The Issue At issue here is whether Memorial should be authorized to operate the cardiac catheterization service it has already initiated. The parties have stipulated that criteria specified in Section 381.494(6)(c)(5), (7), (9), (10) and (13), Florida Statutes (1983), are not in contention and that Section 381.494(6)(d)(5), Florida Statutes (1983), does not apply. Still in dispute is whether Memorial's application conforms to the criteria set out in Section 384.494(6)(c)(1), (2), (3), (4), (6), (8), (11), (12) and (6)(d)(1), (2), (3) and (4), Florida Statutes (1983), and Rule 10-5.11(15), Florida Administrative Code. Among the parties' posthearing submissions are proposed findings of fact. By order entered February 3, 1984, Fort Myers Community Hospital's motion to strike DHRS' proposed findings of fact, conclusions of law and final order was denied. Proposed fact findings have been considered in preparation of the following findings of fact, and have been adopted, in substance, except where not supported by the weight of the evidence, immaterial, cumulative or subordinate.
Findings Of Fact Community and Memorial are in Fort Myers, Florida, about three miles apart. Since 1974, Community has offered cardiac catheterization services. Memorial instituted these proceedings in hopes of obtaining authority to establish a second cardiac catheterization service in Fort Myers. Memorial already had an arteriographic radiology room and had only to spend approximately $232,835 in order to acquire a polydiagnostic-parallelogram, a cine pulse M-400 single plane system, a 35 millimeter camera, a "CMB-A Combilabor 2 Cine" film processor and a film projector. With this new equipment, Memorial has gained cardiac catheterization capability, but it is still unequipped for open heart surgery. Memorial instituted cardiac catheterization service in July of 1983. Under an agreement between the hospitals, Memorial's Exhibit No. 5, cardiac patients at Memorial needing open heart surgery can be transferred to Community, once the need is apparent. DISTRICTS In 1981, and as late as the time of the hearing, Lee, Collier, Hendry, Glades, Charlotte, Sarasota, DeSoto, Highlands, Hardee and Polk Counties comprised District 8. As of October 1, 1983, however, the district shrank to seven counties, with the shift of Highlands, Hardee and Polk Counties to District No. 6. In 1981, there were three cardiac catheterization laboratories in what was then District 8: one each at Community, Lakeland Regional Medical Center and Sarasota's Memorial Hospital. Lakeland Regional in Polk County is now in District 6. Population projections for the ten counties originally in District 8 are as follows, for the years 1981, 1982, 1983, 1984 and 1985: 1981 Total Population Percent 0-64 Total Percent 0-64 65+ Total 65+ Percent 0-14 CHARLOTTE 62088.0 66.146 41086.6 33.854 21019.4 12.258 COLLIER 91456.8 80.428 73557.1 19.572 17899.7 18.464 DESOTO 19531.2 83.715 16350.5 16.285 3180.7 21.719 GLADES 6153.6 84.737 5214.4 15.263 939.2 22.697 HARDEE 19663.2 88.488 17399.6 11.512 2263.6 27.396 HENDRY 19339.2 91.255 17647.9 8.745 1691.3 28.362 HIGHLANDS 49460.8 73.075 36143.6 26.925 13317.2 17.605 LEE 215752.8 77.297 166770.2 22.703 48982.6 17.485 POLK 329801.6 85.519 282043.7 14.481 47757.9 21.750 SARASOTA 209440.8 69.897 146392.8 30.103 63048.0 13.664 SUM OF COUNTIES DISTRICT8 1022688.0 78.470 802588.5 802508.3 21.530 220099.5 220179.7 18.389 PROJECTION 1982 Total Population Percent 0-64 Total Percent 0-64 65+ Total 65+ Percent 0-14 CHARLOTTE 65716.0 66.255 43540.2 33.745 22175.8 12.258 COLLIER 96942.6 79.921 77477.6 20.079 19465.0 18.464 DESOTO 20023.4 83.655 16750.5 16.345 3272.9 21.719 GLADES 6315.2 84.177 5316.0 15.823 999.2 22.697 HARDEE 19947.4 88.350 17623.5 11.650 2323.9 27.396 HENDRY 20079.4 91.112 18294.8 8.888 1784.6 28.362 HIGHLANDS 51395.6 72.509 37266.4 27.491 14129.2 17.605 LEE 226239.6 76.941 174070.8 23.059 52168.8 17.485 POLK 337951.2 85.350 288440.7 14.650 49510.5 21.750 SARASOTA 216630.6 69.761 151124.0 30.239 65506.6 13.664 SUM OF COUNTIES DISTRICT8 1061241.0 78.184 829904.3 829719.6 21.816 231336.7 231521.4 18.389 PROJECTION 1983 Total