The Issue Should Petitioner discipline Respondent's license to practice medicine?
Findings Of Fact At the times relevant to the inquiry Petitioner was the state agency charged with regulating the practice of medicine in Florida, pursuant to Section 20.43, Florida Statutes, and Chapters 456 and 458, Florida Statutes. Respondent is and has been at all times material hereto a licensed physician within the state of Florida, having been issued license No. ME0045474, effective December 28, 1984. Respondent's last known address is 1401 Centerville Road, Suite 202, Tallahassee, Florida 32308. Respondent is board-certified in obstetrics and gynecology. The board certification is by the American Board of Obstetrics and Gynecology. Respondent is a fellow of the American College of Obstetricians and Gynecologists. Respondent received his undergraduate degree from Florida State University and his medical degree from Howard University. His training at Howard University included a four- year residency program from 1982 to 1986. Respondent holds staff privileges at Tallahassee Memorial Hospital (TMH) in Tallahassee, Florida. Patient A.G. Patient A.G. began treatment with Respondent in 1998 and continues as Respondent's patient. A.G. is an Hispanic female who is not proficient in English. When seen by Respondent in his office she has been accompanied by an interpreter that would allow Respondent to discuss details of her health care in English for translation into Spanish for the patient's benefit. Respondent's understanding of Spanish is limited to education in high school and a year at the university. He has the ability to describe some matters that are pertinent to gynecologic practice or obstetric practice and in particular as it relates to telling patients, for example "how to push and when not to push." The record does not reveal that Respondent has the ability to discuss A.G.'s overall health care in Spanish, her language. A.G.'s husband, T.Q., who accompanied her at relevant times principally spoke Spanish and not English. He is somewhat proficient in English. On June 16, 1999, A.G. had an office appointment with Respondent. At that time A.G. had undergone gallbladder surgery but her pelvic pain persisted. In consultation on that day it was decided that A.G. would undergo diagnostic laparoscopy to explore the reason for her chronic pelvic pain. Through the discussion the patient was told that biopsies of the pelvic anatomy might be performed during the procedure and that any problems that could be addressed through laparoscopy would be addressed as Respondent felt comfortable in carrying out that correction. Otherwise, Respondent said that he would "take pictures" and "get out of the case" with the decision to offer further treatment left for another time. Patient A.G. had been referred to Respondent for her persistent pelvic pain following an examination on April 27, 1999, that had been made by Margaret Cantor, a Nurse/Mid-Wife and Registered Nurse. She conducted a pelvic examination of the patient that date. The examination included the use of speculum to examine the cervix and vagina in the interest of looking for abnormalities, lesions, growths, and discolorations. No cervical lesions were found in this examination. A pap smear taken at the time revealed normal results with some inflammation. Diagnostic laparoscopy is a surgical procedure involving an incision in the abdominal wall through which a scope is inserted to visualize the abdominal cavity. Typically the workup for performing a diagnostic laparoscopy would include use of ultrasound, pelvic examination, and a pap smear. Possible complications in this procedure include vascular injury, bowel injury, bladder injury, infection, and bleeding. Preliminary to the diagnostic laparoscopy it is the custom and practice in the medical community to perform a vaginal examination with the use of a speculum. On July 1, 1999, patient A.G. was seen by the Respondent in his office for her pre-operative check. On this occasion A.G. was unaccompanied by a translator. Nonetheless, Respondent was able to perform a brief physical and obtain a history with the assistance of A.G.'s husband. Respondent listened to the patient's heart and lungs and performed a bi- manual examination in which one or two fingers were inserted in the vagina and with a hand on the abdomen compression was performed on the pelvic viscera, uterus, tubes, and ovaries and the lower section of the pelvis. Nothing significant was observed in the patient since last seen. On July 1, 1999, an employee in Respondent's office witnessed patient A.G. sign a consent form allowing the diagnostic laparoscopy. The consent form makes no reference to the agreement for Respondent to perform a loop electrocautery excision procedure, referred to by abbreviations as a "LEEP" conization biopsy procedure or a LEEP cone. No evidence of such consent is contained in patient A.G.'s medical records maintained at Respondent's office. The diagnostic laparoscopy was to be performed at TMH. On July 1, 1999, Patricia Charbonneau, a clinical nurse at the hospital, reviewed a consent form with patient A.G. concerning the diagnostic laparoscopy for the purposes of that facility. Nurse Charbonneau was aware of the scheduling of the diagnostic laparoscopy by reference to the history and physical prepared by the Respondent. This conference involved the discussion of potential risks and complications of the laparoscopy. No discussion was conducted concerning possible risks and complications of a LEEP conization biopsy. The consent form from TMH pertaining to patient A.G. and the diagnostic laparoscopy stated "If any unforeseen condition arises and additional surgery is deemed medically necessary during my procedure, I request and authorize my physician to proceed." Nurse Charbonneau was left with the impression that the patient understood the explanation concerning the upcoming procedure and gave her consent. Ms. Charbonneau was assisted in this communication by A.G.'s husband. No discussion was held concerning the performance of a LEEP cone biopsy, in that the permit from Respondent made no mention of that procedure. Ms. Charbonneau took steps for an interpreter to be available the next morning when the surgery was to be performed given the nature of the surgery, the use of anesthesia and the desire to have "everything" reviewed again. A LEEP conization is a form of biopsy performed either in an office or hospital setting with anesthesia. The cervix is examined with the assistance of a speculum. Lugol solution is placed on the cervix to identify any abnormal cells and an excesion is made by shaving a small piece of the cervix for examination. The workup for LEEP conization includes a pap smear and a colposcopy. The performance of LEEP conization presents potential risks and complications related to infection, endometrious, bleeding, cervical stenosis, and cervical incompetence. On July 2, 1999, patient A.G. came to the TMH outpatient surgery center for her scheduled diagnostic laparoscopy to be performed by Respondent. She was the fourth patient on a schedule of surgeries to be performed by Respondent on that date. Respondent was conversant with the sequence of surgeries to be performed. Patient A.G. was placed in a holding area in the outpatient surgery center to prepare her for her surgery and to await transport to the operating room. Sometime before moving the patient to the operating room Respondent saw the patient in the holding area. Respondent addressed patient A.G. by saying hello and asking her how she was doing. This was not a visit intended to educate the patient and was not involved with any other medical purpose. At the time the patient's husband was with her during this brief encounter which was intended to confirm that the patient was there for the surgery as had been previously arranged. Several hours may have passed between the time Respondent saw patient A.G. in the holding area and when he next encountered the patient in the operating room. Respondent also saw patient N.C. in an adjacent cubicle to where patient A.G. was located while the patients were awaiting their surgery. Patient N.C. was the third patient on the schedule, there for the performance of a LEEP conization biopsy. Respondent followed his surgical schedule for the first two patients in the intended sequence. Some delay was occasioned by a problem experienced in the surgery performed on the second patient. Valerie Anne Lazzell, M.D., is an anesthesiologist licensed to practice in Florida. She is employed by Anesthesiology Associates of Tallahassee, Florida. It was intended that she provide anesthesia during Respondent's performance of the diagnostic laparoscopy for patient A.G. It was anticipated that the patient be subjected to general anesthesia which involves a rapid loss of consciousness and blocks the sensory, mental and motor functions of the patient. A general anesthesia can be provided by using an endotracheal tube, with a mask or with an LMA. This is as distinguished from the use of a neurolept employed in most instances when performing LEEP conization biopsies. In that setting the patient is generally anesic, not really aware, and has analgesia "on board." The use of a neurolept promotes a pain-free state of immobility and an insensitivity to pain and is usually accomplished by use of IV medications. From the record, it appears that Jean Mauch, C.R.N.A., with Anesthesiology Associates was scheduled to provide anesthesia by neurolept for the third patient N.C. who was scheduled for LEEP conization biopsy. Patient A.G. at the time in question was 4'9" tall and weighed 103 pounds. Patient N.C., an African-American woman was 5'2" tall and weighed 242 pounds. Their skin tone was similar in color. Dr. Lazzell saw patient A.G. before the patient was taken for surgery. In this examination the doctor filled out the patient's airway, listened to her heart and lungs, and considered the patient's ASA classification which was one of good health. Dr. Lazzell considered the plan for anesthesia with an endotracheal tube. She gained the assistance of a Dr. Becker who was fluent in Spanish in explaining the use of anesthesia to the patient. Dr. Lazzell sought Dr. Becker's assistance when the hospital did not make an interpreter available. Dr. Lazzell discussed the possible risks and complications of use of this form of anesthesia and a consent form was signed and dated. While this assessment was being made A.G.'s husband was in attendance. It was Dr. Lazzell's expectation that the patient A.G. would next be seen as scheduled when the nurse anesthetist called Dr. Lazzell to the operating room to intubate patient A.G. in association with the provision of anesthesia for the diagnostic laparoscopy. Jean Mauch, C.R.N.A., when performing her duties in the operating room setting at TMH outpatient surgery center was expected to induce anesthesia, maintain the anesthesia, monitor vital signs, treat untoward events during surgery and maintain fluids in the patient while under the supervision of the physician, in this instance, Dr. Lazzell. Nurse Mauch was principally responsible for providing the anesthesia for the third procedure on patient N.C., the LEEP conization biopsy. This included preparation in the operating room of medications and other related tools and supplies. The third procedure, the LEEP conization biopsy for N.C., was referred to on a typed surgical schedule in the preoperative desk in the outpatient surgery center. Having checked the schedule Nurse Mauch obtained the chart for N.C. and went to the cubical, not of N.C. but A.G. When Nurse Mauch arrived at A.G.'s cubical, Jamie Martin, R.N., the pre-op nurse and Dale Dunsmore, R.N., the circulating nurse, were there. Nurse Dunsmore and Nurse Mauch arrived at the cubicle where patient A.G. was located at about the same time. When arriving at the cubicle for patient A.G., Nurse Mauch had in mind that the process was one in which she was getting ready for the surgery to be performed on patient N.C. While in the cubical Nurse Mauch introduced herself to the person she believed to be the patient N.C., at which time Nurse Dunsmore said that the patient only speaks Spanish. Nurse Mauch recalls that a translator was not available for assisting in any communication with patient A.G. Realizing that Nurse Dunsmore was checking the armband for identification, the reference to the fact that the patient only spoke Spanish did not cause Nurse Mauch any concern. Nurse Mauch never heard Nurse Dunsmore orally refer to patient A.G. by name. Nurse Mauch continued with her presentation by commenting that she was the nurse anesthetist who was going to put the patient to sleep. Patient A.G. nodded her head in response to Nurse Mauch's physical gesture that the patient was going to be put to sleep. Beyond that point Nurse Mauch and Nurse Dunsmore took patient A.G. to the operating room ostensibly as the third patient on the schedule for provision of a LEEP conization biopsy wherein Nurse Mauch would provide the necessary anesthesia. The chart for N.C. was brought to the operating room. Before the patient was removed from the cubicle Nurse Martin provided pre-op medication to patient A.G., phenergan robinul. The fact that Nurse Martin was giving preoperative medication and that Nurse Dunsmore was checking the armband on what turned out to be patient A.G. led Nurse Mauch to believe that patient A.G. was patient N.C. the third scheduled patient, according to Nurse Mauch. As Nurse Mauch recalls, when the Respondent entered the operating room where the third scheduled procedure was to be performed he checked the chart for patient N.C. Respondent went out and washed his hands, returned and started the procedure. At the end of the procedure Nurse Mauch recalls Respondent commenting that the next patient speaks only Spanish, to which Nurse Mauch said, "No, this patient," meaning the patient who had been subjected to the procedure is the one who speaks Spanish. Respondent replied "I must be mixed up." Nurse Mauch recalls Dr. Lazzell arriving at the door of the operating room with patient A.G.'s chart. Dr. Lazzell looked surprised to find the circumstances. Nurse Mauch told Dr. Lazzell that this is the neurolept, the case involving the LEEP conization biopsy. Dr. Lazzell commented that "No it isn't." Nurse Mauch heard Dr. Lazzell ask Respondent, "What procedure did you do?" Respondent replied "LEEP conization." Dr. Lazzell said "No, this was supposed to be the diagnostic laparoscopy." Nurse Mauch observed Respondent leave the room and return. Patient A.G. was re-preped and the diagnostic laparoscopy scheduled to be provided was performed with the patient being intubated by the use of an endotracheal tube. Nurse Martin in her capacity as pre-op nurse was responsible for receiving patients and getting the patients ready for administering medications that were prescribed and getting IVs and things started on the patients prior to the patients being sent to the operating room. She recalls performing pre- operative duties on the patient A.G. Nurse Martin was familiar with the schedule of patients, the sequence. She understood that patient A.G. was the fourth patient in the schedule and provided the pre-anesthetic to patient A.G. in preparation for the operation. This involved the use of phenergan. Nurse Martin made no mistake in identifying patient A.G. when providing care. Nurse Martin heard Nurse Dunsmore identify patient A.G. in Nurse Martin's presence and agreed with that identification. Nurse Martin had seen the patient A.G. before the occasion at which Nurse Mauch and Nurse Dunsmore were there with the patient in Nurse Martin's presence and the patient A.G. was taken to the operating room. Nurse Martin had reviewed patient A.G.'s chart earlier in caring forward responsibilities for preparing the patient for the operation. Nurse Dunsmore identified her duties as circulating nurse at TMH outpatient surgery center as being related to setting up rooms for surgeries, transporting patients from pre-op holding areas, identifying patients, verifying surgeries, verifying allergies, and so forth. Ordinarily Nurse Dunsmore in performing her duties would read the chart of the patient scheduled for a procedure to make certain that all permits were signed. She would then go to where the patient was being held, introduce herself to the patient and ask for identification, verifying the surgery that is scheduled for the patient, and perform other related assignments. In performing her duties Nurse Dunsmore would accompany the patient with the anesthesiologist to the operating room. The method of identification in effect at the time in question would be to compare an addressograph card which accompanied the patient's chart with the information on an identification bracelet worn by the patient. Nurse Dunsmore verified that the operating room for the third procedure was set up for a LEEP conization biopsy. After the second procedure on the schedule, Nurse Dunsmore recalls that she went to patient A.G.'s room. However Nurse Dunsmore had handed Nurse Mauch patient N.C.'s chart. Nurse Mauch carried the chart to patient A.G.'s cubicle. The two nurses essentially entered the cubicle together. Nurse Martin and patient A.G.'s husband were already there. Nurse Martin left the cubicle shortly thereafter. Nurse Dunsmore introduced herself to the patient and reached for the patient's identification bracelet and read it out loud. The patient smiled and nodded in response. In turn the patient's husband smiled and nodded in response. Patient A.G. was then taken to the operating room by Nurse Dunsmore and Nurse Mauch. The patient was sedated by Nurse Mauch and positioned for provision of the LEEP conization biopsy. Nurse Dunsmore observed the Respondent enter the operating room and look at the chart which was in relation to patient N.C., not patient A.G. Nurse Dunsmore saw Respondent leave the operating room to scrub. Nurse Dunsmore was in attendance when the procedure was performed. Nurse Dunsmore recalls Dr. Lazzell entering the operating room at the end of the procedure with the chart belonging to patient A.G. and the realization by those in attendance that the chart in the operating room was for N.C., whom they understood to be undergoing the procedure when in fact the patient undergoing the procedure was A.G. Diane Jordan was a surgical technician assigned to assist in the third procedure, the LEEP conization biopsy. She recalls the patient being put to sleep by Nurse Mauch and the patient being prepared for the procedure. The patient was covered by draping towels across the upper portion of the thighs. A blanket was placed over the patient's torso. The patient was placed in the lithotomy position allowing observation of the patient's buttocks, vulva, vagina and external pelvic organs. The patient had a mask on her face and a surgical hat to cover her hair. All of these arrangements had been made before Respondent entered the operating room. Ms. Jordan recalls that the chart in the room was for N.C., the patient anticipated to undergo the LEEP conization biopsy. Ms. Jordan did not realize that the patient in reality was patient A.G. Ms. Jordan recalls that the Respondent when entering the room asked is this "such and such" in relation to a LEEP conization biopsy and that Nurse Dunsmore replied in the affirmative. Ms. Jordan remembers Respondent looking at the chart for N.C. and signing it. Ms. Jordan was in attendance while the procedure was performed. Ms. Jordan heard Respondent mention something about a lesion before he started. Ms. Jordan provided medication to be injected during the LEEP conization. Ms. Jordan identified the fact that a specimen was obtained which was given to her and provided to the nurse to send to pathology for evaluation. When Respondent entered the room for what he anticipated to be the third procedure what he asked specifically was "Is this Ms. C our case for the LEEP?" referring to the LEEP conization to be performed on patient N.C. That is when Nurse Dunsmore responded in the affirmative. After inquiring about the identification of the patient in association with the nature of the procedure Respondent expected to perform and in receiving an affirmative response, Respondent took no further steps to personally confirm the identity of the patient. Respondent opened the chart that was patient N.C.'s chart. Respondent took a drawing from his pocket that a Dr. Thompson had made of patient N.C.'s cervix when he had treated the patient. The drawing was in association with a colposcopy. Respondent intended to compare that drawing with what was observed in the patient during the performance of the LEEP conization biopsy in locating the suspected pathology. In proceeding with what he considered to be the third scheduled procedure for N.C., Respondent placed the speculum, applied the tenaculum and observed what looked to be a lesion that roughly approximated what he anticipated it would be based upon the drawing from Dr. Thompson. Respondent applied Lugol's solution and proceeded with the LEEP conization biopsy. Having applied the solution there was an indication of some pathology in roughly the position as the drawing had depicted. Respondent obtained the sample from the cervix. The size of the specimen was less than the diameter of a dime with a depth or thickness of about two