact 50. Accepted in Finding of Fact 3. 22,23,25,26,27. Accepted in Finding of Fact 5. 24,28,29,30. Subordinate to Finding of Fact 5. 31. Accepted in Finding of Fact 33. 32,33. Subordinate to Finding of Fact 33. Rejected as not supported by the record, as cited. Subordinate to Finding of Fact 33. Rejected as not supported by the record, as cited. Subordinate to Finding of Fact 7. 38,39. Accepted in Finding of Fact 7. 40,41,42,43,44,45,46. Accepted in or Subordinate to Finding of Fact 6. Accepted in Finding of Fact 33. Subordinate to Finding of Fact 50. Rejected as characterized and as inconsistent with St. Luke's proposed Finding of Fact 50. Subordinate to Finding of Fact 30. 51,52. Subordinate to Finding of Fact 6. Accepted in Findings of Fact 19 and 21. Subordinate to Finding of Fact 21. 55,56,57,58. Accepted in Finding of Fact 21. Subordinate to Finding of Fact 30. Accepted in Finding of Fact 30. 61,62. Accepted in Finding of Fact 22. Subordinate to Finding of Fact 22. Accepted in Finding of Fact 26. 65,66. Subordinate to Finding of Fact 18. 67. Subordinate to Finding of Fact 18 and Accepted in Finding of Fact 20. 68,69,70,71. Accepted in Finding of Fact 20. Accepted in Findings of Fact 20 and 29. Accepted in Findings of Fact 20 and 29. 74,75. Subordinate to Findings of Fact 20 and 29. 76. Accepted in Finding of Fact 29. 77,78,79,80. Accepted in Findings of Fact 20 and 29. Accepted in Finding of Fact 29. Accepted in Finding of Fact 19. Accepted in Finding of Fact 22. Accepted in Findings of Fact 5, 6, and 7. Accepted in Findings of Fact 20 and 29. Subordinate to Finding of Fact 29. 87,88,89. Accepted in Findings of Fact 20 and 29. 90. Accepted in Finding of Fact 17. 91,92,93,94,95,96,97. Subordinate to Findings of Fact 5, 6, 7, 20 and 29. Accepted in Finding of Fact 33. Subordinate to Finding of Fact 33. Rejected in Finding of Fact 33. 101,102. Accepted in Findings of Fact 49 and 50. 103,104,105 Subordinate to Findings of Fact 49 and 50. Accepted in Finding of Fact 20. Issue not reached. 108,109. Accepted in Finding of Fact 17. Issue not reached. Accepted in Finding of Fact 11. Rejected in Findings of Fact 28,30 and 44. 113,114. Accepted in Finding of Fact 11. Accepted in Finding of Fact 44. Subordinate to Finding of Fact 44. Accepted in Finding of Fact 30. 118,119. Subordinate to Findings of Fact 28, 30 and 44. Accepted in Findings of Fact 44 and 45. Accepted in part in Finding of Fact 28. Accepted in Finding of Fact 28. Subordinate to Finding of Fact 27. Accepted in Finding of Fact 11. Accepted in Finding of Fact 30. Rejected as not supported by the record cited. Rejected in Findings of Fact 30, 33, and 50. Accepted in Finding of Fact 17. 129,130. Issue not reached. 131,132. Rejected in Finding of Fact 20. 133,134,135,136,137,138,139 Accepted as insurance standards only in Finding of Fact 47. Accepted in Finding of Fact 7. Rejected in Finding of Fact 20. 142,143,144,145,146. Issue not reached. 147,148,149, 150,151,152,153,154,155. Accepted in or Subordinate to Finding of Fact 51. Accepted in Finding of Fact 30. Subordinate to Findings of Fact 49 and 50. 158,159. Subordinate to Finding of Fact 30. 160,161,162. Subordinate to Finding of Fact 44. 163. Subordinate to Findings of Fact 30 and 44. 164,165,166,167,168,169,170. Accepted in or Subordinate to Finding of Fact 51. 171,172,173,174,175,176,177,178,179,180. Accepted in or Subordinate to Finding of Fact 35. 181,182,183,184,185,186. Accepted in or Subordinate to Findings of Fact 11,12,24,37, and 42. Accepted in Finding of Fact 47. Conclusion in first sentence rejected, otherwise Accepted in Finding of Fact 20. 189,190,191,192,193,194,195,196,197. Accepted in or Subordinate to Finding of Fact 47. Accepted in Findings of Fact 20 and 47. Rejected conclusion in Findings of Fact 49 and 50. Accepted first sentence in Finding of Fact 49. Rejected as not relevant in Findings of Fact 50. Rejected in Finding of Fact 35. Rejected in relevant part in Finding of Fact 35. Rejected in relevant part in Finding of Fact 37. Subordinate to Finding of Fact 37. COPIES FURNISHED: Michael J. Cherniga, Attorney Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. 101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32301 Edward Labrador, Attorney P. Tim Howard, Attorney Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Sam Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, General Counsel Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
The Issue Whether the standard of care for the practice of optometry required that patient, J.P., be dilated by Respondent at the January 1998 appointment. Whether the standard of care for the practice of optometry required Respondent to note in patient J.P.'s patient record the reason for not dilating J.P. at the January 1998 appointment.
Findings Of Fact Petitioner is the state agency charged with regulating the practice of optometry in the State of Florida. At all times material to this case, Respondent has been licensed as a certified optometrist in the State of Florida, holding license number 1734. Respondent practices optometry in Chattahoochee, Florida. Respondent received his Doctor of Optometry degree from the University of Alabama in Birmingham in 1982. He is licensed to practice optometry in Georgia and Florida, and in the latter since June of 1982. Respondent has been a certified optometrist in Florida since 1984-1985. Respondent specializes in diseases of the retina which include, but are not limited to, diabetes and hypertension. Respondent is engaged in the private practice of optometry, but also practices hospital-based optometry as a physician- consultant with Florida State Hospital. He has lectured and published extensively in the area of optometry, including issues on public health and the importance of high blood pressure and diabetes. Respondent sits on the Council on Optometric Education which is an 11-member board that accredits all of the optometry schools and residency programs in the United States and Canada. As a certified optometrist, Respondent is competent to perform a dilated fundus examination. Respondent's examination and treatment of J.P. Respondent provided optometry services to patient, J.P., a registered nurse, for the first time on February 21, 1989. This was J.P.'s initial patient visit. Respondent performed a dilated fundus examination on J.P. which indicated his peripheral retina was completely normal. J.P. did not report any history of high blood pressure/hypertension at that time. On August 20, 1990, Respondent performed a full and general examination of J.P.'s eyes and all of the components of that examination were recorded in J.P.'s patient record. J.P. did not report any history of hypertension at that time. No dilation was performed nor was it required. In late 1994, J.P. was working as a nurse at Florida State Hospital when a patient slapped him on the face. J.P. suffered a corneal abrasion. On December 13, 1994, Respondent examined J.P. Respondent diagnosed J.P.'s problem as "mild iritis," and medical treatment was afforded. Respondent performed a thorough examination of J.P.'s retina, including the peripheral examination with dilation. All aspects of the retina were within normal limits. There was no sign of any hypertensive changes at that time, nor any sign of any trauma related to the incident. J.P.'s injury resolved satisfactorily, and, J.P. had no further trouble whatsoever. J.P. was told to return in one week for a follow-up visit, but he did not. J.P. has not had any trouble with his eyes after the December incident and after being treated by Respondent in December of 1994. J.P. has had borderline high blood pressure/hypertension since he was a teenager. He started taking daily medication in 1990. J.P. advised Respondent of his hypertension and the nature of his medication on a form when he visited in 1994. J.P.'s hypertension was well-controlled with medication at the time of J.P.'s December 1994 visit through his next examination in January 1998. He suffers no symptoms from his high blood pressure/hypertension. J.P. returned to Respondent in January 1998 to obtain a prescription for reading glasses. J.P.'s January 1998 visit with Respondent was not his initial presentation or visit. J.P was questioned about his hypertension and J.P. told Respondent it was in good control. J.P. had been seeing Dr. Richardson, a local physician. Dr. Richardson refers patients with ocular complications of systemic diseases to Respondent for examination. Dr. Richardson, who was familiar with J.P.'s health, did not express any concern to Respondent regarding J.P.'s hypertension. Because Respondent had not examined J.P. for over two (2) years, he performed a comprehensive examination and all of the minimal procedures for vision analysis including consideration of J.P.'s patient history and visual acuity's, which were done and recorded. He performed an external examination, with a slit lamp, which was done and recorded. Respondent also performed a pupillary examination, which was recorded as normal. Visual field and confrontation testing were done and recorded. He also graded the blood vessel status for any abnormalities. He recorded the cup-to-disk ratio having performed an internal examination by direct ophthalmoscopy. There were no recorded arteriosclerotic changes, and no hypertensive retinopathy. He graded the ratio between the arteries and the veins, which was normal at two-thirds. An extra ocular muscle balance assessment was done. Respondent, using a direct ophthalmoscope, was able to view the majority of the retina and assess the blood vessel status for any signs of retinopathy, at which point there was no sign of retinopathy, which was consistent with the patient's history of having controlled hypertension. Tonometry was performed and the results for a glaucoma check recorded. Refraction was performed and results with acuity recorded. J.P. had no physical limitation or medical condition, such as diabetes, which may have required this examination. J.P.'s blood pressure or hypertension was reported as being in good control, and the record does not reveal otherwise. While performing the vision analysis, Respondent had a good view of the retina because J.P. did not have cataracts or other media opacities in the lens or cornea or vitreous of the eye that could cause problems seeing the retina, which might require dilation. Respondent also weighed the risks of dilation. Respondent's explanations for not performing the dilated fundus examination and for not noting same in J.P.'s patient chart are reasonable. A treatment plan was devised for J.P. and J.P. was apprised of the findings of the examination. Respondent advised J.P. to return in one year. J.P. did not return. Respondent issued a prescription for glasses for J.P. J.P. never encountered any unresolved medical problems nor encountered any medical problems with his eyes that resulted from the lack of a dilated fundus examination on his eyes in January 1998. This examination was not medically indicated. Standard of Care for performing a dilated fundus examination and notation in the patient's record A dilated fundus examination is performed to enable the optometrist to examine the anterior part of the eye, -- in particular, the peripheral part of the retina -- and to assess the condition of the lens, looking for cataracts, for example. Eyedrops are placed in the eye to enlarge or dilate the pupil. This helps the optometrist to view a larger area of the retina in greater detail than can be done without dilation of the pupil. Florida Administrative Code Rule 64B13-3.007 provides for "minimum procedures for vision analysis" and specifically subsection (2)(f) provides: "An examination for vision analysis shall include the following minimum procedures, which shall be recorded on the patient's case record . . .