Population Percent 0-64 Total Percent 0-64 65+ Total 65+ Percent 0-14 CHARLOTTE 69344.0 66.364 46019.7 33.636 23324.3 12.258 COLLIER 102428.4 79.414 81342.5 20.586 21085.9 18.464 DESOTO 20515.6 83.594 17149.8 16.406 3365.8 21.719 GLADES 6476.8 83.617 5415.7 16.383 1061.1 22.697 HARDEE 20231.6 88.211 17846.5 11.789 2385.1 27.396 HENDRY 20819.6 90.969 18939.5 9.031 1880.1 28.362 HIGHLANDS 53330.4 71.942 38367.1 28.058 14963.3 17.605 LEE 236726.4 76.585 181296.7 23.415 55429.7 17.485 POLK 346100.8 85.180 294810.1 14.820 52190.7 21.750 SARASOTA 223820.4 69.625 155835.7 30.375 67984.7 13.664 SUM OF COUNTIES DISTRICT8 1099794.0 77.897 857023.3 856710.0 22.103 242770.7 243084.0 18.389 1984 Total Population Percent 0-64 Total Percent 0-64 65+ Total 65+ Percent 0-14 CHARLOTTE 72972.0 66.474 48507.1 33.526 24464.9 12.258 COLLIER 107914.2 78.907 85151.7 21.093 22762.5 18.464 DESOTO 21007.8 83.534 17548.6 16.466 3459.2 21.719 GLADES 6638.4 83.057 5513.7 16.945 1124.7 22.697 HARDEE 20515.8 88.073 18068.8 11.927 2447.0 27.396 HENDRY 21559.8 90.827 19582.1 9.173 1977.7 28.362 HIGHLANDS 55265.2 71.376 39446.0 28.624 15819.2 17.605 LEE 247213.2 76.229 188447.9 23.721 58765.3 17.485 POLK 354250.4 85.011 301152.3 14.989 53098.4 21.750 SARASOTA 231010.2 69.490 160527.9 30.510 70482.3 13.664 SUM OF COUNTIES DISTRICT8 1138347.0 77.611 883945.6 883479.4 22.389 254401.4 254867.6 18.389 PROJECTION 1985 Total Population Percent 0-64 Total Percent 0-64 65+ Total 65+ Percent 0-14 CHARLOTTE 76600.0 66.583 51002.4 33.147 25597.6 12.258 COLLIER 113400.0 78.400 88905.3 21.600 24494.7 18.464 DESOTO 21500.0 83.473 17946.7 16.527 3353.3 21.719 GLADES 6800.0 82.497 5609.8 17.503 1190.2 22.697 HARDEE 20800.0 87.934 18290.3 12.066 2509.7 27.396 HENDRY 22300.0 90.684 20222.5 9.316 2077.5 28.362 HIGHLANDS 57200.0 70.809 40503.0 29.191 16997.0 17.605 LEE 157700.0 75.873 195524.4 24.127 62175.6 17.485 POLK 362400.0 84.842 307466.2 15.158 54933.8 21.750 SARASOTA 238200.0 69.354 165200.5 30.646 72999.5 13.664 SUM OF COUNTIES DISTRICT8 1176900.0 77.324 910671.1 910027.8 22.676 266228.9 266872.2 18.389 PROJECTION These figures come from Community's Exhibit No. 1, as to which all parties stipulated. USE RATES The parties also agreed that, during the calendar year 1981, cardiac catheterization procedures in the district amounted to 743 at Community, 739 at Memorial Hospital in Sarasota, and 409 at Lakeland Regional, for a total of 1891 procedures, of which 1482 occurred at cardiac catheterization laboratories still in District 8. Since no cardiac catheterization laboratory in District 8 takes pediatric patients, this segment of the population must be excluded in calculating District 8 cardiac catheterization use rates. Of the total 1981 population of what was then District 8, 18.389 percent was under the age of fifteen. It follows that 834,626 persons 15 or older lived in District 8 in 1981. 1/ Dividing 1891 cardiac catheterization procedures by the adult population yields a 1981 use rate of 226.56854 per 100,000 persons for "old" District 8. Excluding cardiac catheterization procedures performed at Lakeland Regional and excluding the population of Highlands, Hardee and Polk Counties, the 1981 use rate for what has become District 8 can be calculated by dividing 1482 by 521526.76. This yields a use rate of 284.15666 per thousand persons resident in 1981 in the area of which District 8 is now comprised. In the state as a whole, 28,497 adult cardiac catheterizations occurred in 1981. Community's Exhibit No. 2. Dividing by Florida's projected 1981 population of 10,028.317, Community's Exhibit No. 1, the statewide cardiac catheterization use rate in 1981 was 284.16532. HRS no longer uses the cardiac catheterization projections in the State Health Systems Plan. CALCULATIONS REQUIRED BY RULE The parties have stipulated to the applicability of Rule 10-5.11(15), Florida Administrative Code, which is in evidence as Joint Exhibit No. 4, and of which official recognition has been taken. This rule prescribes multiple numerical standards. First is a minimum service volume of "300 cardiac catheterizations performed annually . . . within three years . . . [of] initiation