dimes. The performance of the LEEP conization biopsy took less than five minutes. As Respondent finished Dr. Lazzell came to the operating room and informed Respondent that this was not the patient the he thought he was treating. Having been told by Dr. Lazzell that there was a misidentification, Respondent for the first time while engaged with the patient in the operating room proceeded to the front of the table and looked at the patient while the patient was being unmasked. By doing so Respondent discovered that indeed the patient had been misidentified and that he had actually performed surgery on patient A.G., not patient N.C. Respondent left the operating room and informed patient A.G.'s husband of the problem. Respondent returned to the operating room. The patient was provided anesthesia by Dr. Lazzell and the diagnostic laparoscopy that was scheduled was performed. Notwithstanding that it was never intended that Respondent perform a biopsy on patient A.G. from the cervix, Respondent expresses the opinion that if the physician encounters a visible lesion some form of biopsy is in order. Respondent expresses the opinion that in performing procedures such as a diagnostic laparoscopy greater latitude is afforded in terms of what the physician can do when he or she discovers "What's amiss with the patient." This in Respondent's view is because the patient is going into the procedure with the understanding that there may be an unanticipated problem and if the unexpected problem can be addressed, it should be taken care of. Of course this assumes that the biopsy that was performed on patient A.G. was in association with the scheduled diagnostic laparoscopy, when in fact the biopsy was the product of happenstance, in that, Respondent when addressing what he considered to be the condition in the patient N.C., by chance observed a similar condition in the patient A.G. Respondent concedes that prior to patient A.G.'s arrival at the outpatient surgical center that LEEP conization was not an indicated procedure for that patient. The biopsy that was performed was with the misapprehension as to the patient whose needs were being addressed, not merely an unanticipated circumstance in a patient whose identity was established when Respondent performed the biopsy. This was not an additional surgical procedure that came about in connection with the scheduled diagnostic laparoscopy; it was perceived by Respondent as the intended surgery being performed on a different patient when the case began. As a consequence it is the planned- for diagnostic laparoscopy which became the additional procedure. Nonetheless, Respondent tries to explain his result by expressing the opinion that other unexpected and unplanned-for procedures may be undertaken in the instance "Within the realm of the comfort level of the physician and the patient ahead of time; where they know each other, other things can be done as well." Respondent believes that the ability to proceed with the biopsy on patient A.G. while thinking that he was responding to the case involving patient N.C. is implicit and is promoted by "A feeling of trust that we had developed at the point in time." This refers to the point in time at which the other surgery, the diagnostic laparoscopy was being discussed with the patient A.G. The type of pathology that was encountered by Respondent with patient A.G. that led to the biopsy was compatible with condyloma with warty atypia. That is what Respondent observed and collected for evaluation. The laboratory confirmation of the specimen was performed by Dr. Woodard Burgert, a board-certified anatomic and clinical pathologist. In his assessment Dr. Burgert observed that the cone biopsy in question was compatible with condyloma with warty atypia. There was no significant dysplasia. Expert Opinions Dr. Edward Zelnick is a board-certified obstetrician and gynecologist who practices in Florida. He has hospital privileges at Hollywood Medical Center and Memorial Regional Hospital. He is familiar with the procedures involved in patient A.G.'s care based upon his own experience. He is sufficiently familiar with the facts in this case to render an opinion concerning Respondent's level of care for that patient. In the instance where pathology is found in examining the cervix, Dr. Zelnick believes that action should be taken in addressing that pathology, but only in the instance where the pathology has been discussed with the patient and the appropriate alternative treatment has been discussed. Absent an emergency it is necessary to provide the patient the alternative to surgery and identify the risk of surgery. Absent life-threatening circumstances, a biopsy such as that performed on patient A.G. should not be performed without the patient's consent, which had not been given. Dr. Zelnick further describes the instance in which a biopsy in a case such as this would be in order, would be in relation to an instance in which it appeared that the circumstance was an immediate threat to the health of the patient that needed to be addressed. None of the exigent circumstances existed in this case. Therefore, Dr. Zelnick expresses the opinion that the performance of the biopsy by Respondent did not meet the expected standard of care. Based upon his familiarity with the form of consent in this case which states, "If any unforeseen condition arises and additional surgery is deemed medically necessary during my procedure I request and authorize my physician to proceed," Dr. Zelnick believes that the physician's responsibility there is to respond during the course of the surgery, if medically necessary, to such matters as repairing of a blood vessel that has been cut or damage to an internal organ or bowel. None of those circumstances were associated with the biopsy performed on the patient A.G.. While Dr. Zelnick delegates patient identification to surgical staff or nursing staff, he believes that the ultimate responsibility for patient identification to make certain that the right operation is performed on the proper patient resides with the surgeon. To do less is to practice below the standard of care universally accepted and a matter of common sense. According to Dr. Zelnick, Respondent did not meet that standard when performing the biopsy on patient A.G. who was misidentified. Whatever rules and procedures may be in place setting standards for identification in a hospital, Dr. Zelnick does not believe those standards abrogate the duty of the physician to properly identify the patient. What is expected of a physician is 100 percent certainty as to who the proper patient is and to assure that the proper procedure is carried out on the proper patient. The method of arriving at that determination is not significant, in Dr. Zelnick's view. Dr. Roberto Fojo is a board-certified obstetrician and gynecologist licensed to practice medicine in Florida. He has hospital privileges at Jackson Memorial and North Shore Medical Center in South Florida, and he is affiliated with the University of Miami, Department of Obstetrics and Gynecology, Division of Gynecology. He is familiar with the procedures involved in patient A.G.'s care based upon his own experience. He is sufficiently familiar with the facts in this case to render an opinion concerning Respondent's level of care for that patient. He does not view a diagnostic laparoscopy as being intended to discover and diagnose cervical lesions, where, as here, the lesion is on the surface of the cervix and vagina. A diagnostic laparoscopy is not intended to promote an examination of the cervix, according to Dr. Fojo. Dr. Fojo is familiar with the consent form executed by patient A.G., the language previously described. He has seen that language before or something similar to it and considers it part of the standard surgical consent in connection with a diagnostic laparoscopy that was intended in this case. The consent is designed to allow the surgeon to address matters such as puncture of the bowel or a problem with a major artery or veins or scar tissue or adhesions. This consent would not include addressing lesions on the cervix. A LEEP conization procedure is not an accepted procedure to perform in the patient undergoing diagnostic laparoscopy unless the LEEP conization had already been discussed and there was a problem with the cervix that the patient knew about. There, in Dr. Fojo's perception, the patient would be undergoing what he refers to as dual procedure. Dr. Fojo does not believe that surgery should be performed on a patient absent the patient's consent as being part of the original procedure or in an emergency. The LEEP conization biopsy by Respondent was not related to the consent that had been provided nor pertaining to an emergency. In this sense, Dr. Fojo expresses the opinion that Respondent failed to meet the standard for medical practice when performing the LEEP conization biopsy on Patient A.G. Dr. Fojo believes that a surgeon should ascertain without any doubt that the patient in the room is a patient that he or she should be performing surgery on, the appropriate surgical procedure. This need for identification is an independent responsibility of the physician and may not be delegated. It requires 100 percent accuracy, according to Dr. Fojo. Dr. Fojo holds to the opinion that the physician is responsible for the identification regardless of his or her efforts that may have been compromised by others in attempting to properly identify the patient and perform the indicated procedure. He believes this to be common medical practice. Respondent was not within the standard of care in performing the LEEP conization procedure on patient A.G. under Dr. Fojo's assessment. Dr. Michelle McCallanahan is a board-certified obstetrician and gynecologist who is licensed in Florida and practices in Jacksonville, Florida. She is familiar with the procedures involved in patient A.G.'s care based upon her own experience. She is sufficiently familiar with the facts in this case to render an opinion concerning Respondent's level of care for that patient. The consent form executed by patient A.G. is not unfamiliar to Dr. McCallanahan. Her perception of this consent language is that it relates to complications that occur during the course of the diagnostic laparoscopy that were not foreseen and constitute an emergency requiring an immediate procedure to correct the condition. Examples are vascular injuries to vessels, bowel injury, bladder injury, infection and bleeding. By contrast, lesions on the cervix do not constitute an example of an unforeseen circumstance. Dr. McCallanahan expresses the opinion that an appropriate workup for LEEP conization was not done for the patient A.G. Nonetheless, there are some circumstances in which it would not be violative of the standard of care to perform LEEP conization without conducting a workup. That circumstance would be in the instance where the lesion that was observed was highly suggestive of cervical cancer, according to Dr. McCallanahan. The case that Respondent was presented with did not constitute such a condition. Ordinarily, the standard of care contemplates the discussion of possible risks or complications associated with LEEP conization procedures before performing them. According to Dr. McCallanahan it would be appropriate to perform a surgical procedure without discussion of the risks and possible complications in an emergency when the patient was unconscious and could not give consent in advance. Those are not the facts here. While Dr. McCallanahan relies upon the assistance of other persons within the surgical and nursing staff, she expresses the opinion that the ultimate responsibility for patient identification prior to the performance of surgery resides with the physician. She believes that it is below the standard of care to not correctly identify the patient before the procedure is done and perform an improper procedure or non- consenting procedure on that patient, as was the case here. Dr. Jana Bures-Forstheoefel is a board-certified obstetrician and gynecologist who is licensed in Florida. She practices in Tallahassee, Florida, and has privileges at TMH and performs surgeries in the outpatient surgery center. She is familiar with the procedures involved in patient A.G.'s care based upon her own experience. She is sufficiently familiar with the facts in this case to render an opinion concerning Respondent's level of care for that patient. She believes that Respondent met the standard of care for identifying patient A.G. before performing surgery on the patient. The method used by Respondent to identify the patient was common to the practice of other physicians who performed surgeries in that setting, according to Dr. Forstheoefel. In the event that Dr. Forstheoefel was performing a diagnostic laparoscopy and observed a cervical lesion she would evaluate the condition to include the performance of a biopsy, the most common method for cervical biopsy being a LEEP conization. Notwithstanding the lack of specific consent by the patient for Respondent to perform the LEEP conization, Dr. Forstheoefel holds to the opinion that it was correct to biopsy, given what was observed in the patient. The prospect that a physician would be 100 percent accurate in identifying a patient undergoing surgery is not humanly possible and is a standard that should not be imposed upon a physician in Dr. Forstheoefel's opinion. She considers that the matter of proper identification preoperatively is a team effort. One person should not be solely responsible for all things in making certain of the patient's safety and assuring that the right thing is done. Dr. Kenneth John McAlpine is a board-certified obstetrician and gynecologist. He is licensed in Florida. At times relevant he performed surgeries at the TMH outpatient surgery center. He is familiar with the procedures involved in patient A.G.'s care based upon his own experience. He is sufficiently familiar with the facts in this case to render an opinion concerning Respondent's level of care for that patient. He believes that Respondent met the standard of care in identifying the patient A.G. before performing the surgery and in performing the LEEP conization on that patient. Although Dr. McAlpine has not experienced a situation in which he observed a reason to do a LEEP conization in a diagnostic laparoscopy case, where consent for LEEP conization had not been given ahead of time, he does not question the decision to address the condition observed, such as in the case at issue. From his point of view, it was acceptable to do a LEEP conization biopsy to address the lesion. Although no prior indication existed before the lesion was observed during the procedure Dr. McAlpine would not want to ignore the lesion. Dr. McAlpine believes that the process that Respondent undertook in identifying the patient A.G. before surgery was consistent with practices in effect at the hospital, this included reliance on staff in the operating room. Dr. McAlpine does not believe that it is necessary for a physician to be 100 percent accurate in the identification as a person ultimately in charge. No matter as to the facts, he sees the issue of the identification being a multi-disciplinary approach among health care providers. Dr. David O'Bryan practices obstetrics and gynecology. He is licensed in Florida. At times relevant he performed surgeries at TMH outpatient surgery center. He is familiar with the type procedures involved in patient A.G.'s care based upon his own experience. He is sufficiently familiar with the facts in this case to render an opinion concerning Respondent's level of care for the patient. The method employed by Respondent in identifying the patient was consistent with the practice used in the immediate medical community at the time, according to Dr. O'Bryan. Dr. O'Bryan believes that the Respondent performed the appropriate surgery on Patient A.G. For Dr. O'Bryan, what is more important in addressing the patient's needs is the apparent pathology, not the consent that may have been provided by the patient in advance of the procedure. It would be negligent not to address the lesion on the cervix in his view. The pathology present determines the response even without a consent for the procedure. Dr. O'Bryan did not consider that the pathology constituted an issue of life or death. The fact that the LEEP conization biopsy was not planned was less significant than the need to address the pathology. It does not matter if the patient were A.G. or N.C. or some other patient, Dr. O'Bryan believes that it was appropriate to perform the biopsy. Dr. O'Bryan believes that the surgeon bears a great deal of responsibility in patient identification, but the ultimate responsibility for identification does not reside with the physician or any other operating room staff member in Dr. O'Bryan's assessment. Dr. O'Bryan does not conceive that there can be any greater comfort in the identification than in the instance where the "operating room crew" tells the physician who it is and the physician has a chart in his hands which indicates that it is the same patient as the operating staff has identified and the pathology that was found is consistent with what had been anticipated according to the patient chart and the staff identification. Nothing in medicine involves the imposition of a 100 percent standard of care to include properly identifying the patient preoperatively, according to Dr. O'Bryan. Dr. Roberto Morales is a board-certified obstetrician in gynecology licensed to practice in Florida. At times relevant, he performed surgery at the TMH outpatient surgery center. He is familiar with the type procedures involved in Patient A.G.'s care based upon his own experience. He is sufficiently familiar with the facts in this case to render an opinion concerning Respondent's level of care for the patient. Dr. Morales believes that Respondent met the standard of care for identifying the patient A.G. in that hospital and in other places as well. Dr. Morales believes that the patient was correctly identified by Respondent earlier in the day and that the incorrect patient was brought back to the operating room. Under those circumstances, Respondent did what was appropriate to identify the patient in the performance of the LEEP conization on patient A.G. and was within the standard of care, according to Dr. Morales. Assuming the patient was scheduled for a diagnostic laparoscopy, if during the examination, visualization of the cervix, a lesion was observed, a biopsy would be the typical next step, according to Dr. Morales. The caveat to his opinion in the ability to perform that biopsy would depend upon the patient that was being taken care of and the sense that the physician had about the patient's expectations of what should be done and not done. It is assumed that Dr. Morales believed that the level of relationship between Respondent and Patient A.G. would allow the performance of the LEEP conization biopsy. Dr. Morales believes that the attempt to be 100 percent accurate in the identification of patients preoperatively is an aspirational goal, not a requirement. For him all persons concerned have the responsibility for taking care of the patient. Having considered the opinions expressed by the experts, the ultimate facts to be determined must be based upon the realization that Respondent proceeded to perform the LEEP conization biopsy on patient A.G. without advance written consent, that Respondent believed that he was confronting the case of patient N.C., and that the performance of the LEEP conization on Patient A.G. was not in its timing and justification part of the diagnostic laparoscopy scheduled to be performed on Patient A.G. The earlier effort by Respondent to identify his patient in the holding area was sufficient for that stage of the process. Respondent acted in the customary manner in relying upon his knowledge that Patient N.C. was to be the third patient based upon the schedule. It was not unexpected that Respondent would rely upon the surgical staff in orally confirming the patient identity and the procedure to be performed when entering the operating room for the scheduled third procedure. This identification was further confirmed by the presence of the chart for Patient N.C. Respondent's failure to take further steps to physically identify the patient by looking at her arm bracelet, by looking at her face, or in some other manner recognizing the mistake that had been made by others in readying Patient A.G., and not Patient N.C. for surgery could be forgiven if there were no consequences, but there were. Although Respondent should not be the absolute guarantor in the identification of the patient, what he did in the operating room was not enough, when the result is that Respondent performed the LEEP conization that was not consented to in advance, and performed believing that the patient was N.C., the patient for whom the procedure was intended, and was not in response to an emergency regardless of patient identity. As a result, Respondent failed to meet the standard of care for reasonably prudent similar physicians under acceptable similar conditions and circumstances in his actions. In mitigation, the outcome was not harmful to the patient. Moreover, other health care professionals were in great measure responsible for the failure to properly identify the patient.