[i]nternal examination (direct or indirect ophthalmoscopy recording cup disc ratio, blood vessel status and any abnormalities) " Florida Administrative Code Rule 64B13-3.007(4), not referenced in the Amended Administrative Complaint, provides: "Except as otherwise provided in this rule, the minimum procedures set forth in paragraph (2) above shall be performed prior to providing optometric care during a patient's initial presentation, and thereafter at such appropriate intervals as shall be determined by the optometrist's sound professional judgment. Provided, however, that each optometric patient shall receive a complete vision analysis prior to the provision of further optometric care if the last complete vision analysis was performed more than two years before." Florida Administrative Code Rule 64B13-3.010 provides the "standard of practice for licensed optometrists." Subsection(10)(a) provides: "To be in compliance with Rule 64B13-3.007(2)(f), certified optometrists shall perform a dilated fundus examination during the patient's initial presentation and thereafter whenever medically indicated. If in the certified optometrist's sound professional judgement, dilation should not or can not be performed because of the patient's age or physical limitations or conditions, the reason(s) shall be noted in the patient's medical record." There is no cited agency precedent interpreting subsection (10)(a). The Board's expert, Kenneth Lawson, O.D., is a certified optometrist licensed to practice optometry in the State of Florida. He has been a consultant for the Board of Optometry for approximately three (3) years and has reviewed twenty-five (25) to thirty-five (35) cases involving complaints filed against optometrists. According to Dr. Lawson, Florida Administrative Code Rule 64B13-3.010(10)(a) was enacted in 1995 because there had been an ambiguity with respect to the dilation standard of care. It is Dr. Lawson's opinion that this rule requires a certified optometrist to perform a dilated fundus examination on every initial patient and where medically indicated. He interprets the word "initial" to mean the first time the patient is seen by the optometrist and also when the patient has not been examined by an optometrist for a period of three (3) years. Dr. Lawson opines that every patient becomes an initial patient every three (3) years if not examined and dilated within the three-year period. He also believes dilation is required during every visit if there has been trauma to the eye or if the patient has had a history of ocular trauma or other factors such as hypertension, regardless of whether the hypertension is under good control during each visit. See Conclusion of Law 46. As a rule, however, Dr. Lawson dilates every patient over sixty-five (65) years old every year and all patients under sixty-five (65) every two years. These time periods can vary depending on the health of the patient. For example, Dr. Lawson stated that there is a low risk or probability that hypertension would lead to blindness or impairment of visual acuity if the hypertension is well-managed by medication and the patient is younger than sixty (60). Dr. Lawson conceded that the Board's rule does not require dilation every year, only every three years. Dr. Lawson also opines that there should be some documentation on the patient's chart indicating why dilation was not performed. Dr. Lawson relied on the Physician's Current Procedural Terminology (CPT) textbook, volume IV, to support his position that an "initial" patient is one who has not received any services from the physician within a three-year period. Dr. Lawson believes that the words "initial" and "medically indicated," appearing in subsection (10)(a), are referenced by the three-year period. He concludes that it is the standard of care for dilation to be performed every three (3) years. However, the CPT instructs physicians on how to bill for procedures and enables an optometrist to receive a higher rate of reimbursement rate for the visit; it is not a standard of care. The textbook or physician code book was not offered in evidence and is not a credible source. Dr. Lawson's explanation of the relevant standard of care is not persuasive. Walter Hathaway, O.D. and Adam Gordon, O.D., M.P.H. testified on behalf of Respondent as expert witnesses. Dr. Hathaway is a certified optometrist in the State of Florida and has practiced for thirty-four (34) years. He has served as an expert reviewer for the State of Florida, Board of Optometry, and has served as an expert witness twelve (12) times. Dr. Hathaway opined that a dilation is required during the patient's initial evaluation or presentation and when medically indicated; for example, when the patient has a history of diabetes, flashes, or floaters, which indicates retinal detachment. Dr. Hathaway opined that a dilated fundus examination is not required in all cases where a patient reports a history of hypertension if the hypertension is under control. Dr. Hathaway was asked to consider a hypothetical set of facts based upon the facts of record regarding J.P.'s health and Respondent's examinations of J.P. Based on his professional judgment, Dr. Hathaway concluded that Respondent was not required to perform a dilated fundus examination on J.P. during the course of his examination on January 6, 1998. Dr. Gordon is a licensed optometrist in the State of Alabama, has practiced for eighteen (18) years, and has been a Clinical Associate Professor at the University of Alabama- Birmingham School of Optometry for sixteen (16) years. He also examines patients in a private group practice. Formerly, he served as a faculty member at Johns Hopkins University Hospital in Baltimore, Maryland. Dr. Gordon was also asked to consider a hypothetical set of facts based upon the facts of record regarding J.P.'s health and Respondent's examinations of J.P. and stated, that in his professional judgment, a dilated fundus examination was not medically indicated for this patient on January 6, 1998. Likewise, Dr. Gordon stated that this examination is not required on all patients reporting a history of hypertension. Conversely, he would consider dilation if the patient reported his or her high blood pressure was out of control or if he or she stopped seeing a physician or had stopped taking medication for the condition, factors absent here. It was not medically indicated for Respondent to automatically give J.P. a dilated fundus examination in January 1998, because J.P.'s hypertension was under control at that time. J.P. testified that his hypertension had been controlled with medication through and including his January 1998 visit with Respondent. Further, J.P. had no problems with his eyes after his 1994 visit with Respondent. A dilation examination may have been required if J.P.'s hypertension had been uncontrolled or if J.P. exhibited some other medical problem such as diabetes, or if J.P. had stopped taking prescribed medication. These factors are not present here. The weight of the evidence supports only one finding: there was no medical indication which would have required Respondent to perform a dilated fundus examination on J.P. during his January 1998 examination. The weight of the evidence supports Respondent's exercise of professional judgement in not performing a dilated fundus examination on J.P. during the January 1998 visit. The weight of the evidence proves that the standard of care set forth in Florida Administrative Code Rule 64B13- 3.010(10)(a) for performing a dilated fundus examination does not require this examination automatically every three (3) years. Rather, dilation should be performed during the "initial presentation," and when "medically indicated" based on the certified optometrist's exercise of sound professional judgment in light of the patient's medical history and current health. Further, the weight of the evidence proves that the standard of care set forth in Subsection (10)(a) does not require a certified optometrist to note in a patient record the reason why a dilated fundus examination was not performed unless dilation was not performed based solely on the patient's age or physical limitations or conditions, all absent here. The latter criteria are the only ones stated in the rule, and the weight of the evidence does not prove that additional criteria should be considered.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Amended Administrative Complaint filed against Respondent be dismissed with prejudice. DONE AND ENTERED this 6th day of December, 2000, in Tallahassee, Leon County, Florida. CHARLES A. STAMPELOS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of December, 2000.