of service." Rule 10-5.11(15)(i)(4), Florida Administrative Code. Without a need for catheterization services, no applicant could meet this requirement but the minimum service volume requirement is designed to ensure that the technicians do their work often enough to remain proficient and is not, strictly speaking, a need criterion. It is clear from the evidence that Memorial can meet this minimum service volume requirement. Fifty or sixty procedures had already occurred at the Memorial laboratory by the time of the hearing. The other arithmetic calculations called for by the cardiac catheterization rule relate specifically to need. Because 1983 is the year in which Memorial initiated cardiac catheterization services, Rule 10-5.11(15)(1), Florida Administrative Code, requires that the number of cardiac catheterization procedures in the service area "Nx" be calculated for 1983. The rule specifies that this is to be accomplished by multiplying the 1981 use rate by the 1983 population. For purposes of the rule, the pertinent 1983 population is the adult population of present District 8, which, based on Community's Exhibit No. 1, amounts to 568,097 persons. Whether the statewide use rate or the use rate prevailing in what has become District 8 is used, the result is virtually identical. Multiplying by the 1981 use rate calculated with reference to the territory that is now District 8 yields 1614.3365 procedures in 1983. Multiplying by the 1981 use rate for Florida statewide yields 1614.3346. Multiplying by the 1981 use rate for what was then District 8 yields 1287.126, but this number cannot be said to relate to the population to be served in District 8 as it is presently constituted. For purposes of Rule 10-5.11(15)(1), Florida Administrative Code, therefore, "Nx" equals 1614. Rule 10-5.11(15)(o), Florida Administrative Code, requires that "Nx" be divided by the number of "existing and approved laboratories performing adult procedures in the service area." Memorial's program has never received final approval, even though it is in fact operating and therefore "existing" within the meaning of the rule. Since Community and Sarasota's Memorial also have existing programs, the rule requires that 1614 be divided by three, yielding 538 as the average number of procedures per laboratory per year. Rule 10- 5.11(15)(o)(1), Florida Administrative Code, provides that there shall be no additional adult cardiac catheterization laboratories established in a service area unless: The average number of catheterizations performed per year by existing and approved laboratories performing adult procedures in the service area is greater than 600. . . . No party contends that Memorial's application meets this rule criterion. All agree that three is the appropriate divisor. Nor is there any justification for adding the minimum service volume (300) to the need for cardiac catheterizations (1614) which the rule establishes for District 8. The rule treats the 300 as a subset of the 1614 total. COMMUNITY'S LABORATORY UNDERUTILIZED During the period January 3 to June 30, 1983, the cardiac catheterization laboratory at Community performed 517 catheterizations 2/ for an average of 4.34 procedures per day the laboratory was open. The cardiologists schedule their own procedures, by asking their office staff to arrange times with the Community employee who keeps the appointment book for the laboratory. Tuesday is most popular. During the period from January 3 to June 30, 1983, an average of 4.75 cardiac catheterizations occurred on Tuesdays in Community's laboratory. Wednesdays and Thursdays saw comparable, although lower utilization, but the average number of procedures dropped to 4.08 for Mondays and to 3.74 for Fridays. As a rule, cardiologists in Fort Myers do not perform these procedures on weekends. The cardiac catheterization laboratory at Community can handle five procedures a day comfortably. A single crew of technicians occasionally did seven cases a day, but this involved working overtime. The laboratory normally in operation no earlier than eight in the morning and no later than two or three in the afternoon. The