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That a final order be entered finding Respondent in violation of Section 458.331(1)(t), Florida Statutes, and imposing a $1,000.00 administrative fine and costs of investigation and prosecution. DONE AND ENTERED this 8th day of November, 2002, in Tallahassee, Leon County, Florida. CHARLES C. ADAMS 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 8th day of November, 2002. COPIES FURNISHED: Robert C. Byerts, Esquire Kim Kluck, Esquire Department of Health 4052 Bald Cypress Way, Bin C-65 Tallahassee, Florida 32399-3265 David W. Moye, Esquire Linda Loomis Shelley, Esquire Fowler, White, Boggs and Banker, P.A. Post Office Box 11240 Tallahassee, Florida 32302 Larry McPherson, Executive Director Board of Medicine Department of Health 4052 Bald Cypress Way Tallahassee, Florida 32399-1701 R. S. Power, Agency Clerk Department of Health 4052 Bald Cypress Way Tallahassee, Florida 32399-1701
The Issue Whether the Petitioner is qualified for licensure as a medical doctor in Florida by examination.
Findings Of Fact Petitioner graduated from the School of Medicine at the University of Pennsylvania in 1955, following which he did a rotating internship at Abington Memorial Hospital before reporting for active duty in the U.S. Navy. Upon release from active duty in the Navy in 1959 he entered a residency program in general surgery at Hospital of University of Pennsylvania followed by thoracic surgery which he completed in 1965. Petitioner was certified by the American Board of Surgery in 1965 and by the Board of Thoracic Surgery in 1966. From 1965 to 1986 Petitioner was engaged in the practice of general, cardiac, thoracic and vascular surgery. In the latter part of this period, he headed a cardiothoracic surgery team at Lankenau Hospital, Philadelphia, which performed some 700-800 open-heart surgeries per year. It was during this period that most of the malpractice suits were filed against Petitioner, the hospital and other doctors on his team. As head of the surgical team Petitioner did the definitive surgery (bypass grafts) while other members of the team opened and closed the chest cavity. Petitioner is currently licensed to practice medicine in Pennsylvania, New York, New Jersey, Delaware and Arizona. At the time he first applied for licensure in Florida in 1988, he was licensed in Pennsylvania, New Jersey and Arizona. No licensing agency has brought any charges against Petitioner's license. Petitioner took and passed the FLEX examination in 1988 scoring 84 and 83 on the two parts of the exam. In the past twenty years, 19 malpractice suits have been filed against Petitioner. Of those suits 9, have been dismissed by Plaintiffs without any recovery from Petitioner, and two were settled on behalf of Petitioner, one in 1979 for $50,000 and one in 1989 for $25,000. Those settlements represented little more than nuisance value. The hospital defendant settled one case for $225,000 and another for $2,500. Of the remaining eight suits the complete medical records of those cases were reviewed by another cardiothoracic and vascular surgeon who opined that five are without merit. For the remaining three, additional evidence is needed to fairly appraise the merits of those suits. This additional information will not be available until discovery is completed. Petitioner's testimony, that these remaining three cases did not involve a failure on his part to practice medicine with that level of care, skill, and treatment which is recognized by a reasonable prudent similar physician as being acceptable under similar conditions and circumstances, corroborates the Affidavit of the risk manager (Exhibit 3) and letters in the file (Exhibit 1) stating those cases are deemed to be without merit and will be vigorously defended. All of these suits were brought in Pennsylvania where the backlog of civil cases is such that civil cases are not scheduled for trial until approximately seven years after the suit is filed. Furthermore, the complaints filed in these cases contain general allegations that the Respondent's negligence, inattention, failure to adequately apprise the plaintiff of possible complications of the surgery, along with the negligence of the hospital and others involved with the surgery, directly resulted in the plaintiff's death, injury, etc. These are catch- all allegations and the specific nature of the malpractice claim cannot be discerned from these pleadings. Cardiothoracic and vascular surgery is a high risk field of medicine in that the patients are frequently very sick and elderly. Accordingly, the success rate for this type surgery is lower than for most surgeries, and this leads to a higher incidence of suits alleging malpractice. Many of these earlier suits were brought before the doctors began paying attention to documenting that they fully explained the risks of the surgery to the patient and thereafter the patient gave informed consent to the operation. Petitioner has been more assiduous in this regard in recent years than he was several years ago. This practice will have the effect of reducing the incidence of malpractice suits against surgeons. It is noted that several of the suits alleged the plaintiffs were not adequately advised regarding the risks involved and, therefore, they did not give informed consent to the surgery.
Recommendation It is RECOMMENDED that Horace MacVaugh III be granted a license to practice medicine in Florida. DONE and ENTERED this 19th day of December, 1990, in Tallahassee, Leon County, Florida. K. N. AYERS 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 19th day of December, 1990. APPENDIX Petitioner's proposed findings are accepted, except: 8. Accepted only insofar as consistent with HO #5 and 6. 15. Rejected. No evidence was presented in this regard. Respondent's proposed findings are accepted except: 17. Second and third sentences rejected as not supported by any competent evidence. COPIES FURNISHED: Roger Lutz, Esquire Robin Uricchio, Esquire HOLLAND & KNIGHT Post Office Box 1526 Orlando, Florida 32802 Allan Grossman, Esquire The Capitol, Suite 1602 Tallahassee, Florida 32399-1050 Dorothy Faircloth, Executive Director Florida Board of Medicine Northwood Centre, Suite 60 1940 North Monroe Street Tallahassee, Florida 32399-0750 Kenneth E. Easley, Esquire General Counsel Department of Professional Regulation Northwood Centre, Suite 60 Tallahassee, Florida 32399-0792
The Issue The issue for consideration in this hearing is whether the Intervenor, St. Joseph Hospital of Port Charlotte, should be issued Certificate of Need #6202 for the establishment of a cardiac catheterization laboratory at its facility in Port Charlotte, Florida.
Findings Of Fact At all times pertinent to the issues herein, the Department was the state agency responsible for the regulation and certification of health care facilities in this state and charged with the responsibility of issuing Certificates of Need, (CON), under the criteria set forth in Section 381.705 Florida Statutes and the Department's Rules. St. Joseph Hospital is a 212 bed general acute care hospital located in Port Charlotte, Florida, within the jurisdiction of the Department's District VIII. It is a not for profit, tax exempt corporation owned by Bon Secours Health Systems, a multi-hospital system. It offers varied medical and surgical services, including obstetrics and pediatrics, and operates a 24 hour emergency room. The facility is accredited by the Joint Commission on Accreditation and Health care Organization, and its laboratory is accredited by the American College of Pathology. Because St. Joseph opened a nursing home in Port Charlotte in 1975, Chapel Manor Nursing Home, Fawcett's predecessor, and at that time, the only nursing home in Port Charlotte, applied for and was issued a CON to convert from a nursing home to an acute care hospital and began operation as Fawcett Memorial Hospital that year. Fawcett is now a 254 bed general medical surgical acute care hospital providing a broad range of services with the exception of obstetrics and pediatrics, and is located directly across the street from St. Joseph. It offers diagnostic cardiac catheterization service only, implementing that service in August, 1989. Both Fawcett and St. Joseph have the same service area and utilize the same physicians on their medical staffs, which are practically identical. St. Joseph offers a full array of cardiology services with the exception of cardiac catheterization. As a result, any St. Joseph patient requiring cardiac catheterization must be discharged from St. Joseph and transferred to another hospital in the area which provides that service. Between January 1989 and February, 1990, approximately 97 St. Joseph patients required transfer because of the fact that St. Joseph had no pertinent program. Because of this fact, and recognizing that the Department had determined there was a numeric need for an additional cardiac catheterization lab within the district, specifically based on the under-served indigent and Medicaid patients, in February, 1990, St. Joseph submitted a letter of intent to file a CON application for the establishment of an adult inpatient cardiac catheterization laboratory at its facility in District VIII. This letter of intent was based on proper Board Resolution, and was filed not only with the District but also with the local Health Council, and the required notice was published in a local paper. Thereafter, in March, 1990, St. Joseph filed its CON application for the facility, along with the appropriate fee, with the Department, at the same time filing a copy with the local Health Council. The Department responded with an omissions letter, the requirements of which were met by St. Joseph in a timely manner, and the Department thereafter deemed the application complete. Notwithstanding Fawcett's allegations in the post hearing submission that St. Joseph's application was not complete, there was no evidence presented at hearing to so establish, and the Department deemed it both timely and ultimately complete. On on about July 17, 1990, the Department issued its State Agency Action Report and notified St. Joseph of its decision to approve the application. Approximately one month later, in a timely fashion, Fawcett filed its Petition challenging the Department's approval of St. Joseph's application. St. Joseph projects implementation of service by the unit in December, 1992. The unit will encompass approximately 3,800 square feet and will be part of and companion to a larger construction project designed to expand St. Joseph's surgical capacity. It will be located in a proposed two-story addition to the south side of the existing hospital. Total cost of the project, including construction of the building and equipment, is estimated to be approximately $2.6 million, one hundred percent of which will be financed by debt. It is estimated that interest costs over the term of the financing will be an additional $2.25 million. St. Joseph anticipates the charge for a cardiac catheterization will be $6,657.48 in 1993, and $7,123.50 in 1994. This is the same as the average charge for the procedure by existing providers in the district, adjusted for inflation in later years. The facility will be open routinely from 7:00 AM to 2:30 PM, Monday through Friday. An on-call team will, however, be available 24 hours a day although cardiac catheterization, usually an elective procedure, should not require much in the way of emergency services. Dr. Victor Howard, a Board certified internist and cardiologist, who is already on staff at St. Joseph, is projected to be the medical program director for the new facility without additional compensation. Cardiac catheterization is a relatively new diagnostic and therapeutic invasive procedure which involves the insertion of an extremely fine hollow tube through a blood vessel in the groin, up into the patient's heart. Because the patient faces danger from collateral problems such as bleeding, stroke, congestive heart failure and medication reactions, at least three staff members are required to assist the physician performing the catheterization. As with most procedures, the more it is done, the more proficient the individuals doing it become. By the same token, the medical staff assistants to the physician in charge must have specialized skills and training, and the Department rules require that in order to properly provide for therapeutic catheterization patients, an open heart surgery facility must be available within thirty minutes of the facility where the catheterization is being carried out. St. Joseph intends to rely on Medical Center Hospital in Punta Gorda, approximately ten miles away, as the required backup open heart facility. Medical Center is within the maximum thirty minute drive time criteria. It provides not only an open heart surgery program but also both diagnostic and therapeutic cardiac catheterizations. Diagnostic catheterizations, as opposed to therapeutic catheterizations, can be done on an outpatient basis. Experience has indicated that staff assistant technicians, nurses and others, are frequently not reasonably available. As a result, there is continuing competition between hospitals providing the services requiring these individuals, and this competition is often severe. Nonetheless, Fawcett has, up to the present, been able to recruit and retain adequate numbers of experienced personnel without the necessity for paying a bonus over and above normal salary. By the same token, St. Joseph believes it, too, will be able to attract and retain sufficient numbers of qualified personnel to successfully operate its laboratory as approved. At the present time, St. Joseph has ten registered nurses on staff who have cardiac catheterization laboratory experience. The laboratory, if approved, will not open at St. Joseph until the second half of 1992. At that time, manpower requirements for the project call for 3.36 full time employees, (FTE's), and that number appears capable of being satisfied by the current staff, though a cardiovascular technician, (CVT), has not yet been hired for the lab. In addition, St. Joseph appears to have on hand adequate management and supervisory personnel. It projects salary and benefits expense of almost $140,000.00 in 1993 and almost $150,000.00 in 1994. Maintenance expense is expected to approximately $65,000.00 the second year of operation. The proposed project has been enthusiastically received by the medical community in the service area. Because, in that area, the treating physician determines where the patient will be treated, support for the project by the area cardiologists is important as a positive factor for consideration. Because it has both the financial and personnel resources to provide the service, access to the service will be improved for the medically indigent and the facility's current cardiology program will be enhanced. The Florida legislature has, by its passage of Section 381.705, Florida Statutes, laid the basic analytical framework to be used in determining whether the facility here in question is needed. Consistent with the terms of the enabling statute, the Department has promulgated Rule 10-5.011, F.A.C., to implement the provisions of the statute. The rule formula provides a showing of "need" if at least 300 procedures could be performed by the new program, based on the total number of catheterizations, diagnostic and therapeutic, projected for the District. Projections for Charlotte County alone indicate 180 additional catheterizations between 1989 and 1994. Consistent therewith, the Department has determined that within DHRS District VIII, the pertinent service district, there is a numeric need for one additional cardiac catheterization laboratory. Need, however, goes beyond the question of numeric need. It is also a factual issue that requires an analysis of health planning principles and standards used within the ultimate goal of providing the best quality medical care for the citizens of this state in a sound, economically justified manner. In that regard, it is appropriate to evaluate need with an eye that looks toward avoiding unnecessary and costly duplication of services that are unnecessary. Fawcett contends there is no need for an additional lab in District VIII, based on the underutilization of existing programs. The Department's rule, the use of which resulted in a determination of need for one additional unit, does not regulate capacity. District VIII consists of Sarasota, DeSoto, Glades, Hendry, Charlotte, Lee, and Collier Counties. Sarasota and Lee Counties each have three cardiac catheterization programs while Collier has one in its only hospital. Charlotte County has two, Fawcett and Medical Center. It has already been noted that Fawcett and St. Joseph are located across the street from one another. Medical Center, which is used for therapeutic catheterizations, is located not far from the other two, and all three are Medicaid providers. All three also serve generally the same service area and use, essentially, the same medical staff. Moreover, the three facilities' cardiology staffs are essentially identical. When evaluating the service availability, however, it must be noted that Charlotte County experienced the highest relative increase in population among all the District VIII counties during the decade of the 1980's, and projections are that it will continue to lead up through 1995. At the present time, Charlotte County has the highest percentage of residents over age 65, (34%), of any of the District VIII counties. Looking at the proposed service in light of the pertinent State Health Plan, that for 1989, four preferences should be considered when evaluating the need for the proposed service. One deals with giving preference to those who propose to establish both cardiac catheterization and open heart surgical services. Since there is no established need for an open heart surgery service in the District, St. Joseph could not and does not plan to provide for one. Consequently, this preference is not pertinent here. The second preference is for those applicants who propose to establish a cardiac catheterization program in a county without any existing program. Again, this is not pertinent to the current situation. The third preference is toward applicants with a history of providing a disproportionate share of Medicaid and charity care. Here, St. Joseph is not a disproportionate Medicaid share provider, a point made by Fawcett. By the same token, however, neither is Fawcett. Fawcett did not, over the years, keep an accurate record of the number of patients to whom it provided free medical services, or of the value of those services. It claims it did not realize the importance of those numbers, concerning itself more with the provision of the service rather than with the recording of it. It was not, for most of its existence, however, a Medicaid provider, applying for and gaining that certification as of September l, 1989. Yet, during those non-certified, unrecorded years, it claims to have provided care to patients regardless of their ability to pay. While this claim is accepted as true, it is impossible to quantify it. The fourth preference is given to applicants who agree to provide services to all patients regardless of ability to pay. St. Joseph has agreed to do so and has a history of providing care to the medically indigent. So does Fawcett, but Fawcett is not an applicant, so the preference issue does not, necessarily, apply. It is clear, however, that neither the existing providers nor the applicant are precluded or disqualified as a result of the application of these preferences. Turning to the local, (District) Health Plan, which is also to be considered in the evaluation of the projects, the 1989 update of the District VIII Plan, that pertinent here, also provides for applicants to be evaluated in light of several preferences. One calls for an applicant to provide certain services, all of which are provided currently by St. Joseph. The second preference calls for the laboratory to be open no less than 40 hours a week and to provide a maximum waiting time of one month for simple, elective cases. The evidence presented indicates that the currently operating facilities meet this criteria, but also that St. Joseph will likely do the same if approved. Another preference relates to the proposed program's impact on existing providers in the area. It is here that the parties disagree radically on whether or not such an impact exists. St. Joseph has taken the position that its program will have only minimal impact on the ability of Fawcett and other existing providers to continue to provide quality economic service. On the other hand, Fawcett projects a major negative impact on its services, and claims the Department apparently failed to consider, at the time it did its initial evaluation, whether or not St. Joseph's program would adversely impact on it's existing service. Fawcett contends that its presently improving financial posture will be definitely impacted adversely by St. Joseph's implementation of the new service, if approved, in that its anticipated positive financial improvement will be reduced, if not destroyed, by the opening of St. Joseph's proposed program. Evidence produced by Fawcett tends to indicate that by 