Findings Of Fact Petitioner, Dialysis of Broward, Inc., apparently filed an application for a Certificate of Need, No. 4092, to establish a ten-station chronic hemodialysis facility in Broward County, Florida. The Intervenors all filed timely petitions to intervene and have standing to intervene in this proceeding. At hearing, Petitioners presented no witnesses and only one admissible exhibit, the State Agency Action Report. No other evidence was submitted to show entitlement by Dialysis of Broward, Inc., to the Certificate of Need sought. According to the State Agency Action Report there are excess dialysis stations in Broward County and no need for the proposed facility.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order and therein deny the application of Dialysis of Broward, Inc., for Certificate of Need No. 4092. DONE and ENTERED this 20th day of October, 1986, in Tallahassee, Florida. _ DIANE K. KIESLING, Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of October, 1986. COPIES FURNISHED: Nathan Militzok, Esquire 1250 E. Hallandale Beach Blvd. Suite 1005A Hallanadale, Florida 33009 E. G. Boone, Esquire Peter Giroux, Esquire 1001 Avenida del Circo Venice, Florida 34284 George N. Meros, Jr. Carlton, Fields Law Firm P. O. Drawer 190 Tallahassee, Florida 32301 Lesley Mendelson, Esquire Assistant General Counsel 1323 Winewood Blvd. Building 1, Suite 407 Tallahassee, Florida 32399-0700 William Page, Jr. Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 APPENDIX The proposed findings of fact of Department of Health of Health and Rehabilitative Services, Inc., Florida Kidney Center, Rena1 Support Services, Inc., Plantation Artificial Kidney Center, Inc., and University Dialysis Artificial Kidney Center are adopted in substance in Findings of Fact 1-4 of this Recommended Order.
Findings Of Fact Galencare, Inc., d/b/a Northside Hospital ("Northside") and NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital ("Palms") were litigants in administrative proceedings concerning the Agency For Health Care Administration's ("AHCA's") preliminary action on certificate of need applications. Northside moved to dismiss Palms' application based on defects in the corporate resolution. The resolution is as follows: RESOLVED, that the Corporation be and hereby is authorized to file a Letter of Intent and Certificate of Need Application for an adult open heart surgery program and the designation of three medical/surgical beds as a Coronary Intensive Care Unit as more specifically described by the proposed Letter of Intent attached hereto. RESOLVED, that the Corporation is hereby authorized to incur the expenditures necessary to accomplish the aforesaid proposed project. RESOLVED, that if the aforedescribed Certificate of Need is issued to the Corporation by the Agency for Health Care Administration, the Corporation shall accomplish the proposed project within the time allowed by law, and at or below the costs contained in the aforesaid Certificate of Need Application. RESOLVED, that the Corporation certifies that it shall appropriately license and immediately there- after operate the open heart surgery program. In its Motion, Northside claimed that the third and fourth clauses in the Resolution are defective, the third clause because it does not "certify" that the time and cost conditions will be met and the fourth for omitting "adult" to describe the proposed open heart surgery program. Northside relies on the language of the statute requiring that a resolution shall contain statements . . .authorizing the filing of the application described in the letter of intent; authorizing the applicant to incur the expenditures necessary to accomplish the proposed project; certifying that if issued a certificate, the applicant shall accomplish the proposed project within the time allowed by law and at or below the costs contained in the application; and certifying that the applicant shall license and operate the facility. Subsection 408.039(2)(c), Florida Statutes. Northside also relies on Rule 59C-1.008(1)(d), which is as follows: The resolution shall contain, verbatim, the requirements specified in paragraph 408.039 (2)(c), F.S., . . . Palms' filed the Motion For Sanctions against Northside on November 15, 1993, pursuant to Subsection 120.57(1)(b)5 for filing a frivolous motion for an improper purpose, needlessly increasing the cost of the litigation, with no legal basis. Northside's claims that the Resolution was defective were rejected in the Recommended Order of Dismissal of January 11, 1994, amended and corrected on January 26, 1994, and not discussed in AHCA's Final Order of March 15, 1994.
Findings Of Fact Donald Davis is the promoter behind the formation of Community Hospital of Collier, Inc. He is a health care management consultant and a principal of the firm Health Research and Planning Associates, Inc. In his profession he concentrates on the promotion and development of health care facilities. He has engaged previously in the business of forming corporations for the purpose of submitting applications and obtaining Certificates of Need. He also provides consulting services to health service corporations. Neither Davis nor the other principals of the applicant corporation, including his wife, have any experience or expertise in constructing or operating hospitals, and Davis admitted that the sole purpose for forming the entity known as Community Hospital of Collier, Inc. was for the purpose of submitting an application and prosecuting it in order to obtain a Certificate of Need for an acute care hospital for District VIII. Mr. Davis' own company, Health Research and Planning Management Associates, Inc. was paid $15,000 by Community Hospital of Collier, Inc. to develop the Certificate of Need application at issue. Community has "a couple of thousand dollars" in its own bank account. The officers and directors of Health, Research and Planning Management Associates, Inc. are the same as those of Community Hospital of Collier, Inc. On June 15, 1983, after having previously filed a letter of intent, Mr. Davis filed an application for a Certificate of Need for a 152-bed acute care hospital on behalf of Community Hospital of Collier, Inc. Mr. Davis is an officer and director of that corporation. The articles of incorporation for Community Hospital of Collier, Inc. which gave it its de jure status were not signed until July 29, 1983 and were not filed with the Secretary of State until August 19, 1983. Be that as it may, Mr. Davis maintains that the Board of Directors of Community ratified the filing of the application. That authorization found at page 44 of the application, however, refers to the Board of Directors of Community Health Care of Okaloosa/Walton. The resolution was dated June 7, 1983 and Mr. Davis testified that the use of the name Community Health Care of Okaloosa/Walton in the caption of that Board of Director's resolution was a "typographical error." In any event, the applicant corporation had no legal existence at the time the application was filed on June 15, 1983, however, by its later acts in filing and prosecuting the application it implicitly, at least, ratified the action of its promoter, Mr. Davis, in filing the application since the officers and directors consisted of Mr. Davis, his wife and a third individual. Be that as it may, Community negotiated a stock purchase agreement with National Medical Enterprises (NME) on August 15, 1984. Pursuant to this agreement, NME is obligated to purchase all capital stock of Community if a Certificate of Need for 100 beds or more is awarded. In return for the sale of the stock of the applicant corporation to NME, Mr. Davis and the other two board members of Community will receive a total of $600,000 in addition to the $15,000 Mr. Davis has already received for his efforts in preparing and prosecuting the Certificate of Need application. The only asset of Collier is the inchoate Certificate of Need. Upon consummation of the stock purchase agreement, Mr. Davis will resign from the Board of Directors and presumably NME will appoint its own board. Community has given full authority to NME to prosecute the application as it sees fit, including making certain changes NME deemed appropriate to the application, including seeking 150 beds instead of 152 and changing the method and means of financing the project (mostly equity instead of debt). Additional changes in NME's approach to prosecution of the application include the proposed method of recruitment of personnel and management of the hospital. Community has no agreements with any other group, entities or individuals to provide financial, personnel and other resources necessary to construct, manage and operate an acute care hospital and did not demonstrate that it has any such resources in its own right. Mr. Frank Tidikis, Vice-President for Operations for the eastern region for National Medical Enterprises, testified concerning the financial and management resources and staffing arrangement NME proposes for the new hospital should it be authorized. He enumerated many medical specialties that NME intends to place on the staff of the hospital, but neither Community nor NME have done any studies revealing what types of medical specialties are presently available in the Collier County area, how many physicians in those specialties are available and what ratio exists or is appropriate for various types of physicians to the community population. The proposed staffing pattern, sources and method of recruitment was predicated solely on NME's past experience in obtaining hospital staff in other areas of the nation, and not upon any study or other investigation showing the availability of appropriate types of trained staff people in reasonable commuting distances of the proposed hospital, which would be located in northern Collier County. If NME consummates the purchase agreement, the hospital would be locally managed by a board of directors consisting of 51 per cent of the hospital's own medical staff and 49 per cent lay members chosen from the community at large. FINANCING Mr. Michael Gallo was Community/NME's expert in the area of health care finance, being NME's Vice-President for Finance. It was thus established that the total cost of the project, if approved, would be approximately $23,600,000. This amount would be financed by NME which proposes to make a 35 per cent equity contribution in