1994, if current projections hold true, Charlotte County will experience an increase of only 180 diagnostic catheterizations per year. St. Joseph's projections indicate that in that timeframe it expects to perform 509 diagnostic catheterizations per year. Simple arithmetic, then, would reveal that if those figures are correct, 329 of the 509 projected diagnostic procedures would have to come from the number of procedures performed by both Fawcett and Medical Center. Since approximately 75% of the current cardiac catheterizations performed in Charlotte County are performed at Fawcett, by far the greatest impact would be on that institution. The figures projected indicate a loss by Fawcett, then, of 232 procedures in 1993 and 318 in 1994. Medical Center's projected losses would be somewhat less, but nonetheless, such a reduction, if realized, would result in a loss of revenue to each of the existing providers from current income levels. Fawcett experienced severe financial problems during the past several years prior to the incumbency of the present CEO. In 1987 and 1988, it had financial losses which were improved in 1989 to a result showing a marginal excess of revenue over expenses. For 1990, Fawcett expects to show a profit for the first time in several years. Its prior negative operating result, however, has had a negative impact on its debt to equity ratio which, itself, is significant in that it is used by lenders as an index or flag regarding the financial health of an institution which seeks to borrow money. Because of its poor financial condition in the past, Fawcett was unable recently to borrow money needed for 1990 capital projects, and it is the increasing profit margin, which Fawcett hopes will make it more competitive in the borrowing market, that is most threatened by the proposed initiation of St. Joseph's project. The improved financial picture which Fawcett experienced in the most recent financial years has been directly attributed to the revenue earned by its cardiac catheterization program. In 1989, Fawcett determined that each cardiac catheterization patient contributed $1,927.00 to the hospital's financial health, and Fawcett contends that each patient taken from it by the opening of St. Joseph's proposed program will result in a financial loss to it. Utilizing the 1989 contribution margin projected to 1993 and 1994 reflects that if St. Joseph's program is approved, and if the anticipated numerical patient load is lost, the net financial loss to Fawcett would be in excess of $446,000.00 in 1993 and in excess of $612,000.00 in 1994. If these figures are inflated to 1993 and 1994 dollars, the loss could well be greater. Fawcett contends that it is currently experiencing a healthy improvement in its financial position which it anticipates would be substantially and adversely affected by the loss of cardiac catheterization patients to St. Joseph if that facility's project were approved as proposed. No doubt there would be a negative impact, but the degree thereof is speculative. Both the statute and the rule mentioned previously set forth criteria for the evaluation of these projects. One is the existence of an alternative to the service provided. Whereas St. Joseph contends there is no alternative diagnostic procedure preferable to cardiac catheterization, Fawcett contends there are several alternatives to St. Joseph's proposed project. Nonetheless, prior to its application, St. Joseph considered some alternatives. One was the setting up of a mobile laboratory on an interim basis. Since this could be used only by outpatients, it was determined not to meet the need of those patients requiring an inpatient procedure or of the physicians who would perform in it, and the anticipated $1.3 million cost was considered excessive for a short term fix. It is so found. Another was the possibility of establishing the lab somewhere within the hospital's existing space, but a survey of the facility quickly revealed there is no available existing space. However, since a part of the service proposed by St. Joseph would include outpatient catheterization, this part of the need could be met by the laboratory established in Charlotte County by several cardiologists who practice on the staff of St. Joseph, and who recently established a facility in the county. By the same token, if a need for outpatient procedures is demonstrated, the existing inpatient program could, Fawcett contends, provide it. Finally, is the existence of under-utilized programs at Fawcett and the Medical Center which have existing excess capability which could be considered an adequate and available alternate to the St. Joseph program. Turning to the question of financial feasibility, another evaluation criteria, there is no doubt that St. Joseph has the ability to borrow the capital to make the project financially feasible in the immediate future. St. Joseph's financial condition is sound. As might be expected, there is substantial difference in opinion as to the reasonableness of the pro forma projections submitted by St. Joseph's as evaluated by the Department. In fact, the parties agree to very little. St. Joseph contends that the patient mix estimated in the application is reasonable and based on its experience and that of Lee Memorial Hospital, and that the staffing level is appropriate and reasonable, and there is little to contest. The major difference in positions is in the area of supply costs and the percentage of patients accounted for by Medicare. St. Joseph estimated a supply cost of $248.00 per admission in 1989 dollars, inflated by 7% per year up to 1993 and 1994, but Fawcett contends the actual supply cost in 1989 dollars is $492.00 per admission. Assuming, arguendo, that Fawcett is correct, the projected supply costs would then be increased by in excess of $85,000.00 in 1993 and almost $126,000.00 in 1994, and this would result in a reduction of projected income for the service in both years. Fawcett's evidence and argument here are not persuasive, however. Fawcett also contends that St. Joseph's assumption that 58.9% of the cardiac catheterization patients would be Medicare, a figure which assumes that the Medicare patient utilization for catheterization would be the same as the facility as a whole, is not reasonable. Fawcett relies on the fact that St. Joseph is the sole obstetrics provider in Charlotte County and the majority of these obstetric patients are not Medicare patients. Considering that along with the fact that cardiac catheterization is a service which has a higher level of Medicaid utilization than St. Joseph presently provides, a more likely and reasonable predictor of the Medicare utilization of St. Joseph's program would be the Medicare utilization for the two existing catheterization programs. Fawcett's utilization in that regard is 64.6% and Medical Center's is 70.5%. Extrapolating from those figures, Fawcett contends a reasonable financial projection for St. Joseph's program would be 65% Medicare utilization. Since that type of service is reimbursed on the basis of DRG, the amount of income to the hospital is less, and the resultant contractual allowances, deductions from revenue, would be in excess of $61,000.00 in 1993 and more than $87,000.00 in 1994. Therefore, combining both the increase in projected supply costs and the decrease in projected income from Medicare, Fawcett contends that the projected number of catheterizations in 1994 and 1994, as modified using Fawcett's figures would result in a net reduction of approximately $210,000.00 in the former year and in excess of $126,000.00 in the latter. If those figures prove correct, St. Joseph's proposed program , it is suggested, would apparently not be feasible in the long term. On the other hand, St. Joseph contends its utilization figures for 1993 and 1994 are reasonable in that it projects a volume slightly greater than one-half of the number of procedures accomplished by Fawcett in its first year of operation. St. Joseph's expert evaluated the use projections for the first two complete years of operation and the costs assumptions and found both to be reasonable. Nonetheless, he also accomplished calculations of profitability utilizing Fawcett's suggested increased costs figures, and utilizing three different approaches, ultimately concluded that even looking at the worst case scenario, St. Joseph's proposal would be financially feasible both in the short and the long term. Independent analysis of the evidence leads to the conclusion that the projected staffing level and the salaries and benefits for that staff are reasonable. The anticipated reimbursements on the basis of the DRG's are reasonable. The projected utilization in the first and second years of operation are reasonable, and taken together, the evidence supports the conclusions drawn by St. Joseph's expert. It is so found. Another area for consideration is the impact St. Joseph's program would have on Fawcett's existing program. Fawcett's program has now been in operation for several years and even with approval of St. Joseph's, will continue to operate without competition until the second half of 1992, after which St. Joseph's program would be in a start-up configuration for at least a year. As such, it will be well into 1993 and possibly into 1994 before St. Joseph's program can be considered to have its full impact vis-a-vis the Fawcett program. Fawcett's expert, who concluded that St. Joseph's program would have a serious adverse effect on Fawcett's ability to contribute to its improving financial picture did not consider the fact that Fawcett does not currently perform outpatient cardiac catheterization procedures, and any of that nature done by St. Joseph should have no impact on Fawcett. The expert also did not consider in his analysis of impact any population growth beyond 1990 or growth in the demand for diagnostic catheterization procedures. Fawcett listed approximately $13.7 million in proposed capital expenses over the next five years which, it claims, will be adversely impacted by the effect of St. Joseph's proposed program on its cash picture. Many of the line items within this figure are much the same as normal routine replacement items, and only $3.5 million represent the cost of items specifically identified as needed to meet existing life safety code violations or for accreditation purposes. No doubt there will be some impact on Fawcett's operation by the opening of St. Joseph's program, yet Fawcett has not demonstrated clearly that the impact will result in a return to the pre-1990 negative cash position which was shown to now be reversing. Even accepting Fawcett's expert's assumptions, the likelihood is great that Fawcett's equity balance would increase by over $900,000.00 from 1992 to 1993 and by over $800,000.00 from 1993 to 1994. So long as Fawcett's cardiac catheterization program performs more than 182 procedures per year, its current break-even point, no negative impact to the hospital's overall financial picture is likely to occur. Assuming that Fawcett's procedures were no more than one-half its 1990 admissions, at current rates, its program would render a positive contribution of more than $650,000.00 to the hospital's financial picture. This figure could not be considered as other than a viable financial contribution. What is more, the implementation of the program at St. Joseph should not exert any upward pressure on the cost of other services rendered by St. Joseph, and should, by competition, moderate future price increases for this procedure at the two competing facilities. As regards Medicaid and indigent care, St. Joseph has been a Medicaid provider since 1965 and has a history of providing service to indigent patients and under-served groups. In fact, the value of care rendered without cost to patients by St. Joseph has climbed from $418,000.00 in 1988 to a projected $1.5 million in 1991. By the same token, its commitment to Medicaid has increased to almost 4% in 1990, in addition to approximately 2% of uncompensated care that same year. The obstetric unit has been shown to operate $500,000.00 a year in the red because of the volume of indigent care provided. Nonetheless, St. Joseph agrees to accept a condition to its CON requiring it to provide 1.5% Medicaid and 2% charity care. In comparison, Fawcett was not certified for Medicaid until late 1989 and its experience since that time has not been substantiated. This tends to underscore the Department's contention that Medicaid and charity patients are under-served within the Charlotte County area. Other criteria outlined within the statute have not been shown by evidence presented, as being significantly affected one way or the other by the implementation of St. Joseph's proposed program. Several of the statutory criteria are, in fact, not applicable to the proposed project in this case. Much the same can be said for the criteria outlined in Rule 10-5.011(1), F.A.C., which tend to overlap to a substantial degree with the statutory review criteria. Fawcett claims that the application filed with the Department by St. Joseph is "very incomplete" in that it omits significant information regarding project costs, capital expenses, source of funds, and a litany of other required information. It claims, therefore, that the Department could not have conducted any meaningful review of the application based upon the information provided. The Department's representative, Ms. Dudek, admits that most, if not all applications omit some information. That is the purpose of the omissions letter which is sent to an applicant after initial review. Not all information called for by the statute is deemed essential however. If an omission is considered immaterial, it will not cause the application to be denied, all other essential material being provided. There are primarily two criteria called for by the statute which are essential to Departmental approval. The first deals with the applicant's access to resources to develop and operate the project, and the second is that the applicant offer quality care. In this case, both were deemed to have been met as was stipulated to by Fawcett. In the instant case, the Department's representative concluded that St. Joseph's application was one of the most thorough and comprehensive, in terms of presentation and backup, to have been filed within the past few years.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be entered by the Department approving St. Joseph's application for an inpatient cardiac catheterization laboratory, (CON #6202) for District VIII. RECOMMENDED in Tallahassee, Florida this 4th day of April, 1991. ARNOLD H. POLLOCK, 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 4th day of April, 1991. APPENDIX TO RECOMMENDED ORDER CASE NO. 90-5815 The following constitutes my specific rulings pursuant to Sec 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: 1. & 2. Accepted and incorporated herein. 3. & 4. Accepted. 5. & 6. Accepted. 7. - 10. Accepted and incorporated herein. 11. & 12. Accepted. 13. & 14. Accepted and incorporated herein. Accepted. Accepted and incorporated herein. Accepted. & 19. Accepted and incorporated herein. 20. & 21. Accepted and incorporated herein. 22. - 26. Accepted and incorporated herein. 27. - 34. Accepted. Rejected. - 39. Accepted. 40. - 42. Accepted and incorporated herein, except for the first sentence of Finding 41. Rejected. Accepted and incorporated herein. & 46. Accepted. Rejected. Rejected. - 51. Accepted and incorporated herein. Accepted. Accepted. Not proven. - 59. Accepted and incorporated herein. Accepted that the loss of revenue will have an impact but the loss has not been shown to be substantial. - 65. Accepted and incorporated herein. 66. & 67. Accepted. 68. - 76. Accepted incorporated herein in substance. Rejected that the loss of revenue would "cripple" the health trend. It would adversely affect it but not cripple it. - 83. Accepted and incorporated herein. 84. - 90. Accepted. Accepted. Accepted and incorporated herein. - 97. Accepted that there are alternatives, but rejected that they are acceptable or adequate. Rejected as too broad a statement. Rejected as to the conclusion of waste. & 101. Accepted. Ultimate conclusion rejected. Need for level of education and experience accepted. Accepted. Underlying fact accepted. Balance is editorialization. - 108. Accepted. Accepted. Not an appropriate Finding of Fact. Accepted. & 113. Accepted and incorporated herein. 114. - 116. Rejected. Accepted. & 119. Rejected. 120. & 121. Accepted and incorporated herein. Rejected. - 126. Accepted. 127. & 128. Accepted. 129. & 130. Rejected. 131. & 132. Accepted. 133. & 134. Rejected. Not a Finding of Fact but a comment of the state of the evidence. Accepted. & 138. Accepted. Accepted. Rejected. & 142. Accepted. Rejected. St. Joseph was a Hill-Burton hospital. Accepted. Accepted that St. Joseph receives funds from taxes and other sources, but the conclusions that aid to Medicaid an the indigent "is to be expected" is an unjustified conclusion. 146. Accepted. 147. Accepted but probative value questionable. 148. Accepted that it is less costly. 149. First two sentences accepted. Remainder not proven. 150. Rejected. 151. & 152. Accepted in the short term. 153. Accepted. 154. Not proven. 155. Rejected. 156. - 158. Rejected. 159. & 160. Accepted. FOR THE RESPONDENT AND INTERVENOR: 1. - 3. Accepted and incorporated herein. Accepted. - 8. Accepted and incorporated herein. Accepted. - 13. Accepted. 14. - 16. Accepted and incorporated herein. Accepted. & 19. Accepted and incorporated herein. 20. & 21. Accepted. 22. - 24. Accepted and incorporated herein. Accepted and incorporated herein. - 28. Accepted and incorporated herein. Accepted and Incorporated herein. - 35. Accepted and incorporated herein. 36. - 41. Accepted and incorporated herein. Accepted. - 45. Accepted and incorporated herein. 46. & 47. Accepted. 48. & 49. Accepted and incorporated herein. 50. & 51. Accepted. 52. - 54. Accepted and incorporated herein. 55. - 58. Accepted. 59. & 60. Accepted and incorporated herein. Accepted. Accepted. & 64. Not Findings of Fact but a comment on the state of the evidence. 65. & 66. Accepted and incorporated herein. Not a Finding of Fact but a statement of party position. Not a Finding of Fact but a comment on the evidence. & 70. Accepted and incorporated herein. 71. & 72. Accepted and incorporated herein. Accepted. Accepted. Not a Finding of Fact but a comment on the evidence. Accepted. - 80. Accepted and incorporated herein. Accepted but irrelevant to the issues here. Accepted but considered more a statement of party position and a comment on the evidence. & 84. Accepted and incorporated herein. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted and noted in the Conclusions of Law portion of the Recommended Order. - 100. More proper as Conclusions of Law than as Findings of Fact, but accepted where pertinent. COPIES FURNISHED: John D. C. Newton, II, Esquire Aurell, Radey, Hinkle & Thomas Suite 1000, Monroe-Park Tower P.O. Drawer 11307 Tallahassee, Florida 32302 Richard Patterson, Esquire DHRS 2727 Mahan Drive Tallahassee, Florida 32308 R. Terry Rigsby, Esquire Philip Blank, P.A. P.O. Box 11068 Tallahassee, Florida 32302 Linda K. Harris Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Sam Power Agency Clerk DHRS 1323 Winewood Blvd. Tallahassee, Florida 32399-0700