the amount of approximately $8,500,000 and which will finance the balance of the project cost at a rate of approximately 13 per cent interest for 20 years. NME projects that an average daily patient census of 45 would be necessary to "break even." A daily census of 45 would yield 6,425 patient days per year, with the facility projected to break even in its first year of operation. NME projects that by the third year of operation, a return on investment of 10 to 12 per cent would be achieved. NME's projections are based on an assumed average length of stay per patient of 5.6 days. NME allocated two and sone-half per cent of its projected gross revenues for indigent patient care, and four per cent of projected gross revenues allocated to bad debt, that is, uncollectible hospital bills, not necessarily related to indigent patients. The $600,000 which NME must pay Community Hospital of Collier and Mr. Davis in order to acquire the assets of that corporation (i.e. the CON) will be treated as a project cost and will be depreciated as though it were a part of the buildings. Community/NME projects its total revenue per adjusted patient admission to amount to $4,843, with projected total revenue per adjusted patient day at $865. It predicts these figures will increase by about five per cent for successive years as a factor of inflation. The proposed hospital site consists of approximately 12 acres, available at a price of $30,000 to $50,000 per acre. The application itself originally proposed a location in the central or southern portion of Collier County. However, after NME entered into the agreement with the applicant corporation for the stock purchase and became involved in the prosecution of the application, the location was changed. Thus, it was discovered at the outset of the hearing that indeed, the proposed location of Community of Collier's hospital would be in the northern portion of Collier County in close proximity to Lee County. 1/ The proposed $360,000 to $600,000 land cost would of course, be added to the total cost of Community's proposed project. It has not been demonstrated what use would be made of the entire 12 acres, nor that the entire 12 acres is required for the hospital, its grounds, parking and ancillary facilities. STAFFING One of the reputed benefits of Community's proposed project is that it would afford a competitive hospital in the Collier County health services market to counter what Community contends is a virtual monopoly held by Naples Community Hospital, as well as to promote the attraction of more qualified medical staff to that "market". In this context, Community contends that its facility, by being built and operating as an alternative acute care hospital, would attract more physicians to the Collier County area and thus, arguably, render health services more readily available. Community thus decries the supposed "closed staff" plan of Naples, contending that Community offers an "open" staffing plan, which would serve to attract more physicians to the geographical area involved and enhance Community's ability to appropriately staff its hospital. Naples Community Hospital, on the other hand, experiences numerous physicians vacationing in the area requesting staff privileges. Many of these physicians apparently do not have any intention of permanently locating in the Naples/Collier County area, however, and therefore in order to determine which physicians are seriously interested in locating there, Naples has a screening procedure which includes an interview with the Chief of Staff, the Assistant Director for Staff Development, and the chief of the service for which a physician is applying for privileges. This preliminary screening procedure is not tantamount to a closed staffing situation, which only exists where a fixed number of physicians are permitted on a hospital staff, with others waiting until an opening occurs. In the open staff situation, as exists at Naples, no matter how rigorous the screening process, there is not a finite number of staff physicians available. Any physician who qualifies under the hospital bylaws and assures the screening committee of his intention to locate in the area served by the hospital is admitted to the staff. Thus, the staffing pattern for physicians at Naples Community Hospital augurs just as well for the attraction of physicians to the Collier County vicinity as does the staffing method proposed by Community. In that vein Naples has granted privileges to 13 new physicians in the preceding calendar year and had 8 applications pending at the time of hearing. Only one applicant was denied privileges during that year. Additional factors which must be considered in the context of staffing such a hospital concern the ability of the applicant to provide quality of care and appropriate, available resources including health care and management personnel to operate the facility. Aside from demonstrating that NME, through the stock purchase agreement, may obligate itself to provide ample funds and other resources to fund, staff and operate the project, and that it has successfully staffed and operated hospitals in numerous locales, Community did not demonstrate what likely sources would be drawn upon for nurses and other staff members to staff its hospital in order to avoid recruiting most of them from nearby facilities, including Naples Community, which could precipitate a diminution in the quality of health care at these other facilities. In short, other than showing that NME's management has the financial resources and experience to accomplish the staffing and operation of the hospital, there was no demonstration by Community which would establish the availability of sufficient health care personnel to operate and manage its hospital at adequate levels of care. COMPETITION Community contends that its facility should be built in order to foster competition in the provision of health care services in Collier County. It took the position, through its expert witness, Dr. Charles Phelps, that the Naples hospital holds a monopolistic position in Collier County inasmuch as it is the only hospital in the county. It should be pointed out somewhat parenthetically, however, that this "County market area" theme ignores the fact that this application is for an acute care hospital in District VIII, which is not subdivided by rule into County sub-districts for health care planning purposes. Further, Community originally proposed locating its hospital in the central or southerly portion of Collier County, but as of the time of the hearing, proposed to locate its hospital in the northerly portion of Collier County with a service area it itself proposed which will include the southerly portion of Lee County. This area is also within the service areas of Naples Community Hospital, Lee Memorial Hospital, Fort Myers Community Hospital and the soon to be constructed Gulf Coast Osteopathic Acute Care Hospital. Thus, in its attempt to establish Naples Community Hospital as occupying a monopolistic position in the "Collier County health care market", Community did not establish that Collier County either legally or practically is a separate health care market demarcated by the county boundary with Lee and Hendry Counties, such that Naples' status as the sole acute care hospital within the legal boundaries of Collier County is monopolistic. Indeed, it competes for patients with the Lee County hospitals named above in the northern Collier-southern Lee County market area involved. Community attempted to demonstrate a monopolistic situation in favor of Naples Community Hospital by comparing its relative increase in costs per day and costs per patient stay with Fort Myers Community Hospital and Lee Memorial Hospital. Naples Community Hospital did indeed exhibit the largest rate of cost increase in both those categories. Community's expert, Dr. Phelps, opined that lack of competition in the Naples area caused the disparity in rate of increase in costs between Lee County hospitals and the Collier County hospital. Naples called Ed Morton, who was accepted as an expert witness in hospital financial analysis, reimbursement, hospital auditing and accounting, financial feasibility and corporate finance. It was thus established that Naples does not occupy a monopoly position and provides health care at lower costs than would be the case should the Community Hospital facility be constructed. Mr. Morton demonstrated that analyzing total costs per adjusted patient day does not reliably indicate the efficiency of a hospital, since such daily costs fluctuate with the average length of stay. A better indicator for determining hospital efficiency is to analyze total revenue per adjusted admission. A comparison of Lee Memorial, Naples Community Hospital, Fort Myers Community Hospital and NME's six Florida hospitals was employed based on data provided to the hospital cost containment board for the years 1980 through 1983, in order to show which hospital operated more efficiently and tended less toward monopolistic market positions. In making this comparison, Mr. Morton employed the "total revenue per adjusted admission" and "total revenue per adjusted patient day" methods of comparing the hospitals. He used this approach because it reduces to a common denominator the various values and statistics utilized in the hospital cost containment board formulas. It was thus established that Naples has the lowest total revenue per adjusted admission and lowest total revenue per adjusted patient day of all the hospitals depicted in the comparison study (Naples Exhibit 23). Naples total revenue per adjusted admission is $400 to $1,900 less than each of the other hospitals. One reason Naples experiences less total revenue is because its charges are lower, since it employs some 1,600 volunteer workers. If these workers were paid at a minimum wage they would reflect a cost of approximately $600,000 per year. Further, the hospital over the years has obtained large donations of money and labor through funding drives, all of which have enabled it to keep charges down for its patients and to continue to operate certain services at a deficit. For instance, Naples has a discreet pediatric unit, which means a physically separate, self-contained pediatric care unit, with specialized staff, who perform no other services than those they are designated to perform in pediatrics. That unit operates at a deficit repeatedly since 40 per cent of the Naples pediatric patients originate from the Immokalee area, which is characterized by an extremely high percentage of indigent persons. Naples' witness Morton performed a patient origin study which shows that approximately 84 per cent of Naples' patients originate in Collier County, 12 per cent originate in Lee County, particularly southern Lee County, and two per cent originate from unrelated areas. The Naples Community Hospital is located in Naples, approximately in the mid-section of Collier County and a significantly greater distance from the northern Collier/Lee County line than will be the Community facility, if built. Community expects to draw approximately one-half, or six per cent, of the 12 per cent of Naples' patient load which is derived from Lee County. NCH however, at the present time, competes with Fort Myers Community Hospital and Lee Memorial Hospital, in particular, for patients from both southern Lee County and northern Collier County, Community's proposed service area. Thus, NCH does not maintain a monopoly serving Collier County or Community's proposed service area to the exclusion of these other hospitals. The placement of Community's facility at a point much closer to the Lee County border than is Naples' present facility would result in the injection of a fourth or fifth strong competitor into the Collier County-southern Lee County patient origin and health service market area, rather than merely the addition of a second competitor for Naples Community Hospital. ADVERSE COMPETITIVE EFFECTS Both Lee Memorial Hospital and Fort Myers Community Hospital already draw a substantial number of patients from southern Lee County, as well as northern Collier County. Gulf Coast Osteopathic Hospital, after protracted litigation, has secured approval of a Certificate of Need to build an osteopathic acute care hospital in the southerly portion of Lee County. That Final Order authorizes 60 beds. It is fair to assume, inasmuch as these hospitals are already drawing from southerly Lee County, that the capture of the patient market in southern Lee County will be made much more pervasive with the addition of the Gulf Coast Osteopathic acute care facility. That being the case, insofar as the 1989 horizon year is concerned, far less than 12 per cent of the Lee County origin patient days now available to hospitals located in Collier County will actually be available. Community will thus draw even less than its own projected six per cent of its patient days from Lee County. In any event, it is logical to conclude that substantially all the patient days resultantly available to a Collier County situated facility will be derived from Collier County upon the advent of the Gulf Coast Hospital. Thus, any patients drawn to Community, if its facility were built, would be at the direct expense of NCH. That being the case, it is reasonable to conclude that the analyses performed by Mr. Morton, Naples' expert, which reveal that Community Hospital will potentially siphon off as many as 80 patient days per day from Naples Community Hospital, is accurate. If this occurs, it would mean that approximately 29,200 annual patient days would be garnered by Community. Mr. Morton's analysis established that a resultant raising of rates by Naples would have to occur in the amount of $240 per patient day. Failure of Naples to so raise its rates to patients, would cause an annual revenue deficiency of 6.5 million dollars. This increase of $240 per patient day would result in a $1,536 increase in the average charge per adjusted admission, based upon the average length of stay at Naples which is 6.2 days. Even if Community obtained only half its patients from the Naples Community Hospital, (a likely understatement of its patient market impact), the resulting loss to Naples per patient day would be $220 with a concomitant necessary increase, in average patient charges per admission in the amount of $768, in order for NCH to remain financially viable. If Naples were unable to raise its charges to compensate for this loss of patients to the Community facility, then it would have to curtail services currently rendered on a deficit basis, such as its discrete pediatric unit, which experiences a 40 per cent indigent patient utilization. Community's own projections show that it expects to garner 27,790 patient days, which for the above reason, are likely to all be gained at the expense of NCH. This will result in the loss to NCH of at least 76 patient days per day with a resultant revenue shortfall nearly as high as that postulated by Morton as a result of his patient origin study and adverse impact analysis. Thus, in terms of lost patient days and lost revenue, both the figures advanced by Naples and those advanced by Community reveal that a substantial adverse impact will be occasioned to Naples by the installation of Community's hospital, especially in view of its location at approximately the midpoint between the Lee County boundary and NCH's facility in Naples. Naples derives approximately 54 per cent of its gross patient revenues from Medicare reimbursement. Four per cent of its revenues are represented by Medicaid patient reimbursement. Eight to nine per cent of its billings are not collected because of non-reimbursable, indigent patient care and bad debts. Community will obtain from 76 to 80 patient days per day case load now enjoyed by Naples Community Hospital. Community projects that its billable case load will be characterized by four per cent Medicaid reimbursable billings, and six and one- half per cent of its annual case load will be represented by indigent and bad debt uncollectible billings. Forty-six per cent of NCH's indigent and bad debt cases come from the Immokalee area lying east of State Road 887 and north of State Road 846, and the Community Hospital would be built approximately midway between that area and the location of NCH. Therefore, based upon Community's own projection of total billings for 27,790 patient days, or at most, 29,200 days per year, (according to NCH's figures which depict the loss to NCH of 80 patient days instead of 76) it becomes obvious that Community's bad debt, indigent case billings would actually be in the neighborhood of 17 per cent of its total, billable case load, rather than the six and one-half per cent it projects in its application and evidence. This would render the bad debt, indigent patient-based uncollectibles of Community to be on the order of four million dollars per year. Such a high magnitude of bad debt, uncollectible billing experience can reasonably be expected since Community's Hospital would be constructed between the source of most of the indigent bad debt case load and NCH's location. This location is also in the center of the most affluent, rapidly developing residential area of Collier County. Given the fact that Community-NME's proposed location is likely to attract a high indigent, bad debt case load from the economically depressed Immokalee area, approaching the magnitude of 17 per cent of total case load, if a policy of freely accepting indigent, uncollectible cases were followed by Community-NME, but considering also the fact that Community proposes to locate its hospital in the service area it has delineated to include the most concentrated source of more affluent, privately paying patients available to these competing hospitals, it cannot be concluded that Community-NME plans to incur such a high financial risk by free acceptance of indigent, charity cases. Rather it seeks to largely serve the collectible, private-paying patient source of northwestern Collier County, hence its recently altered proposed location. This determination is borne out by the experience of NME's other Florida hospitals, which are characterized by a very low percentage acceptance of indigent, bad debt, patient service. Thus, it is quite likely that NCH would be relegated to continued service of this large number of indigent, nonpaying patients while Community/NME would serve a patient base composed of largely private-paying and Medicare reimbursed patients drawn primarily from NCH, a significant financial detriment to that entity, which at present experiences a rather precarious operating ratio, characterized by, at best, a three per cent profit margin. Such an eventuality would force upon NCH the choice of raising its rates substantially or curtailing services, or both, with the probable alternative of seeking taxpayer subsidization of such an increased charity case load. NCH effectively competes with the pertinent hospitals in Lee County for the same patient base, due to its lower charges, as shown by the fact that Naples has the lowest revenue per adjusted admission and per adjusted patient day of the hospitals in Collier and Lee Counties. Thus, any increase in charges at Naples necessitated by the adverse effect of the installation of Community's hospital would put it at a distinct additional disadvantage in competing with the Lee County hospitals. A similar financial resultant adverse impact would be imposed on Lee Memorial, Fort Myers Community and Gulf Coast in terms of declining utilization and revenues. It is further noteworthy that Community's own projection of annual patient days reveals that it will experience an occupancy rate of approximately 50 per cent. It has not been established how 27 to 29 thousand patient days with a concomitant occupancy rate of only SO to 51 per cent can support a 150-bed free standing, acute care hospital with a full complement of ancillary services, which fact renders the financial feasibility of Community's proposed hospital substantially in doubt. In terms of the relationship of adverse impacts on existing hospitals to the legislative goals of hospital cost and rate containment, it should be pointed out that the current utilization rate of all hospitals in this area District VIII are declining, partly as a result of the impact of the "diagnostic related groups" (DRG) method of reimbursement. The utilization at NCH for the first six months of 1984 has dropped to 62.3 per cent. The utilization rate of the Lee County hospitals has been reduced to approximately 