Findings Of Fact Surgicare III is a Florida general partnership comprised of Surgicare Corporation, a wholly owned subsidiary of Medical International, Inc. (MCI) and Surgicare III of Jacksonville, Inc., a Florida corporation. MCI is the nation's largest provider of ambulatory surgical centers operating 34 such centers throughout the United States. MCI will manage the proposed facility under a management contract. The proposed facility will be financed 25 percent equity and 75 percent debt. Petitioner is financially capable of constructing and operating the proposed facility. While Surgicare had not finalized its site selection at the time of the hearing, it proposes to construct the facility in or near Brandon, with the primary service area to comprise Hillsborough County east of U.S. 301. Exhibit 15 is a unilateral prehearing stipulation by Surgicare to construct the facility in the above-described service area if the requested certificate is granted. There are many advantages of outpatient surgery in a freestanding facility over inpatient surgery and over outpatient surgery in an inpatient environment such as an acute-care hospital, of which cost is significant. Without belaboring the issue, it is accepted as a fact that many surgical procedures requiring general anesthesia and taking from a few minutes up to six hours can be performed in an outpatient setting where the patient goes home following the surgery and does not remain in the hospital overnight. Most, if not all, of these outpatient surgeries are elective and freestanding outpatient surgical centers are less costly to the patient, more convenient to the patient and to the surgeon, and provide a better environment for the patient than do most hospital outpatient facilities. Furthermore, the advent of freestanding outpatient surgical facilities has provided competition to hospitals which has resulted in lowering of hospital charges for outpatient surgery. Hillsborough County comprises one service area which includes 13 hospitals and one existing ambulatory surgery center, and a certificate of need has been issued to Surgical Services of Tampa to provide additional outpatient surgical facilities. DHRS has no rule methodology to determine need for additional ambulatory surgical facilities; however, a methodology has been established as a policy under which need for ambulatory surgery centers is determined. This policy has been in effect for an extended period of time; and, with two exceptions, is accepted by Petitioner as the proper method from a health planner's view to determine the need for additional outpatient surgical facilities. These exceptions are the percentage of surgeries expected to be performed in an outpatient setting during the second year of operation of the proposed facility and calculations of need based on a subdivided county. This methodology takes the latest available information for hospitals in the service area as to the number of surgeries, both inpatient and outpatient, performed in each hospital during this latest available period which, in this case, was calendar year 1984. The number of surgeries performed in Hillsborough County divided by the population of Hillsborough County will result in a surgical rate. Since the year in which Petitioner is expected to pass through the break-even point and show a profit is 1989, the population is projected to 1989 and multiplied by the surgical rate to determine the number of surgeries projected for 1989. Those 13 hospitals in 1984 performed 52,482 inpatient surgical procedures and 20,152 outpatient surgical procedures (a total of 72,834) when the Hillsborough County population was 715,435. Using these figures, the surgical rate of Hillsborough County in 1984 is 72,634/715,315 x 1,000 = 101.5 procedures per 1,000 population; the outpatient surgical rate is 24.5 per 1,000; and the Ambulatory Surgery Center is 3.7 per 1,000 (Exhibit 12). With a 1989 population projection of 757,309 in Hillsborough County, the outpatient surgeries performed in hospitals in 1989 will be 24.5 x 787,309/1,000 = 19,289 and Tampa Ambulatory Surgery Center surgeries will be 2,913 (3.7 x 787,309/1,000) or a total of 22,202 outpatient surgeries performed at existing facilities plus an additional 2,222 outpatient procedures to be performed at Surgical Services of Tampa, which will be fully operational at that time. The disputed percentage is the expected percentage of total surgeries which will be performed on an outpatient basis in 1989. Petitioner contends this figure should be 34, while Respondent contends 30 to be the correct percentage. Both parties attempt to extrapolate outpatient surgery percentage provided by the American Hospital Association. In certificate of need hearings involving freestanding ambulatory centers in 1984, DHRS used a figure of 29 percent, which was the mean of 18 percent and 40 percent, the former being the number of outpatient surgical procedures performed in 1981 and the high figure the AMA's estimate of the ultimate percentage of surgical procedures that could be performed in an outpatient setting. Since 1981 the percentage of surgeries performed in an outpatient setting has increased. In 1984 the percentage of total surgeries in Hillsborough County that were performed in an outpatient setting was 27.74 percent. Freestanding outpatient surgical facilities are a recent innovation in the health care provider field. Due to the lower costs associated with outpatient surgical procedures over inpatient surgical procedures, the advent of freestanding outpatient surgical centers has brought much needed competition to the health care provider field and has induced hospitals to provide for outpatient surgery and lower their charges for the use of these facilities. As a result the percentage of surgeries performed in an outpatient setting has grown rapidly in recent years, perhaps at an exponential rate. However, this growth is not unlimited and, as the percentage curves of outpatient surgeries versus total surgeries approaches this limit, the curve flattens. Today nearly all ophthalmic procedures are performed in an outpatient setting; there will be little further percentage growth in that field. Petitioner's contention that outpatient surgeries will increase percentage-wise at the same rapid pace they have increased during the past few years and be at 34 percent in Hillsborough County in 1989 is less credible than is the figure of 30 percent used by Respondent. A proliferation of freestanding outpatient surgical facilities will have the effect of increasing the costs to those patients whose surgery, now done in a doctor's or dentist's office, is shifted to a freestanding outpatient facility. As noted by one of Petitioner's witnesses in these proceedings, his malpractice insurance could be reduced if he performed in an outpatient surgical facility those operations he is currently performing in his office. Obviously, the patient so affected would be charged for the services of an anesthesiologist and other outpatient surgical facility services for which he is not charged when the office surgery is performed. Petitioner further supports the need for this facility by proposing to serve the eastern half of Hillsborough County, which will comprise its service area. Of the 13 hospitals in Hillsborough County, only three are located east of U.S. 301 and none of these has dedicated outpatient operating rooms. There are no official census figures or projections therefrom showing the population of the eastern portion of Hillsborough County in 1984 and DHRS does not so divide Hillsborough County for health care planning purposes. The county is one service area and Petitioner's attempt to subdivide the eastern portion into a sub-area is inconsistent with statewide procedures. Multiplying the surgical rate in Hillsborough County of 101.5 per 1,000 population by the 1989 projected population of 787,309 equals 79,912 surgeries to be performed in 1989. If 30 percent of these are performed in an outpatient setting, the outpatient surgeries will be 23,974. The Hillsborough County hospital outpatient surgeries projected to 1989 are 19,289 and those outpatient surgeries to be performed at Tampa Ambulatory Surgery Center are 2,913. Adding these latter figures results in 22,202 outpatient surgical procedures to be performed in existing facilities. Altogether 2,222 outpatient surgical procedures are projected to be performed at Surgical Services of Tampa. Thus, by 1989 existing and approved facilities will perform 24,424 outpatient procedures and the projected need is 23,974. This results in an excess capacity or negative need of 450 outpatient surgical procedures in Hillsborough County for 1989.
The Issue This proceeding was initiated when HRS proposed to deny San Marco's application for Certificate of Need No. 3304 for an ambulatory surgical center in Jacksonville, Duval County, Florida. San Marco filed a timely petition for formal hearing. Initially four intervenors were involved: Baptist, Memorial, Surgical Services of Jacksonville, Inc. and Medivision of Duval County, Inc. Surgical Services filed its Notice of Voluntary Dismissal on March 7, 1985, and Medivision withdrew on October 28, 1985. At the hearing, San Marco offered evidence through eight witnesses and 28 exhibits; HRS presented one witness and one exhibit; and the two intervenors presented nine witnesses and 26 exhibits. Certain exhibits, by stipulation of the parties, were entered as "Hearing Officer Exhibits." Those four exhibits included the state agency action plan, the petitioner's application for CON, a three-volume state health plan and the District IV health plan The primary issue is whether San Marco is entitled to Certificate of Need No. 3304 for an ambulatory surgical center which will include two operating rooms. During the course of the proceeding several ancillary issues developed; those issues are summarized here and are addressed in the body of this recommended order: In determining need for a free-standing ambulatory surgery center, is it appropriate to consider evidence of out- patient surgical services provided by hospitals? (Petitioner's Motion in Limine, T-9). Is the project proposed by San Marco an "ambulatory surgical center" as defined in subsection 381.493(3)(a), Florida Statutes? (Respondent's Motion to Dismiss, T-500). Should the intervenors, Baptist and Memorial be dismissed for failure to establish standing? (Petitioner's Motion for directed verdict, T-1182). The briefs, memoranda and proposed orders of the parties have been carefully considered in the preparation of this Recommended Order. A specific ruling on each proposed finding of fact is included in the Appendix attached hereto. On March 25, 1986, Petitioner filed a Motion for Restricted Reopening of Record. Basis for the motion is Medivision's withdrawal of its application for certificate of need. The motion is denied.
Findings Of Fact The Parties San Marco is a limited partnership. The owners are Stuart Yachnowitz, individual general partner and sole limited partner; Surgi-Centers of America, Inc., (SCA), a Florida corporation, corporate general partner; and Jacksonville Women's Health Organization, Inc., a Florida corporation, (JWHO), corporate general partner. The sole shareholders of SCA are Stuart Yachnowitz, his father, Joseph Yachnowitz and Susan Hill. The owners of JWHO are Joseph and Stuart Yachnowtiz. (T-47, 48, CON application pp. 20-23). San Marco intends to include local physicians in the ownership of the surgicenter. (CON application p. 40) The surgieenter will be managed by Y and S Management Corporation, the company now providing management services to JWHO. Y and S Management Corporation is owned by Joseph and Stuart Yachnowitz. Including JWHO, it manages eight licensed abortion clinics throughout the country as well as two free-standing ambulatory surgery centers (FSACs) which primarily perform abortions. Susan Hill, the chief operating officer for Y and S for the past ten years, prepared the CON application for the surgicenter. (T-47-49, 108-111). The building at 1561 San Marco Boulevard in Jacksonville, currently occupied by JWHO for its licensed outpatient abortion clinic, will be renovated and occupied by San Marco. The facility will be expanded from approximately 3000 square feet to 4700 square feet. Two operating rooms (ORs) will be added along with ancillary facilities necessary for licensure as an ambulatory surgical center. (Petitioner's Exhibit #1, CON application p. 4, T-52, 54, 55). Abortions will continue to be performed at the facility at an estimated rate of 168 procedures a month. (Petitioner's Exhibit #2, T-102, 103). Other surgical procedures will be added in the categories of gynecology, general surgery, and plastic surgery at the projected rate of 15 per month for the first month of operation to 90 per month after a little over a year's operation. The 90 additional procedures per month is anticipated to continue through the second year of operation. (Petitioner's Exhibit #2, CON application p. 40, T- 102, 103). San Marco anticipates drawing some patients for the additional procedures from its existing caseload and utilizing some physicians who currently practice at the abortion center. (T-62, 63, 101, 102, 247). Memorial is a not-for-profit acute care hospital, located in Duval County in close proximity to the San Marco facility. Since May 1985, Memorial has been providing outpatient surgery services in a dedicated outpatient facility adjacent to the acute care hospital. The same day surgery" facility contains two laser rooms and four operating rooms. (T-854, 913, 914). Baptist is a not-for-profit acute care general hospital also located within close proximity to the San Marco facility. It currently provides outpatient surgical services in twelve ORs and 3 cystoscopy rooms in its main facility. Sometime around August 1987, its new adjacent 17-story structure, The Pavillion, is anticipated to open. The fourth floor of that facility will be dedicated to outpatient surgery and will include four operating rooms and two cystoscopy rooms. (T-939, 984, 987, 988, 1045, 1047). HRS reviewed San Marco's application and determined that it should be denied on the following basis: "There appears to be an insufficient projected number of outpatient procedures to allow this facility to be viable." (State Agency Action Report, September 6, 1984). The State and Local Health Plans The 1985-1987 State Health Plan does not directly address the need for additional ambulatory surgical centers. It adopts as an objective that ". . . By 1989, 30 percent of all surgical operations should be performed on an outpatient basis." (Vol. II p. 81). It addresses ambulatory surgical centers as an alternative delivery system which lowers costs by substituting less costly services. (Vol. II p. 76). And, it outlines a brief history of the increase of ambulatory surgical centers in Florida during the decade of the 1980s. It acknowledges, "As in the case of hospitals, saturation of the marketplace for outpatient surgery has caused new entrants into the field to be more highly specialized in order to attract sufficient business. (Vol. II p. 27). HRS District IV includes Duval, Nassau, Baker, Clay, St. Johns, Flagler and Volusia counties. The 1985 District IV Local Health Plan adopts sub-area boundaries in planning for certain specialized services, including ambulatory surgery. Sub-area A is comprised of Baker, Nassau, Duval, Clay and St. Johns counties. (p. 112). In contrast to the State Health Plan, it makes specific recommendations: that sub-area boundaries should be used for planning purposes; that no additional units should be approved prior to the adoption of state rules; and that no ambulatory surgery units should be added to the district through 1986, when the agency will review the matter again. (p. 20). Utilizing 1983 data to base its projections and the need methodology of a challenged draft state rule, it concludes that Sub-area A has a surplus of 14 ambulatory surgical units. (p 143). Existing Like Facilities and Other Alternatives to the Proposed Service. Ambulatory surgery is typically performed in three types of facilities: general hospitals which mix inpatient and outpatient surgery in main operating rooms; hospitals which maintain separate "dedicated" outpatient operating rooms, sometimes even in adjacent buildings; and free-standing surgical centers which are unassociated physically or administratively with a hospital. (T. 387-390). Testimony in this proceeding was virtually unanimous as to the distinct disadvantages of serving surgical outpatients in a non-dedicated operating room setting. The mingling of' less ill or well outpatients with seriously ill inpatients increases the opportunity for contagion, heightens patient anxiety, deprives patients of access to their families, presents scheduling problems (including the bumping of outpatients in emergencies), and generally increases the cost of the service to the outpatient consumer. (T-386, 388-392, 1125- 1128). Both Baptist and Memorial have recognized the need for separate, dedicated operating rooms. The comparison of hospital-based dedicated ambulatory surgery rooms with free-standing ambulatory surgery rooms stirs somewhat more controversy. There are advantages and disadvantages to both. A hospital-based unit may or may not be more accessible to the physicians. While doctor's offices are often near hospitals, parking still is a problem. While some patients might prefer to avoid a hospital setting altogether, some are comforted by the proximity in the event of an emergency or decision to recuperate overnight. While costs are generally lower in a free-standing facility, there may be an advantage to having the expensive equipment immediately available in some cases (T-241-246, 392, 758-760,996, 1000-1001). If comparing non-dedicated ORs to free-standing ambulatory centers is comparing apples to oranges, then comparing hospital-based ambulatory centers to free-standing ambulatory centers is comparing red apples to green apples. Personal preferences often dictate the choice, but either one will make a pie. There exists no adopted rule governing methodology for determining need for ambulatory surgery centers. In this proceeding, each party presented its own methodology through an expert witness. Those methodologies are described as follows: Petitioner's Need Methodology Howard Fagin, PhD, was qualified as an expert in Health Planning and Health Economics without objection. (T-377) In his opinion there is a need for additional ambulatory surgery rooms. His opinion is based on a four-step process which includes: Analysis of the service area and population within that service area; Review of existing facilities providing comparable or related services; Examination of the utilization of those services within the existing facilities; and Analysis of the need for new health care facilities based upon population and need for new services in the area. 393, 394) Dr. Fagin identified Duval County as the primary service area, and Nassau, Baker, Clay and St. Johns counties as the secondary service area. The surrounding counties depend on Duval for their medical care in many cases. Together, the primary and secondary service areas comprise HRS District IV, Sub- area A (Local Health Plan, p. 112). Population figures are taken from those compiled and projected by the Executive Office of the Governor. (T.-396) For several reasons it is difficult to obtain data on out-patient surgical procedures in Florida. Out-patient surgery is a relatively new phenomenon; some hospitals do not separate in-patient from out-patient procedures in reporting; other hospitals count cases rather than procedures. (T-398) Dr. Fagin felt comfortable with data obtained from the state and from the N. E. Florida Health Planning Council, as adjusted with the use of data obtained from Baptist and Memorial for 1982, 1983, and 1984. (Petitioner's exhibits #11, 12 and 13) For 1984, he figured 31.1 percent of the surgical cases in Duval County were out-patient cases, with the trend increasing. (T-403) Petitioner's Exhibit #15 is the summary of Dr. Fagin's need analysis with two columns, one assuming an out-patient surgery rate of 35 percent of total surgeries, and the other assuming a rate of 40 percent. The number of available ambulatory surgery rooms (24) is based upon the availability of four rooms in one recently opened free-standing ambulatory center (AMI) and twenty other free-standing or dedicated (used only for out-patients) operating rooms in Duval County hospitals. The analysis assumes that the rooms will be operated five days a week, two hundred and fifty days a year (5 days x 52 weeks, minus 10 days for holidays and "down-time"). The figure of 960 cases per year, per room, is further derived from the assumptions the room will be operated 6 hours a day, an average case (including preparation, surgery, and cleanup) will take 1.25 hours, and the rooms will be utilized 80 percent of the time. In addition to the number of cases described to dedicated and free-standing rooms through that process, 3000 cases are presumed to be done each year in non-dedicated operating rooms. This figure is derived from rounding off the reported 3030 out-patient cases in non-dedicated units in 1983. The rationale for including those cases is that due to lack of sufficient free-standing units, the out-patient services must be provided in the regular hospital OR environment. The number of such cases, according to Dr. Fagin, should decrease as the number of free-standing units increases. (T. 414-415). Dr. Fagin's methodology applied to various hypothetical fact situations yields the following conclusions as to need for (+), or excess of (- ), free-standing ambulatory surgery operating rooms: Assuming a service area including all of HRS District IV, Sub-area A, 24 currently available rooms; and 960 cases per room per year: (Petitioner's Exhibit #15) 35 percent 40 percent + 6 rooms + 10 rooms Same assumptions as A, above: (intervenor`s Exhibit #16) 30 percent rate + 1 room Same assumptions as A, above, except limited to Duval County: (Intervenor Exhibit #17) 30 percent 35 percent 40 percent -4 rooms -1 room +2 rooms Same assumptions as A, above, except 31 existing rooms, instead of 24: (Intervenor Exhibit #18) 30 percent 35 percent 40 percent not calculated -2 rooms +3 rooms Same assumptions as A, above, except 31 existing rooms and service area limited to Duval County: (Intervenor Exhibit #19) 30 percent 35 percent 40 percent -11 rooms -8 rooms -5 rooms Same assumptions as A., above, except 1200 cases per room per year, instead of 960: (Intervenor Exhibit #20) 30 percent 35 percent 40 percent -4 rooms -1 room +3 rooms Same assumptions as A, above, except 1200 cases per room and 31 existing available rooms: (Intervenor Exhibit #21) 30 percent 35 percent 40 percent -11 rooms -8 rooms -4 rooms Same assumptions as A, above, except 1200 cases per room, 31 existing available rooms and Duval County only: (Intervenor Exhibit #22) 30 percent 35 percent 40 percent -15 rooms -13 rooms -10 rooms HRS Need Methodoloy Reid Jaffe, Medical Facilities Consultant for the Office of Community Medical Facilities, was qualified as an expert in health care planning with emphasis on certificate of need. (T-533) He