65.4 per cent. The addition of another acute care hospital to this area, which is established to likely experience a utilization of only 50 to 51 per cent itself, would only cause the current low utilization rates to plummet more drastically. This situation would substantially impair the financial viability of all existing hospitals in the relevant area of District VIII, and Community, as well. Thus, if the proposed Community Hospital were added to this area, it would only aggravate the problem the CON approval process is designed to prevent, that of avoiding escalating health care rates and costs, concomitant decline in adequate levels of service and unnecessary duplication of services. GEOGRAPHIC ACCESSIBILITY In support of its assertion that by 1989 a portion of its service area will not be accessible within 30 minutes driving time of an existing hospital, Community adduced the testimony of Mr. Michael Dudek, accepted as an expert traffic engineer. Mr. Dudek plotted the time and distance of travel from NCH, Cape Coral Hospital, Lee Memorial Hospitals Fort Myers Community Hospital, Eastpoint Hospital, the future Gulf Coast Hospital and proposed Lee Memorial 100-bed satellite facility. He employed the "floating car method" in determining travel times from each hospital to points 30 minutes from the hospital. He projected future travel times along the same routes with a view toward growth in traffic volume based upon population growth. Mr. Dudek opined that in 1989 there will be, under average traffic conditions, a portion of northern Collier and southern Lee Counties which will not be within 30 minutes average travel time of any existing hospital. In his own opinion, in peak travel seasons, coextensive with seasonal, winter population peaks in this geographic area, the situation will be aggravated such that the territory where residents are more than 30 minutes driving time from existing hospitals will expand. Mr. Dudek conceded that vehicles on roads adjacent to main artery roads would reach various main arteries at different times, depending on the density of the population in the residential neighborhoods between those main traffic arteries. He did not map his proposed 30-minute driving time contour lines to indicate these variables. Further, he acknowledged that even during the 1989 projected peak traffic season, the geographical triangle in which Community-NME will locate its proposed hospital, was not outside the driving time projected for Naples Community Hospital. He apparently based his conclusions on the premise that road and traffic improvements would not occur so as to significantly compensate for the population and traffic growth posed by various real estate developments of regional impact which have been filed and proposed for north Collier and south Lee Counties. Naples, presented the testimony of Mr. Jack Barr, also accepted as an expert traffic engineer. Mr. Barr used the "average car method" in conducting a travel-time study to determine the points on arterial roads 30-minutes distance from all existing hospitals in Lee and Collier Counties as well as from the proposed Lee Memorial Satellite Hospital. (Naples Exhibit 76). The distances between those points are interpolated and plotted on the basis of estimated average speeds on the non- arterial segments of the roadways that would be traversed by people making their way to the arterial roads. Mr. Barr also surveyed proposed road improvements in the Collier and Lee County areas (Naples Exhibit 7C). He predicated this survey on the most recent Department of Transportation traffic maps. He performed his original field study during a four-week period in December and January, 1982. The travel times for Collier County were then revised and updated on October 24, 1984 with a field survey and for Lee County on August 14 through 23, 1984. Mr. Barr was unable to determine any significant statistical difference between the contours he plotted in his 1982-83 survey and those plotted in the 1984 updated survey. Mr. Barr employed information obtained from the Southwest Florida Regional Planning Council, the Lee County Planning Department and the Collier County Traffic Planner, as well as information from his own files on proposed residential building projects with which he has been associated professionally or become aware of in the area. It was thus established that that portion of north Collier County and southern Lee County, where most of the proposed residential development will occur, and which is in Community's proposed service area, is currently partially or totally within 30-minutes driving time of three existing and one approved hospital. All the proposed major residential developments in the north Collier/south Lee County area are within 30 minutes travel time of at least one existing hospital and most lie within the 3 minute contour lines for the proposed Lee Memorial Satellite Hospital. The travel time contours will remain substantially unchanged for the next ten years based upon major road improvements planned in the next ten years. Information as to road improvements was obtained from the approved Collier County Comprehensive Plan, from average daily traffic counts on U.S. 41 conducted by the Department of Transportation and Collier County, from the Lee County Transportation and Improvement Program which shows the status of road improvements for 1985 through 1989, and from the Department of Transportation Road Improvement Program extending through the fiscal year 1989 for Lee and Collier Counties. All the roads included in the DOT projection for the next five years are committed and will be built. Although there will not be a decrease in traffic along U.S. 41, rather the increase in traffic that would normally occur on U.S. 41 will be largely offset by traffic shifting over to parallel routes which are to be developed through the road improvement programs established by Mr. Barr. There has been a steady decrease in use of the formerly highly congested U.S. 41 artery because of the development of parallel highways such as Airport Road. Mr. Barr established that the road improvements upon which his opinion is partly based are being implemented, and since most are funded by gasoline tax monies earmarked for that purpose, it is reasonable to assume that the DOT sponsored improvements will continue to be made. Further, although Community sought to show that a portion of the population of its service area is beyond a 30- minute travel time from existing acute care hospitals, it did not demonstrate that that population now or in 1989 amounts to more than 10 per cent of the Collier County population. In his capacity as a traffic-engineer, Mr. Barr has worked in Lee and Collier Counties for approximately seven years, representing public and private clients. He has monitored the implementation of the Collier Comprehensive Plan as it relates to roadways and real estate development and established that road improvements are indeed being implemented. His testimony and opinion, predicated on more accurate surveying techniques, supported by local planning and Department of Transportation documentation, is better corroborated and more competent than that of Mr. Dudek and is accepted. Thus, it has not been shown that the 30 minute travel time points and distances attributable to existing hospitals will recede sufficiently to create the new service area contemplated by Community. EXISTING SERVICE - AVAILABILITY, QUALITY, ADEQUACY OF CARE, ACCESSIBILITY To ALL, INCLUDING INDIGENTS NCH affords adequate availability and access to acute care services for patients in Collier and southern Lee Counties, including indigent patients. Community's proposed facility would not have a level 2 or 3 nursery, and would not have a discreet pediatric unit, both of which Naples has. Thus, access to pediatric, as well as obstetric services, would not be enhanced by the advent of Community's hospital, for indigent or other patients originating in Community's proposed service area. Additionally, inasmuch as NCH's pediatric unit operates at a deficits the addition of such services, even of their limited scope, by Community may, for financial reasons, result in the curtailment of such services, especially for indigent, in view of the considerations expressed above. The physician-director of the Collier County Health Department, Dr. Polkowski was called and accepted as an expert witness on behalf of Naples in the area of public health, for the purpose of discussing the distribution of medically indigent persons and availability of services in Collier County. Her work requires her to routinely review U.S. Bureau of Census data on age and health characteristics of the population of Collier County and to travel throughout the county to acquire knowledge of the health characteristics of the population. It was thus established that the highest concentration of poverty level patients occurs in Census Tracts 112, 113, 114 and 104, with a particularly high concentration in Census Tract 112 which comprises the Immokalee area in northeastern Collier County. A particular health problem in that area is teenage pregnancy, with 90 births to females under 19 years of age in 1983 out of a county-wide statistic for such births of 172. Eleven per cent of the babies born to women under 19 years of age in Collier County are low birth weight babies, which typically necessitate higher levels of neonatal, specialized care because of the increased chances of serious health problems occasioned by low birth weight. There are three recognized levels of care for newborn babies in Florida. Naples Community Hospital has a Level 1 and 2 nursery. Level 1 represents babies who have no exceptional conditions. Level 2 is for those babies with respiratory and other serious problems requiring enhanced levels of care and is characterized by such special equipment as isolettes, intensive care bassinets with respirators, cardiac monitors, apnea monitors, resuscitation and cardiac resuscitation equipment. The staffing level of the Level 2 nursery is at a ratio of one neonatal specialized nurse to three babies rather than the one nurse per six babies of the Level 1 nursery. The Level 2 and 3 babies have serious and frequently chronic health conditions for the short, and sometimes the long-term, often characterized by quite high patient costs. The Immokalee area has the highest poor as well as non white concentration in the bounty. There are approximately 14,000 permanent residents, but during the wintertime the population swells to over 20,000 when predominantly Mexican American migrant farm workers arrive in the area. The poor population has a higher mortality rate for infants and manifests more serious medical problems on a greater per capita basis than does the more affluent population lying to the west and southwest. The Immokalee area population has a high rate of tuberculosis, venereal disease, parasites and hepatitis. The current level of services provided to the indigent population by Naples Community Hospital however, is of a high quality. Richard Akin is the Director of the Collier Health Services, a private, nonprofit primary health care organization which offers primary medical and dental care services to the rural, poor population of northeast Collier County. Most of these patients are migrant farm workers who have absolutely no means of paying their own medical bills. Collier Health Services provides primary medical care at three locations in the county with the largest center being at Immokalee. The Immokalee facility has seven staff positions which include such specialties as pediatrics, family practice, internal medicine and obstetrics. The Immokalee facility records approximately 60-thousand patient visits per year. Seventy-five per cent of these are represented by Mexican- American farm workers who are employed in the area seasonally. Another 10 to 12 per cent per year are Haitian immigrants employed in agriculture. Between 60 and 80 per cent of all patient visits are not paid for by the patient. The Immokalee primary care facility refers 4,000 to 4,500 patients to a hospital annually, with about 12 to 15 such referrals per day. These are for normal, non-emergency care situations. Additionally, between 400 and 450 patients are referred to a hospital for emergency care per year. All the primary care center's emergency and non emergency patients are referred to NCH. Mr. Akin has attempted to refer patients from the Immokalee facility to other area hospitals such as in Lee County, but without success. NCH is located in fairly close proximity to the Immokalee Primary Care Center, and, even though most patients have no means of paying for medical care, NCH treats and admits them without questioning them in advance concerning their ability to pay, insurance, Medicaid and the like. Mr. Akin has previously attempted to refer his indigent patients to the Fort Myers area hospitals with little success in having them admitted. LeHigh Acres Hospital is considerably closer, being 24 miles away, but Mr. Akins has had little success in having the indigent patients he serves admitted there. Instead, he refers to Naples since the patients are treated with the same dignity and decency as paying patients at that hospital. In excess of 50 per cent of the patients he refers from the primary health center to Naples never pay anything for the services received. Approximately 30 per cent of the non-emergency patients referred to Naples annually are pediatric referrals. About 30 per cent of the emergency referrals are also pediatric patients. Four hundred to four-hundred fifty non- emergency patients annually are obstetric patients who come to full term and are delivered. It is unlikely that any of the pediatric patients would be referred to a hospital, such as the proposed Community facility, which does not have a discreet pediatric unit with a specialized staff and equipment, since the primary care center in Immokalee has the capability of treating any overnight, routine pediatric problem itself, and any pediatric patient that cannot be handled on a one-day admission at the facility, can be sent to the discreet, specialized pediatric unit at Naples Community Hospitals which Community of Collier will not offer. The standard procedure at Naples Community Hospital for admitting patients who do not have a private physician or a private physician referral, is nondiscriminatory. That is, in the triage process, when a patient arrives at the emergency room, for instance, only the patient's name, address, age, date of birth and questions eliciting his medical status are asked upon his arrival. Depending on the nature of the injury involved, the on-call medical specialist for that type of injury is then summoned to the emergency room. If it appears necessary to admit the patient to the hospital, the on-call specialist authorizes the admission. When the admission determination is made, there is no information available on the admitting documents and no questions are asked to indicate whether the patient is a paying patient, a nonpaying migrant worker, an insured patient, or a Medicare patient. Naples presently has a labor and delivery area with a birthing room and a three-stage cohort type of nursery. Infants move through three different stages in the nursery depending on age, so as to reduce infections. Seventeen of the 24 beds on the floor are designated as OB beds. Whenever more than 17 patients must use that floor, they are able to expand to gynecological medical surgical beds on the same floor which thus gives a total capacity for OB patients of 24 beds. The OB services as proposed by Community are essentially duplicative of the services in existence at Naples Community Hospital, although with a less intensive level of care for 08 and pediatric patients. Essentially all the other services proposed by Community duplicate these services already available to area residents at NCH and the other pertinent hospitals. Thus, it is apparent that if Community's facility is located where proposed, it will actually serve an area that is more elongated north to south rather than east to west, and will in reality serve the more affluent, private- paying patient origin areas lying in west-central and northwest Collier County. The reason for this is that most of the indigent patient population will bypass Community of Collier's Hospital and go to Naples for the above delineated reasons, and Community would then tend to draw patients from the more populated, wealthier areas on a north-south line from the Naples area up to and across the Lee County line rather than on an east-west axis. The fact that Community/NME would serve primarily privately-paying patients is exemplified by the fact that NME's other Florida hospitals typically have no (or very minimal) Medicaid patient days, such that that parent company's policy is not one of encouraging service to Medicaid or indigent patients. It is thus apparent that with the advent of Community/NME's hospital that there would be created two different patient bases or patient markets, with Naples continuing to serve the vast majority of the indigent, Medicaid, or bad- debt patient base. Community/NME would garner its patient base largely from private-paying, more affluent patients with substantially less bad debt ratio. This would siphon off much of Naples's private paying base, such that, with its already slim or sometimes nonexistent profit margin, its financial viability would become more and more in doubt. This would raise the alternative mentioned above of either raising its rates substantially, causing health care costs for the consuming public to rise significantly, seeking relief from the taxpayers of Collier County, or curtailment of available services to indigents and all other patients, especially GE and pediatrics; possibly even all three cost coverage alternatives. Such an eventuality would ultimately result in a reduction in the quality of health care afforded the patient public. NAPLES AVAILABLE AND PROPOSED SERVICES Mr. Mike Jernigan was tendered by NCH and accepted as an expert in health care planning and hospital financial management. Mr. Jernigan is employed as Director of Planning at Naples and prepared the instant Certificate of Need application seeking 30 beds. Naples has recently added 43 psychiatric beds under previously issued Certificates of Need. The instant application contemplates relocation of the 43 psychiatric beds to the fourth floor of a support building, there creating a discrete psychiatric care unit. Naples amended its request at hearing so as to seek 20 instead of 30 medical/surgical beds to be added to the space to be vacated by the 43 psychiatric beds. No significant construction will be required in the vacated space, rather semiprivate rooms will be converted to private rooms. The 1.7 million dollar project cost is chiefly attributable to the construction of the facility which will house the licensed 43 psychiatric beds. Thus, the reduction in the number of acute care beds sought from 30 to 20 will not significantly alter the 1.7 million dollar project cost. Naturally, the minor project costs attributable to installation of 10 acute care beds in the vacated, former psychiatric bed space will be lessened by an amount attributable to 10 beds. In any event, NCH has been demonstrated to have adequate financial resources to undertake the project outlined in its application and has those funds committed. Naples can add these 20 proposed beds and successfully operate them as a minor addition to its now feasibly operating acute care hospital. Naples has recently opened a free standing, primary care center called North Collier Health Center, in the vicinity of the proposed site of Community/NME's hospital. That facility includes a radiology room, laboratory and emergency medical service station, in addition to offering normal, primary care services. It is staffed 24 hours a day, seven days a week with a physician, but does not have inpatient beds. A similar primary care center has been constructed on Marco Island. Both of these centers have been added to Naples complement of facilities and services in implementation of a long-range health care expansion plan designed to make Naples' services more accessible and available to the public throughout its Collier County, southern Lee County service area. Given Naples low and sometimes non existent margin of revenue over expenses, the construction of these two facilities was rendered largely financially feasible through the donation of the land for both of them through