explained the ambulatory surgical center need methodology as summarized in DHRS Exhibit #1. The Department typically uses a single county as its planning area for ambulatory surgery applications. (T-556). Therefore, the data is based on Duval County population and services provided by Duval County facilities. To obtain the volume of surgical procedures in Duval County hospitals, letters were written requesting the break-out for the period February 1984-January 1985. While the process is not an exact science, Mr. Jaffe feels that since the Department asks for the same type of information over a period of time, the anomalies in the figures will become obvious. (T-569). Based upon the returns to the questionnaire, the Duval total surgery rate, (out-patient and in-patient) was determined as 97.7 per 1000 population; the out- patient surgery rate was determined to be 30.2 per 1000 population. The July, 1987 population projection was 623,091. Need was projected at both 30 percent out-patient to total surgeries and 40 percent out-patient to total surgeries. The out-patient surgical potential (number of procedures) is derived from subtracting the hospital out-patient surgical volume from the projected number of procedures needed at a 30 percent and 40 percent rate. From that line was deducted the projected breakeven procedures for each of three free-standing ambulatory surgery centers in various stages of development in Duval County. The 30 percent rate yielded a bottom line of 5,922 excess procedures, and the 40 percent rate yielded a bottom line of 165 procedures remaining for some other facility to perform (unmet need). Since HRS considers the facility breakeven point to be considerably more than 165 procedures per year, it concludes that no additional facilities are required at this time. HRS did not explain its assumption that the rate of surgeries performed on an out-patient basis at hospitals would remain constant (30.2 per 1,000 population), while the overall percentage of out-patient surgeries to total surgeries would increase to 40 percent. (DHRS #1, T-569-576). Intervenor's Need Methodology Michael Swartz testified for Memorial and Baptist as an expert in health care planning and hospital administration. (T-704) He rejected the second-hand data utilized by both Petitioners' and HRS' experts. He devised a poll that was sent to all area hospitals and attempted to verify the responses through direct contacts and, in some instances, a walk-through of the facilities and review of hospital records. Information reported in State Agency Action reports was used for St. Luke's, since that one hospital failed to respond. (T- 704-707, 711-713). Like the other need methodology experts in this proceeding, Mr. Swartz relied on population projections from the Executive Office of the Governor. (T- 711). The geographical service area was considered Duval County, because that is what the state considers and in Mr. Swartz' opinion an ambulatory surgery center draws from a less than 30-minute driving period. (T-712). Mr. Swartz found in his data gathering that, while the number of surgeries per 1000 population has fluctuated only slightly, the mix of surgeries (in-patient to out-patient) has shown a dramatic increase in out-patient procedures. (Intervenor's Exhibit #5, T-722). After determining what he considered were the actual numbers of surgeries performed in 1983 and 1984, the actual number of operating rooms in Duval County, and the actual amount of time spent for each case, including clean-up, he determined that the bottom line showed a utilization rate of only 27.8 percent of existing surgical suites in Duval County in 1984. (Intervenor's Exhibit #6, T-729). Utilizing a fixed use rate of 103.3 surgery cases per thousand, Mr. Swartz projected an excess capacity of 109,214 cases in hospitals in 1986 and 1987, and an excess capacity for 19,279 cases in free-standing surgical centers (including AMI, Surgicare III and Medivision) in 1986 and 1987. (Intervenor's Exhibit #12 and #14, T-749, 750). The most fatal flaw in Mr. Swartz' ultimate conclusion, that there is a current and projected excess of surgery suites in Duval County, is that after his painstaking data-gathering process he lumped together all types of existing operating rooms and assumed they were all equally appropriate to handle in- patient and out-patient surgeries. This assumption is contrary to the weight of evidence in this proceeding. Of the three methodologies presented, I find Dr. Fagins most reasonable. It requires some adjustments, however, to conform to the evidence. Proceeding from Petitioner's Exhibit #15, I find the 40 percent out-patient surgery rate reasonable and consistent with credible expert testimony from all sides in this case. (Howard Fagin - T-413; Reid Jaffe - T-573; Rena Blackmer - T-106l; Carol Whittaker-T- 990: Eileen Fullernveider, T- 1125). Utilization of Subdistrict A as the service area is also 4 appropriate here. It is consistent with the District IV local health plan and recognizes the fact that Jacksonville draws from outlying counties for the sophisticated range of medical services it provides. (T-254, 255) while ordinarily free-standing surgery centers might be more neighborhood oriented and draw from a closer geographical area, it is noted that Duval is the only county in Subdistrict A with free-standing or dedicated operating rooms and for that reason patients could be expected to travel into Jacksonville. (Petitioner's Exhibit #14) The one-hour travel time addressed in the CON application, p. 226, would include some travel from the outlying counties. Reid Jaffe, the HRS expert, does not agree with the local health plan because it would be unlikely that a resident of a county that has a hospital or multiple hospitals in it and that have ambulatory surgical programs, to bypass those closer facilities just to go to Jacksonville." (T-554, 555). In the absence of dedicated ambulatory surgical programs, however, some patients very likely would travel to Jacksonville. The continued projection of 3000 cases in non-dedicated operating rooms is reasonable, since not all ambulatory surgery patients would travel to Jacksonville. Further, even when it completes its new ambulatory center, Baptist anticipates continuing to conduct approximately 2096 of its out-patient surgeries in the main ORs. (T-1063, 1064, 1085). Patient and physician loyalty would also account for some continued out-patient surgeries in those hospitals without dedicated ORs. The population projection for 1988 is appropriate, given a two-year planning horizon and the fact that the final hearing in this proceeding was continued until the end of 1985. The surgical rate of 102.94 per 1000 population is slightly higher than the 97.7 rate utilized by HRS but, just under the 103.3 rate utilized by Intervenor's expert, Howard Swartz. (Intervenor's Exhibit #14). Petitioner's Exhibit #15 understates the available ambulatory surgery rooms projected for 1988. A second free- standing ambulatory surgery center has been approved for Jacksonville and has completed its legal proceedings: Surgicare III, with 3 operating rooms. (T-562, Surgical Services of Jacksonville v. HRS, 479 So.2d 120, Affirmed 11/18/85). The record in this proceeding does not clearly reveal the status of a third surgical center, Medivision, with two rooms dedicated to opthomologieal surgery. Since that facility may still be in legal limbo, its rooms are not being counted. While Intervenor, Baptist, on cross examination posited a hypothetical application of Petitioner's methodology which included seven additional available rooms, no competent evidence followed up to substantiate any more than three additional beds. The available ambulatory surgery rooms factor in the methodology is therefore adjusted to 27. Petitioner's methodology also understates "available capacity" by understating the number of cases which could be handled per room, per year. While Dr. Fagin's methodology utilized 960 cases per room, per year, the weight of evidence and expert opinion established that at least 1300 cases per room, per year is a more realistic approximation. Intervenor's need expert, Michael Swartz, determined capacity based on ten available hours per day, five days a week, at 75 percent effici-ency (American College of Surgeons Standard) to be 2,077 cases per room, per year. (Intervenor's Exhibit #9, T-735- 737). The Hill-Burton standard utilized to determine the need for construction funds in the 1970's was 1200 cases per year, based upon data collected in the 1960s when the average time for a ease was 2 hours. (T-740, 741). Average time today is far less. (T-149, 240, 1064) Petitioner's own projected utilization assumes a capacity for 2 operating rooms, with evening and Saturday scheduling to be 300 procedures a month. (Petitioner's Exhibit #2). This translates into 1800 procedures per year, per-room. while recognizing that counting procedures rather than cases yields a higher number, San Marco never asserted that it anticipates performing two procedures for almost every case it handles. Yet this ratio is the only means of reconciling the difference between its expert's projection and that of its administrator. The above-described adjustment to Petitioner's need methodology results in the following adaptation of Petitioner's Exhibit #15: 40 percent Am. Surg. Subdistrict A 1988 Population Surgical Rate Total Surgery 861,120 102.94/1000 pop. 88,644 Ambulatory Surgery 35,457 Available Am. Surg. rooms 27 Available capacity (1300 cases) 35,100 Am. Surg. in Hospitals 3,000 Net Need Cases -2,643 Net Need Rooms - 2 Quality Of Care San Marco will occupy a building presently occupied by the Jacksonville Women's Health Organization, a licensed abortion clinic. If the certificate of need is granted, the existing building will be remodeled to provide two operating rooms and ancillary facilities required for licensure as an ambulatory surgical facility. HRS witness Reid Jaffe does not question the ability of the structure to meet requirements for licensure and does not question the ability of the proposed center to provide quality care. (T-584). The center will develop bylaws and protocols to maintain quality of care. To practice at the center, a physician must be licensed in Florida and must have privileges in good standing at a local hospital (T-59, 60). Jaroslav Fabian Hulke, M.D., was accepted as an expert in obstetrics and gynecology. He has had extensive experience in teaching and conducting out- patient surgery. (Petitioner's Exhibit #7). He has become personally familiar with Y & S Management's facilities and with their staff through his work at the center in Raleigh, North Carolina. He has also observed the facility in Jacksonville and assisted Susan Hill in developing the equipment list for the facilities. His high commendation of Miss Hill, her facilities and the planned equipment was without equivocation; his testimony as to the anticipated quality of care to be offered by this facility is most credible. (T-351, 353, 355). Anesthesia classifications range from I to IV depending on the condition of the patient. Class I and II are relatively healthy. The San Marco center will handle class I and II; some hospital out-patient units handle class III patients on a selected basis. (T-114, 141, 1120). Statistics on emergencies and deaths in free-standing ambulatory centers are not available now. The Free-standing Ambulatory Surgical Association (FASA) is in the process of gathering data. (T-1129, 1153, 1154). Depending on how they are run, equipped and staffed, the free-standing centers are considered extremely safe. (T-1128). Nothing in this proceeding would hint that the proposed administration, staffing or equipment for San Marco is less than high quality. Staffing By their Prehearing Stipulation filed on October 25, 1985, the parties agreed that there exists in Duval County an adequate labor pool of health manpower and management personnel to staff an ambulatory surgical facility. San Marco has the ability, experience and intention to obtain adequate, well- trained personnel to provide staffing for the proposed center. (T-72-75, 232- 236, 351-352). Physical and Economic Accessibility The parties have stipulated that the proposed facility is geographically available to all residents of Duval County. (Prehearing Stipulation, filed October 25, 1985). While the center will focus on the Duval County area, it also will likely draw from surrounding counties to a lesser degree. The existing abortion center already serves the wider area and as found in paragraph 12 above, no free-standing ambulatory center or dedicated out- patient ORs exist in Subdistrict A outside Duval County. For that reason, patients could be expected to drive as much as an hour to get to the facility. (CON application, p. 226). San Marco claims that it will serve 15 percent medicaid and 5 percent medicare patients. (CON application pp. 91-136). The Raleigh-Surgi-Center was used as a model since it is the one facility that receives medicaid reimbursement for non-abortion procedures. (T-89,160). However, while Medicaid does not reimburse for abortions, the State of North Carolina provides state funds and apparently those patients are computed in Raleigh's 21.6 percent figure. (T-89,90). The validity of the model is undermined by the fact that no such reimbursement occurs in Florida. (T-161). Even though the 20 percent Medicaid and Medicare projection is overstated, economic accessibility is enhanced by the willingness of the center to reduce fees for abortion procedures for otherwise Medicaid eligible patients by $50.00 or $60.00, which sum represents the management fee portion of the procedure cost. (T-158-160). More significantly, the projected standard fee for other than abortion procedures, $300.00 - 400.00, is substantially lower than fees at hospitals, including hospitals with separate ambulatory units. (T- 57, 81-82, 907, 1070, 1071, Petitioner's Exhibits #19, 20, 21, 22). Capital Costs and Financial Feasibility The total anticipated project cost for the proposed center is $246,000.00, including $80,000.00 for renovation of the building and approximately $133,000.00 for the purchase of equipment. (T-94-98, 172-173, 327). Capital is available for project start-up through the personal funds of millionaires, Stuart and Joseph Yachnowitz. (T-172). In its review of the application, HRS concluded: "There appears to be an insufficient projected number of out- patient procedures to allow this facility to be viable." (State Agency Action Report, Hearing Officer Exhibit #1). At hearing, HRS witness Reid Jaffe testified that because of the co-mingling of revenues from the abortion center and the proposed ambulatory surgery center, the financial feasibility of the project could not be determined. (T. 588, 589). On the other hand, if the revenues are co-mingled and if the projections in the applicant's pro formas are accurate, then the facility ought to do better than break even. (T-600-601). Christopher Fogel, Petitioner's expert accountant, represents Y & S Management and the ten out-patient facilities owned by Joseph and Stuart Yachnowitz. (T-182, 183) His financial projections for the proposed facility are found in Petitioner's Exhibits #5 and #6. The first projection is based upon the fee of $300.00 per procedure, for one hour of OR time, and the second is based upon $400.00, for 1.3 hours of OR time. The projections presume the facility would continue to offer its existing services (abortions) at its current level and expand to 250, 500 or 1000 procedures per year. At the $300.00 per procedure level, the facility would begin to make money with 500 additional procedures a year. However, by adding back 50 percent of the management fees (profit in the fees available to the Yachnowitz') and adding back depreciation and amortization, a positive cash flow results without any additional procedures, and increases substantially for 250, 500 and 1000 procedures at both the $300.00 and $400.00 per procedure rate. (T-198-206). Given the worst case scenario (no additional procedures), the owners are losing money only for tax purposes, but are actually increasing cash flow through the legitimate tax deduction of a loss which is not a loss of cash. (T-206). H. Impact on Competition The introduction of a free-standing ambulatory center in Duval County had a positive dynamic effect on existing traditional providers of surgical care in Duval County. Prices were lowered and more hospitals began out-patient surgery programs of their own. While the changes in costs and methods of surgical services is also attributable to pressure and incentives from insurers, no one disputes that the competition from AMI (the one free-standing facility in Duval County that is currently operational) was healthy. (T-639, 640, 1132, 893-894, 1061, 996- 997, 239). HRS health care planning expert, Reid Jaffe is of the opinion that currently the four ORs at AMI, the two opthalomological ORs at Medivision, and the 3 general ORs of Surgicare III (approved but not yet opened) are sufficient competition to the hospitals and to each other (T-564- 565, 643). No one seriously contends that the addition of San Marco's 2 ORs would put an existing facility out of business. Memorial's Chief Financial Officer, Earl Winston Lloyd, expects his facility's new out-patient unit to continue to be profitable with or without San Marco. Memorial's out-patient facility has exceeded Memorial's expectations in its productivity and profitability (T. 871- 874). John Anderson, Chief Financial Officer at Baptist, is concerned that Baptist will lose at least 35 procedures per month which are currently being performed at Baptist by physicians who have indicated an interest in practicing at San Marco. (Intervenor's Exhibit #23, T-943-945). However, he doesn't know whether those same doctors are performing out-patient surgeries in other facilities or whether those surgeries might be the ones that are taken to San Marco. (T-976). Rena Blackmer, Director of Surgical Services at Baptist, testified that when competing out-patient units opened at A.M.I., Memorial and St. Lukes, she felt initially that Baptist was losing a share of the market, but there has not been a continuing adverse effect. (T-1062). In 1985, Memorial`s excess revenue over expenses was approximately $2.5 million, with gross patient revenues of $80-82 million. (T. 863, 864). In 1985, excess revenue over expenses for Baptist was approximately $10 million. A $4.6 million loss on refinancing a debt is not included in that total; however, the $4.6 million is a balance sheet entry which impacts the income statement and is not a cash item. (T-956, 957) Total operating revenue in 1985 was $96 million. (T-955) David Mobley M.D. is a plastic surgeon who has been medical director of the Jacksonville Womens Health Organization since 1976. He practices at Baptist Medical Center, and his name appears on Intervenor's Exhibit #23 as one of the doctors whose out-patient surgeries the hospital is concerned about losing to San Marco. Dr. Mobley performs in his private office approximately ten surgeries a week that he would like to transfer to San Marco. Among as those cases are performed in his office, he is reimbursed only the fee that he receives for the same procedure done in a hospital. He absorbs the cost for his operating room at his office, his staff and supplies. (T- 247, 248). For the patient or his insurer however, the cost for the procedure would be at least twice as much in a free-standing surgery center as in the physician's office. (T-268). San Marco: Abortion Clinic or Ambulatory Surgical Center? From all the evidence in this proceeding the uncontrovertible fact emerges that when and if it is approved, San Marco Surgi-Center will merge with the Jacksonville Women's Health Organization and the two entities will make up a single health care facility: the building is the same; the equipment is the same; the owners are primarily the same; the managers are the same; and for purposes of predicting financial success, the revenue and expenses of the two entities have been considered one and the same. San Marco projects that even after two years of operation as a surgical center, a majority of its procedures will remain abortions. (Petitioner's Exhibit #2). Abortions are accomplished in health care facilities through a variety of surgical techniques, the most common of which is dilation and evacuation (D & E). (T-346, 347). Even though D & E's are expected to predominate at the facility in terms of projected number of procedures (168 per month, compared to 90 other surgical procedures per month, by June 1988), the D & E's will not predominate either in gross revenue from fees or in the anticipated OR time. San Marco anticipates the average patient charge for surgeries other than abortions to be $400.00 per case and the average OR time to be 1.3 hours. (T-93, 149). The non-medicaid patient charge for a D & E is $185.00, and the time in the OR room is generally about twenty minutes. (T-148, 158). Taking the same month, June 1988, and multiplying the number of abortions first by fee, then by OR time, yields a total of $31,080 in fees and 55.4 hours in the OR room. The same process for the 90 other surgical procedures yields $36,000.00 in fees and 119.7 hours OR time.