community fund raising efforts, and the construction of the Marco Island facility was accomplished with entirely donated funds. The EMS substation at the North Collier Primary Care Center is operated and financed by the county, and the sleeping quarters at that sub station and at the Naples main campus facility for EMS personnel are provided free of charge at some financial loss to the hospital. Such an arrangement constitutes good health care planning, even though it results in some financial detriment to Naples, since it makes the emergency medical technicians immediately available to assist emergency patients who are transported to the primary care centers by their own means, and shortens the reaction time for emergency personnel since they are not located at separate locations from the hospital or primary care centers. These arrangements further Naples' long range goal in making its emergency primary care and primary care services more available and accessible to the public in its service area, which goal receives strong public support as evidenced by the large public donations which largely made the installation and operation of these facilities possible. Since Naples is a not-for-profit hospital, any excess of revenue over expenses it experiences is used to acquire new and needed equipment or expand facilities, including facilities and services such as these. The installation of Community/NME's hospital at its proposed locations especially, would duplicate the services offered at North Collier Primary Care Center and to a great extent those offered at the main campus of NCH in Naples. It was established through the testimony of Miles Price, an architect specializing in hospital design, that the construction costs, architectural costs and related inflation factors depicted in Naples' application are reasonable and accurate with regard to the relocation and construction for the psychiatric beds, which are to be moved, and the installation of the 20 acute care beds proposed. Acquisition of equipment necessary for the operation of the 20 proposed beds will be financially assisted by its present shared purchasing arrangements, whereby it is able to obtain resultant discounts in acquisition of the necessary equipment needed for installation and operation of the new beds. BED NEED AND BED ALLOCATION Thomas Porter was tendered and accepted as an expert in health care planning in Florida. Subpart (23) of Rule 10-5.11, F.A.C. is the acute care bed need determination methodology. It is the policy of HRS in accordance with the legal mandate referenced herein to facilitate the use of subpart (23) of the rule by regularly compiling and disseminating district bed need information, including that depicted in Community's Exhibit 16, which includes a memorandum from Phil Rond, the Administrator of the Office of Comprehensive Health Planning of HRS. If the formula at subpart (23) of the above rule is employed using historical utilization data from the years 1981 through 1982, a net bed need of 375 for all of District VIII results and that is the current bed need status of the district advocated by Community. However, as established by the memorandum from Mr. Rond incorporated in Exhibit 16, the most recent utilization data includes that for the year 1983, which is the most recent hospital reporting period envisioned by the formula and above rule. When the 1983 utilization data is added to the 1981-1982 information, a drop in total bed need for District VIII occurs from a figure of 4,147 beds to 3,654 beds. When licensed and approved beds are subtracted from that figure, a minus bed need results and District VIII has an excess of 118 beds. The rule formula at subpart (23)(g) dictates that the three most recent annual hospital licensure reporting periods must be used for the utilization data necessary to operate the need determination formula. 2/ The use of the most recent utilization data, including 1983, for District VIII causes the overall projected occupancy level contemplated in the methodology (at 10.5.11(23)(g)(2)) to fall below 75 per cent, when the bed need calculation is carried out to its conclusion. Given the projected occupancy falling below 75 per cent, the end result is that gross bed need in District VIII is 3,654 beds, rather than 4,147 beds as postulated by Community. Community contends that the 1983 utilization data should not be used since it was not available for Districts I and II and should not be used for any district until it is available and disseminated for all districts 3/ The reason the department promulgated Mr. Rond's special memorandum with regard to the bed need projections for District VIII, was to alert users of that information that in that particular district the drop in the most recent utilization data triggered the rule mechanism of subpart (23)(g)(2) because it revealed that the overall projected occupancy levels would fall below 75 per cent, all of which showed on a district-wide basis an over-bedding of 118 acute care beds. Mr. Larry Bebe is Acting Executive Director and Planner for the District VIII Health Council. He was accepted as an expert witness in health care planning and public health administration. Mr. Bebe considers the local health council plan to be a valuable planning tool for purposes of allocating beds in District VIII on a less than district-wide basis. The plan was adopted in March, 1984, but has not yet been adopted as a rule by HRS. According to the District VIII Health Council Plan, that district is sub-districted by counties, except for Glades and Hendry Counties which are combined in a two-county sub- district. This form of sub-districting has been done for approximately seven years. District VIII is sub-districted on a county basis rather than on other geographical boundaries, because population data, useful in planning allocation of beds, is only available in the form of county-based population projections by age-specific cohorts from the Bureau of Economic and Business Research at the University of Florida (BEBR). Further, in considering the location of existing hospitals, the greatest proportion of people in the seven county area of District VIII can be located within a reasonable time and access to health care services by allocating the beds on a county sub-district basis. The population data promulgated by the BEBR is employed by HRS, is generally accepted as authoritative in Certificate of Need proceedings, and is herein. It is not available by age-specific cohort in the census tract geographical subdivisions attempted to be used by Community in 4 in delineating its purported service area. 4/ Performance of population based health care planning must be done consistently and future need must be projected based upon preparing utilization rates predicated on the same population geographical area each time. A common geographical basis for allocation of beds, such as counties, is most appropriate since that is the basis on which the most accurate population data is available. The bed allocation methodology used by the local health council to allocate beds by county sub-districts is contained in Naples Exhibit No. 35. Bed allocation on a county sub-district basis is determined by taking the overall bed number available from the state methodology rule formula and breaking it down into county sub-districts according to the District VIII health plan methodology. This methodology takes into account existing hospital utilization and location, changes in population, and projected patient days. All items of information to operate the allocation formula are obtained on a county basis. Under the District VIII health plan methodology, when existing beds are subtracted from needed beds, a projected need for 20 medical/surgical beds in Collier County results with an excess of 41 existing beds in Lee County for the horizon year of 1989. Mr. Porter corroborated Mr. Bebe's testimony and established that, although not adopted by HRS rule, the sub-districting of District VIII by county for health planning purposes conforms with HRS policy in terms of population and geographical criteria and constitutes a reasonable and rational health planning tool. The methodology used by the local health councils to allocate beds to the counties incorporates standard, accepted health planning practices and HRS' policy is not to interfere with that allocation of beds on a sub-district basis, so long as the subdistricting allocation does not exceed the bed need number for the district as a whole. Mr. Porter demonstrated that it is possible under the state Subpart (23) methodology to find no need or excessive beds at a district level, however, by applying the local health council methodology a positive mathematical need might be shown in one or more county sub-districts. Thus, it has been shown that the local health council allocation method which reveals a 20-bed need for Collier County is the result of a rational, standard, accepted health planning practice with regard to determining projected bed need on a less than district- wide basis. However, although that methodology shows a formula-based "need" in Collier County, the above findings reflecting the severely declining utilization experience in Collier County at NCH, together with its already scant operating ratio, when considered with the future effect on its utilization rate caused by the advent of Gulf Coast Hospital, show that no true need for any beds exists. Bed need projections are not the only pivotal considerations in determining entitlement to a CON. Brown and Kendall Lakes Hospital, Inc., Humana, Inc. d/b/a Kendall Community Hospital v. HRS, 4 FALR 2452A, (Final Order entered October 6, 1982).
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is, therefore RECOMMENDED: That the application for a Certificate of Need submitted by Community Hospital of Collier, Inc. for 150-beds for northern Collier County be DENIED, and that the application for a Certificate of Need submitted by Naples Community Hospital, Inc. for the addition, as amended, for 20 beds be DENIED, and that, in view of the application involved in Case No. 84-0909 having been withdrawn, that that case be CLOSED. DONE and ENTERED this 16th day of August, 1985 in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of August, 1985.