Recommendation Based on the foregoing, it is recommended that Certificate of Need #3304 be denied. DONE and ORDERED this 2nd day of April, 1986, in Tallahassee, Florida. MARY CLARK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of April, 1986. APPENDIX TO RECOMMENDED ORDER, CASE NO. 84-3712 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner Adopted in substance in paragraph 3. Adopted in paragraph 1. Adopted in substance in paragraph 2. The surgical procedures are summarized by category in paragraph 3. Adopted in substance in paragraphs 2, 16 and 24. Rejected as cumulative and unnecessary. Adopted in substance in paragraphs 16 and 19. Adopted in substance in paragraphs 25 and 26. The statement of John Anderson's testimony is unnecessary, Rejected as cumulative and unnecessary. Adopted in substance in paragraph 26. Rejected as cumulative and unnecessary. Substantially adopted as summarized in paragraph 26. Adopted in part in paragraph 23, otherwise rejected as unnecessary. Adopted in part in paragraph 23, otherwise rejected as unnecessary. Adopted in part in paragraph 23, otherwise rejected as unnecessary. Adopted in substance in paragraph 12 and 21. Adopted in substance in paragraph 12, 13 and 21. Adopted in substance in paragraph 13. Adopted in substance in paragraph 13. Adopted in substance in paragraph 4. Adopted in substance in paragraph 5. Adopted in part in paragraph 5, otherwise rejected as unnecessary. Rejected as irrelevant and unnecessary. Adopted in paragraph 20. Rejected as irrelevant. Rejected as explained in paragraph 22. Rejected as unnecessary. Policy memorandum #7 is addressed in Conclusion of Law No. 3; otherwise this is rejected as a finding of fact. Rejected as unnecessary. Rejected as repetitive. Adopted in substance in paragraph 24 and 26. Adopted in substance in paragraph 21. Adopted in paragraph 9. Rejected as cumulative. Adopted in paragraph 9, otherwise rejected as contrary to the weight of evidence or unnecessary. Adopted in part in paragraph 29, otherwise rejected as unnecessary. Adopted in substance in paragraph 28. Rejected as cumulative and unnecessary. Rejected as cumulative and unnecessary. Adopted in substance in paragraph 28. Adopted in paragraph 28. Adopted in part in paragraph 28, otherwise rejected as cumulative and unnecessary. Rejected as cumulative and unnecessary. Adopted in paragraph 29 as to the profit of $10 million dollars, otherwise rejected as unnecessary. Rejected as cumulative and unnecessary. Rejected as cumulative and unnecessary. As addressed in conclusions of law #10 and #11, the impact on Baptist was found to be minimal and insufficient to support "standing". Adopted in paragraph 10. Rejected as unnecessary. Rejected as unnecessary. Adopted in substance in paragraphs 10 and 11. Rejected as cumulative and unnecessary. Rejected as cumulative and unnecessary. Rejected as cumulative and unnecessary. Rejected as cumulative and unnecessary. Rejected as cumulative and unnecessary. Adopted in substance in paragraph 11. Rejected as cumulative and unnecessary. Rejected as cumulative and unnecessary, except as to the apples/oranges analogy, which is adopted in paragraph 9. Rejected as cumulative and unnecessary. Rejected as cumulative and unnecessary. Rejected as cumulative and unnecessary. Adopted in paragraph 11. Adopted in paragraph 10, as to the characterization of Dr. Fagin's testimony. Otherwise, rejected as summary of testimony rather than findings of fact. The adoption of 40 percent as reasonable is found in paragraph 12. Rejected as contrary to the weight of the evidence. HRS Need Methodology is rejected in paragraph 10.(b) and paragraph 12 as being less reasonable than Petitioners' experts methodology. Rejected as essentially argument, rather than findings of fact. Rejected as contrary to the weight of evidence. Rejected as repetitive. Adopted in substance in paragraph 33 and Conclusion of Law #3. Rejected as argument unsupported by the weight of evidence. Rejected. See paragraph 7 for discussion of State Health Plan. Rejected as argument, rather than finding of fact. No paragraph of this number is found in Petitioner's Proposed Findings of Fact. Adopted in Conclusions of Law, paragraph 4. Rulings on Joint Proposed Findings of Fact Submitted by the Respondent and Intervenors. (Note, the numbers in the left column conform to the numbering of the joint proposed findings) 1. Adopted in substance in paragraph 1, 2 and 3. Adopted in paragraph 6. Adopted -In paragraph 4. Adopted in paragraph 5. 1. Adopted in paragraph 7. Adopted in paragraph 8. Rejected as irrelevant. Adopted in part in paragraph 8, otherwise rejected as unnecessary. Rejected as irrelevant. Adopted in substance in paragraph 10(b). Rejected as contrary to the weight of the evidence. Adopted in part in paragraph 10, otherwise rejected as unnecessary. Rejected as a re-statement of testimony, rather than finding of fact 10.c. Description of Mr. Swartz' methodology is provided in paragraph Rejected as irrelevant. Rejected as irrelevant. 13 - 21. Rejected as unnecessary. Adopted in substance in paragraph 10. Rejected as unnecessary. Rejected as contrary to the weight of evidence, except as reflected in paragraph 10. Adopted in part in paragraph 10.b., otherwise rejected as unnecessary. 25A. Adopted in part in paragraph 10, otherwise rejected as unsubstantiated by competent substantial evidence. Adopted in part in paragraph 10, otherwise rejected as unnecessary. Adopted in part in paragraph 22 and 23, otherwise rejected as unnecessary. 1. Adopted in substance in paragraph 31. Adopted in substance in paragraph 31. Rejected as contrary to the evidence by considering all uncontroverted testimony and evidence describing the facility. Adopted in part in paragraph 32 and 33, otherwise rejected as irrelevant. Adopted in part in paragraph 32 and 33, otherwise rejected as irrelevant. Rejected as contrary to the weight of the evidence. Adopted in part in paragraph 31, 32 and 33, otherwise rejected as irrelevant. Rejected as irrelevant. Rejected as contrary to the weight of the evidence. 1. Rejected as unnecessary. Rejected as argument that is unnecessary or unsupported by competent substantial evidence. Adopted in substance in paragraph 27. 1. Rejected as cumulative. Rejected as cumulative. Rejected as unnecessary. Adopted in part in paragraph 4, 5 and 10, otherwise, rejected as unnecessary. Adopted in substance in paragraph 9. Adopted in substance in paragraph 9. Adopted in part in paragraph 4 and 5, otherwise rejected as unnecessary. Rejected as cumulative. Addressed in Conclusion of Law 6. 1. Adopted in paragraph 17. Rejected as irrelevant. Rejected as irrelevant. 1. Rejected as cumulative. 2. Rejected as mere re-statement of testimony rather than a finding of fact. 1. 1. 1. 1. Adopted in paragraph 20. Adopted in part in paragraph 24, otherwise rejected as irrelevant or contrary to the weight of evidence. Rejected as irrelevant. 1. Adopted in part in paragraph 26, otherwise rejected as irrelevant. Adopted in paragraph 24. Rejected as irrelevant. 1. Addressed in Conclusion of Law 4. 1. Addressed in Conclusion of Law 4. 1. Rejected as unnecessary argument. Adopted in part in paragraph 27, otherwise rejected as unnecessary. Rejected as the description of an exhibit and characterization of testimony. Adopted in part in paragraph 30, otherwise rejected as unnecessary. 1. Adopted in paragraph 24. COPIES FURNISHED: William J. Page, Jr., Secretary Department of HRS 1323 Winewood Blvd. Tallahassee, Florida 32301 Steve Huss, Esquire General Counsel Department of HRS 1323 Winewood Blvd. Tallahassee, Florida 32301 Chris H. Bentley, Esquire William E. Williams, Esquire Jeannette Andrews, Esquire Post Office Box 1739 Tallahassee, Florida 32302 Douglas Mannheimer, Esquire Richard Power, Esquire Post Office Drawer 11300 Tallahassee, Florida 32302 Michael J. Dewberry, Esquire Christopher Hazelip, Esquire 1300 Gulf Life Drive Jacksonville, Florida 32207 Robert Meek, Esquire Post Office Box 240 Jacksonville, Florida 32201 =================================================================
The Issue The ultimate issue to be resolved in this proceeding is whether the SSDB's proposal to construct a freestanding ambulatory surgery center in Volusia County, Florida, should be approved or denied. SSDB and the Department contend that the proposal meets statutory criteria and comports with the Department's rules. SSDB and the Department contend that there is a need for the facility and that SSDB is fully competent to construct and operate the facility. OBMH and HHMC contend that there is no need for the proposed facility, that the facility is not likely to be an economically viable venture, that the facility would injure existing businesses, and that the application should be denied because SSDB did not file a letter of intent with the local health council in a timely manner.
Findings Of Fact SSDB is a corporation that is a wholly owned subsidiary of Surgical Inc. Eighty percent of the stock of Surgical Services, Inc., is owned by American Medical International, Inc., a large, multinational health care corporation which owns and operates hospitals and other health care services. American Medical International is the third largest health care provider in the United States. The remaining 20 percent of Surgical Services, Inc., stock is owned by Randall L. Phillips, the company's president. SSDB is proposing to construct and operate a freestanding ambulatory surgery center in Daytona Beach, Volusia County, Florida. The service area for the proposed facility would be Volusia County. This facility would house four operating rooms and would be designed to handle all types of surgical procedures that can be performed on an outpatient basis. SSDB has entered into a contract to purchase land that provides a suitable site for the facility. It is located at the intersection of Clyde Morris Boulevard and Mason Avenue in Daytona Beach. The contract price for the property is $270,000. In addition to the cost of land acquisition, the preopening costs of the project would total $2,080,000. That amount would cover legal and accounting fees, architectural and engineering fees, a site survey, consulting fees, construction costs, movable equipment costs, and other engineering expenses. The preopening cost estimates are less than the $2,500,000 estimated in the original Certificate of Need application. The reduction is attributable to cost efficiencies primarily in selection and purchase of equipment. The costs estimated by SSDB are adequate to cover all preopening expenses and to provide an adequate facility. Financial support for the facility will be provided by American Medical International. This will include an equity contribution, a loan, and all necessary working capital. American Medical International has committed to provide financing adequate to construct and operate the facility. American Medical International has the financial resources to fulfill this commitment. The facility proposed by SSDB would be 15,500 square feet in size. The design is adequate for the proposed use and satisfies applicable health care facility standards and state and federal laws. The equipment proposed for the facility is sufficient to allow the handling of anticipated types of procedures. The facility will be open to all physicians qualified to perform the types of surgery that can be tone within an ambulatory setting. The facility will accept Medicare patients. The facility will admit any patient scheduled by surgeons, and ability to pay will not be a criterion for admission. SSDB has developed a marketing program to attract physicians and patients to the facility. SSDB has proposed adequate staffing for its facility and will be able to fulfill its staff requirements. SSDB is fully competent, given its backing by American Medical International, to construct and operate the proposed facility. OBMH is a Florida nonprofit corporation. It operates a 205-bed hospital in Volusia County, Florida, and renders medical services to residents of Volusia County and surrounding areas. OBMH presently renders ambulatory surgical services on an outpatient basis in connection with its surgery department. MEMO is a special taxing district. It operates a 345-bed hospital in Volusia County, Florida, and services residents of Volusia County and surrounding areas. HEM has a same-day surgery program and renders ambulatory surgical services through this procam on an outpatient basis. Ambulatory surgical services can be performed either in a hospital- based setting such as operated by OBMH and HHMC, or in a freestanding facility such as proposed by SSDB. HHMC presently has 12 general-purpose operating rooms. The HHMC same-day surgery program utilizes these rooms, but has a separate admitting area and waiting room that is utilized for inpatient surgery cases. OBMH has four general-purpose operating rooms. Outpatient or ambulatory surgeries are regularly performed in these rooms. There are presently 41 general-purpose operating rooms in Volusia County's eight hospitals. Outpatient or ambulatory surgical procedures are performed in these rooms. The Florida Health Care Plan is a health maintenance organization located in Volusia County. It has three operating rooms here inpatient or ambulatory surgery procedures are performed for members of the organization. The Neuman Dye Institute is a freestanding ambulatory surgical center licensed by the Department. It is located in DeLand, Volusia County, Florida. It has two operating rooms which are used for treatment of eye disorders. Approximately 15 percent of the surgeries performed in hospitals in Volusia County during the year August 1, 1982, through July 31, 1983, were done on an outpatient basis. The total number of surgical procedures performed in Volusia County has increased only slightly during the past three years. The number of impatient procedures has decreased, while the number of outpatient procedures has increased rather dramatically. This increase reflects a national trend which increasingly favors ambulatory or outpatient surgeries. It is likely that the number of outpatient cases as a percentage of total surgeries will continue to increase in Volusia County. The 15 percent figure for outpatient surgeries relates only to those procedures conducted in a hospital setting. It does not include procedures performed at the health maintenance organization, the Neuman Eye Institute, or in physicians offices. One major source of patients for ambulatory surgery programs is elective plastic surgery procedures. Two of the plastic surgeons who practice in Volusia County have their own operating rooms where ambulatory surgical procedures can be conducted. These physicians are not likely to use a separate, freestanding facility. The remaining plastic surgeons in Volusia County have utilized the same-day surgery facility at HHMC and have expressed satisfaction with that program. Existing facilities in Volusia County are adequate to accommodate the anticipated growth and the number of outpatient or ambulatory surgeries that will be performed during the next three years in Volusia County. Hospital surgical facilities in Volusia County are significantly underutilized at present. Existing facilities have the capacity to accommodate a more dramatic increase in total surgical procedures and in outpatient surgical procedures than is anticipated over the next three years. Given the existence of the hospital facilities, the Neuman Eye Institute, the health maintenance organization, and operating rooms located in physicians' offices, adequate facilities exist to accommodate the increased demand for outpatient surgeries that is anticipated in Volusia County. SSDB is proposing to offer its services to the public during the first year of operation for an average charge of $490 per procedure. The cost would increase to $540 for the second year. The average per-case cost for outpatient surgeries at HHMC is $393. The average per-case cost at OBMH is $439. Given the fact that one case can Involve multiple procedures, it is evident that existing facilities in Volusia County are charging less for ambulatory surgical services than SSDB proposes to charge. While some increases in present charges are likely, given general trends, it is not likely that HHMC or OBMH will charge as much for outpatient surgical procedures as SSDB proposes to charge. It has been asserted that HHMC's charges for outpatient surgeries are inadequate to cover HHMC's costs and that the charges are being kept low artificially. The evidence is to the contrary. HHMC's charges for outpatient surgeries are adequate to meet the facility's expenses. The facility proposed by SSDB does not present any cost savings to patients. Services at the proposed facility would be more expensive than the same services at existing facilities in Volusia County. Freestanding surgical centers have generally presented some advantages to physicians no consumers. In many places, outpatient surgeries are difficult to schedule in a hospital setting because they are susceptible of being bumped by surgeries that are considered more urgent. Furthermore, in many locations, physicians have had difficulty scheduling their outpatient surgeries in blocks of cases so that they can perform them more efficiently. Those problems have not occurred in Volusia County. Physicians who regularly perform outpatient surgeries in hospitals in Volusia County have been able to schedule their cases in blocks and have experienced no difficulties with bumping. SSDB has projected that its proposed facility would experience an acceptable loss during its first year of operation, but that it would show a net profit during its second and third years of operation. These estimates are based upon projections that 2,160 procedures would be performed at the facility at an average rate per procedure of $490 during the first year and 2,640 procedures at an average rate of $540 during the second year. These projections are unrealistic. The projections contemplate that approximately one-third of all outpatient surgeries in Volusia County would be performed at the proposed facility. The projections also contemplate a very dramatic increase in the number of outpatient surgeries and that more than 60 percent of the increased outpatient procedures would be done at the proposed facility. While it is likely that the number of outpatient surgeries performed in Volusia County and elsewhere will continue to increase as a percentage of total surgeries and that eventually as much as 30 percent of all surgeries performed in Volusia County will be done on an outpatient basis, the increase is not-likely to occur in a single year. Even if It did, it is unlikely that local physicians and consumers cold so dramatically reject present facilities as SSDB projects. Indeed, there is no evidence from which it could be concluded that there is any dissatisfaction on the part of physicians or consumers in Volusia County with present facilities. The evidence is to the contrary. A second reason why the projections are inaccurate is that in making the projections SSDB ignored the existence of the Neuman Eye Institute, the health maintenance organization, and operating rooms that have been established in physicians' offices. A third reason is that SSDB proposes to provide services at a higher cost than at existing facilities. A fourth reason is that SSDB has underestimated the proportion of Medicaid and Medicare cases that are likely to be performed at the facility at a cost that is less than the average cost per procedure proposed by SSDB. It is unlikely that SSDB could operate at a profit during its first three years of operation. At the time that SSDB filed its letter of intent and application with the Department of Health and Rehabilitative Services, there was no local health council in existence Volusia County, Florida. SSDB did not file a copy of its letter of intent or application with the local health council and would have had no place to file it if it attempted to do so.
Recommendation That a final order be entered by the Department of Health and Rehabilitative Services denying the Application for Certificate of Need filed by Surgical Services of Daytona Beach, Inc. RECOMMENDED this 31st day of October, 1983, in Tallahassee, Florida G. STEVEN PFEIFFER Assistant Director 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 31st day of October, 1983. COPIES FURNISHED: Fred Baggett, Esq. Michael J. Cherniga, Esq. Post Office Drawer 1838 Tallahassee, Florida 32302 Jay Adams, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Richard B. Orfinger, Esq. 619 North Grandview Avenue Daytona Beach, Florida 32018 Harold C Hubka, Esq. Post Office Box 5488 Daytona Beach, Florida 32018 Mr. David Pingree, Secretary Department of Health and Rehabilitative Services Winewood Boulevard Tallahassee, Florida 32301
Findings Of Fact I. Proposed findings of Medivision and DHRS Included in HO # 1. Accepted insofar as included in HO # 13. Included in HO # 2. Included in HO #6. Included in HO #5. Accepted insofar as included in HO #11. Included in HO 8 and 9. Included in HO 3 and 10 and 12, 13, and 14. Rejected insofar as inconsistent with HO #16. Accepted insofar as included in HO #2. Accepted. Not deemed relevant to results reached. Accepted insofar as included in HO #18. Included in HO #2. Accepted. Not deemed relevant to results reached.- Included in HO #2. Rejected as inconsistent with HO #14 and 15. Rejected as inconsistent with HO #15,16, and 17. Rejected as inconsistent with HO #15,16, and 17. Accepted. Not relevant to results reached. Accepted only insofar as included in HO #19. Included in HO #13, 14. Included in HO #18. Accepted. Not relevant to results reached. Rejected insofar as inconsistent with HO #l3. Included in HO #21. Included in HO #15. Included in HO #15, 16, 19, and 20. PROPOSED FINDINGS WFRMC Included in preliminary portion of RO. Accepted insofar as included in HO 42. Rejected as irrelevant. Rejected as irrelevant. Rejected as irrelevant. Included in preliminary portion of RO. Included in HO #6. Included in HO #6. Accepted insofar as not in conflict with HO #8. Rejected as irrelevant. Rejected as stating a negative. Accepted insofar as in agreement with HO #8. Accepted. Included in HO #20. Included in HO #21. Included in HO $17. Accepted. Included in HO #8. Accepted. Accepted insofar as included in HO #13. Included in Ho #21. Included in HO #16. Included in HO #16. Included in HO #16. APPENDIX JOINT PROPOSED FINDINGS OF BAPTIST HOSPITAL AND SACRED HEART HOSPITAL Accepted. Relevant portions are included in HO #1. Included in HO #4. Included in HO #3. Included in HO #3. Included in HO #3. Included in HO #6. Included in HO #8. Included in HO #7. Included in HO #8. Included in HO #10. Included in HO #10. Accepted insofar as included in HO #15. Accepted insofar as included in HO #12 and 16. Accepted insofar as included in HO #16. Rejected as conclusion of law Included in HO #18. Included in HO #18. Included in HO # 2. Rejected as not relevant. Included in HO #2. Included in HO #18. Accepted insofar as included in HO #8,9, and 15. Accepted insofar as included in HO #17. Included in HO #18. Accepted insofar as included in HO #16. Accepted. Not included because irrelevant and immaterial. Figures rejected as speculative. Accepted insofar as included in HO #17. Accepted insofar as included in HO #17. Rejected as inconsistent with HO #18. Rejected as conclusion of law. Rejected. Non-rule policy not applicable to specialty ambulatory surgery centers. ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES MEDIVISION OF ESCAMBIA COUNTY, INC., Petitioner, vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, CASE NO. 85-2443 Respondent, and WEST FLORIDA REGIONAL MEDICAL CENTER, SACRED HEART HOSPITAL OF PENSACOLA and BAPTIST HOSPITAL, INC. /
Findings Of Fact MCH was constructed circa 1973 as an acute care hospital and before 1980 had 126 medical-surgical beds authorized including eight intensive care beds. MCH is a for-profit hospital owned by Hospital Corporation of America. It is financially able to fund the proposed addition. In 1980 it received a certificate of need (CON) to add 64 medical-surgical beds for a total bed capacity of 190 medical-surgical beds. These beds came on line in January 1982. MCH here proposes to add a 54-bed unit for oncology patients; to add six operating rooms to use primarily for eye, ear, nose and throat surgical procedures on an outpatient basis; and a new eight-bed surgical intensive care unit located on the first floor adjacent to the existing surgery department. Currently, the hospital has two oncologists on staff who use a 16-bed unit dedicated to the treatment of cancer. Space exists for the additional operating room so the net result is an application for an additional 62 beds. The application also included expansion of general stores and maintenance and the addition of a parking structure, which were granted, leaving only the issue of need for the 62 additional beds requested at a cost of $7 million. When constructed MCH had an eight-bed ICU primarily for coronary care patients located on the second floor of the hospital in the opposite wing from the surgery department on the first floor. It has added a four-bed ICU on the fourth floor by converting two semiprivate medical-surgical rooms. The ratio of ICU beds to total beds in 1973 was 8:126 which is nearly identical to the current ratio of 12:190. The evidence was unrebutted that the ICU at MCH is usually full, that on occasion patients have to wait in the emergency room until a less ill patient can be moved from a bed in ICU, and that the more ICU beds are available the more they will be used. This use was attributed to the doctors desiring their patients to be in an ICU and to testimony that current surgical procedures are more sophisticated than formerly and a greater need exists today for a surgery patient to go to an ICU than existed 15 years ago. In its application for a CON (Exhibit 18) MCH's estimated charge for a medical-surgical bed is $100-150 per day and its estimated charge for ICU beds and SICU beds is $350 per day. The primary service area for MCH is Marion County. Petitioner submitted evidence that nearly 20 percent of the cancer patients diagnosed in Marion County in 1981 came from the surrounding counties of Citrus, Lake, Sumter, and Levy. Accordingly, MCH contends that its primary service area for oncology patients should include these counties. Evidence was also submitted that MCH has been certified by medical associations as an approved cancer treatment hospital; that oncology service is a service generally provided in regional hospitals which provide Level III medical treatment; and, therefore, MCH should be considered on a different scale than Level II services. No evidence was presented that any health systems plan ever considered MCH as a regional cancer hospital or established any bed need for cancer patients at MCH. The evidence was also unrebutted that cancer patients at MCH are primarily treated by chemotherapy; that the drugs used in the treatment are extremely toxic, some have a short life span after being mixed and must be used almost immediately; that having a mini-pharmacy in the cancer ward is highly desirable; that special training of nurses is required to safely administer these drugs to patients; that patients develop nausea, ulcers in the mouth and throat, and present special feeding problems, and because of these special feeding problems it is advantageous to have some facilities in the cancer ward to prepare food at odd hours for patients; that cancer is a "personal" disease, patients desire more privacy, and should have private rooms; that an area away from the patient's room where the patient can visit with his or her family and the family can consult with the doctor in some privacy is desirable; that some newer drugs require hospitalization of the patient for treatment with these drugs, but the hospital stay is shorter and the drugs may be used over longer periods of time; and that the patient needs the security that comes from developing a feeling of trust by the patient of the nurses and doctors who are administering to his needs. MCH has no radiation treatment facilities in the hospital. However, the hospital staff has access to a Linear Accelerator which is located in a private physician's office on MCH's campus. Several witnesses testified to the need for additional beds for cancer patients at MCH; that patients have had to wait several days for a vacant bed; some oncology patients have had to be placed in other wards at MCH; and that special treatment and special training for nurses are required for oncology patients. Marion Regional Medical Center (MRMC) is a nonprofit hospital owned by the Marion County Hospital District, a public body established by statutes with taxing powers in Marion County. MRMC is currently expanding its facilities by 80 beds to the authorized 314-bed hospital pursuant to a CON approved in 1981. The $23 million for that project was financed by revenue bonds issued by Marion County Hospital District. Preliminary bids indicate the original project will be under the estimated cost resulting in a $2-3 million savings. If the additional beds here requested are approved and the construction associated therewith can be accomplished concurrently with the present construction, a saving of nearly $1 million can be obtained. MRMC is the only full service hospital in Marion County and provides medical, surgical, obstetrical, pediatric, psychiatric, intensive care, coronary care, and neurological/neurosurgical services. It has the third most active Emergency Room in the state and receives approximately 45 percent of its admissions through this service. MRMC's proposed project calls for the construction of a sixth floor on the hospital, construction of 66 inpatient beds, and the conversion of a 20-bed pediatric unit for use as a labor and delivery suite, a net gain of 46 beds. As initially proposed, this would provide for eight additional pediatric beds, four pediatric intensive care beds, and 34 medical-surgical beds to be used as a pulmonary medicine unit. Before the hearing the request for additional pediatric beds was withdrawn, leaving a request for 34 additional hospital beds and four pediatric intensive care beds, a total of 38 medical-surgical beds, at a cost of $2.8 million. It was stipulated that both MCH and MRMC provide an acceptable quality of care and operate efficiently. The application satisfied the criteria in Section 381.494(6)(c) with the possible exception of need, and need is the only issue in dispute in these proceedings. Both applicants submitted evidence that they accept all patients regardless of their ability to pay; however, MCH is a private for-profit hospital whose bad debt and charity care amounts to two percent of its gross revenues. MRMC's patient load is four percent indigent and bad debts, and charity care amounts to 12 percent of its gross revenues. Exhibit 18 shows MCH patient utilization to be 61 percent Medicare and one percent Medicaid, and MRMC patient utilization to be 51 percent Medicare and five percent Medicaid, in 1981. There is currently "applicable district plan" or "annual implementation" as provided for in Section 381.494(6)(c)1, Florida Statutes (1982). The implementation of this statute has been stayed by rule challenges. The North Central Florida Health Planning Council, Inc. (NCFHPC), was the Health Systems Agency (HSA) for what was formerly known as Health Service Region II which included only Marion County as a district sub-area. Prior to the July 1, 1982, amendment of Florida's CON law, the HSA reviewed applications and made recommendations with written findings of fact to DHRS. The 1982 CON law eliminated HSA, accordingly the NCFHPC no longer exists. The former HSA recommended approval of the applications of both MCH and MRMC; however, the staff of the HSA recommended disapproval of both applications. For the determination of need in these proceedings, a planning horizon of five years is acceptable and was used by all parties. Thus, the need for the requested CON is assessed for the year 1988. At this time the population of Marion County is forecast to be 165,880. The percentage of persons 65 and older in Marion County is increasing in proportion to the remainder of Marion County's population, and this increase will continue through 1988. This "aging" of the population is occurring throughout the United States as people live longer and demographics change with differing birth rates at differing periods. No evidence was submitted that the percentage of people over 65 is greater in Marion County than in other parts of Florida. MCH has 190 authorized medical-surgical beds and MRMC has 244 authorized medical-surgical beds, for a total of 434 such beds authorized in Marion County in two hospitals across the street from each other in Ocala, Florida. With the 1982 amendment to the CON statute the HSA in Marion County ceased to exist and has been replaced by a local health council. Rule challenges have stayed the promulgation of a comprehensive state health plan and the only Health Systems Plan in being for Marion County is the revised 1983 Health Systems Plan (HSP). This plan was approved by the HSA for Marion County in June of 1982 and contains goals, objectives and standards for planning for the health services required in Marion County. Standard 1-1 provides the need for medical-surgical beds within each Level II planning area (Marion County) should be based on the actual 1980 medical-surgical bed need per 1,000 population in this area. Standard 2-1 provides no additional beds should be added to a community's total bed supply until the occupancy rate of medical- surgical beds in the community exceeds 85 percent if more than 200 such beds are available in the community. The generally accepted standard for occupancy rate above which more beds may be needed is 80 percent. However, where beds are concentrated in one area, which is the case in Marion County where 434 medical- surgical beds are authorized, 85 percent occupancy leaves a reasonable surplus of beds to cover most emergencies or unusual situations that would cause the bed availability to be exceeded. The need for medical-surgical beds per 1,000 population (use rate) in Marion County in 1980 was 2.41. The HSP has a goal of 3.5 beds per 1,000 population and an objective of 4.0 beds per 1,000 population by 1987 in Region II. Applying the 1980 use rate to the 1988 forecast population of Marion County results in a need for 400 medical-surgical beds. The Health Systems Plan update for Marion County defines medical- surgical beds as all hospital beds which are not reserved solely for the use of pediatric, obstetrics, or psychiatric patients. At the time the revised Health Systems Plan for Marion County was promulgated, the two hospitals, MRMC and MCH, had been authorized an additional 80 and 65 beds, respectively, and these beds were being placed in service. By prescribing a use rate for 1980 as the standard to be used in considering applications for additional medical-surgical beds in 1983 and for a year or two thereafter, it would be reasonable to conclude the HSA expected the use rate for the years 1981 and 1982 to be influenced by the addition of the recently authorized 144 beds and to not accurately reflect a reliable use rate for planning purposes. MRMC and MCH presented expert witnesses who, by using different modalities, containing different assumptions, arrived at a need for additional beds in Marion County in 1988 ranging from 97 to 200. Most of these modalities used an occupancy rate of 3.5 beds per 1,000 population and 80 percent utilization of beds. All assume increasing usage of medical-surgical beds by the increasing and aging population. In their application MRMC and MCH planned to finance these projects with rate increases of 11 percent per year (to keep even with inflation) and a continuing increase in the number of patients handled at these higher rates. While inflation may again be up to 11 percent or higher, it is generally accepted today that the current inflation rate is five percent or less. More than 50 percent of both MRMC and MCH patients are presently covered by Medicare, which pays 80 percent of the charges generated by these patients. To assume that this situation will not only continue in the face of current federal deficits, but grow to cover the increased use of these facilities predicted in the assumptions used to show increased bed need for 1988, is not necessarily a valid assumption. Evidence was presented that the number of doctors in Marion County has doubled in the last five years. The ratio of doctors to the population of Marion County for 1977-78 and 1982-83 was not presented nor was the percent increase in the number of doctors in the United States over the past five years. Without some basis for comparison, the fact that the number of doctors in a particular community doubled over a five-year period has no relevancy.