average case takes an hour and fifteen minutes or so. When manipulation of the catheter beyond a heart valve proves exceptionally difficult, a case may take as long as two and a half hours. Without adding staff or lengthening its hours or changing its methods, the Community laboratory easily has the capacity to perform 25 cardiac catheterization procedures a week or 108 a month. In no month has this number been exceeded. In only one was it approached. On the basis of a 50 week year, 1250 procedures can be done without changing anything other than physicians' schedules on Mondays and Fridays. In 1982, Community performed only 806 procedures. The laboratory at Community has substantial unused capacity. Changes short of increasing hours of operation could increase the laboratory's capacity drastically. Of the time expended in a normal cardiac catheterization at Community, only 15 to 20 minutes actually entails use of specialized laboratory equipment. Preparing the patient for catheterization and administering post-catheterization care need not take place inside the laboratory proper. Experience in Florida has taught that moving pre- and post- care outside the laboratory itself makes seven or eight cases a day possible without going beyond two in the afternoon. Changes that would not require a certificate of need could increase Community laboratory's capacity substantially. There are eight cardiologists in the Fort Myers area, all of whom are on staff both at Community and at Memorial, and one possibility would be adding a second shift, or a sixth or seventh day. Either of these steps might entail adding not only catheterization technicians but also additional personnel for ancillary services, however. There is talk of introducing coronary transluminal angioplasty at Community, which would increase the demands on the laboratory, by some ten percent. (Approximately five percent of cardiac catheterization patients are candidates for coronary transluminal angioplasty and this procedure takes twice as long as the ordinary catheterization, on average.) Changes at Community's laboratory not requiring a certificate of need could readily offset any such an increase in utilization. EMERGENCY CATHETERIZATIONS A cardiac catheterization constitutes emergency therapy when, in order to restore normal blood flow, the catheter is used to introduce streptokinase, an enzyme that dissolves blood clots. Streptokinase may be injected intravenously so that it reaches a blockage at the desired strength, but there is a risk of untoward side effects. Use of the catheter permits local application of the enzyme to a blood clot blocking an artery. Neither of the cardiac catheterization laboratories in Fort Myers has ever administered streptokinase through a catheter, however. When a patient is admitted to hospital complaining of chest pains, and other tests do not indicate otherwise, cardiac catheterization may be appropriate, before the patient leaves the hospital. Once or twice, when there was an equipment failure at the Community laboratory, patients in this category had to be discharged and readmitted in order to be catheterized. On about ten occasions in the course of a year patients admitted with severe chest pains had to wait more than 12 hours for the laboratory to be free and in some of these cases the wait exceeded 24 hours. By comparison, the laboratory is idle for much longer periods weekends. Between two o'clock Friday afternoon and eight o'clock Monday morning, there are of course 66 hours; and there was no evidence of any use of the Community cardiac catheterization laboratory on weekends in recent times. CONTINUITY OF CARE About forty percent of the patients who are catheterized are deemed appropriate candidates for open heart surgery. Since Memorial does not have open heart surgery capability, patients must be transferred by ambulance to Community, in emergency situations. Otherwise they are discharged from Memorial and later enter Community or another hospital where open heart surgery is performed. EQUIPMENT COMPARABLE Nobody questions the adequacy of Community's laboratory. Memorial and Community offer identical cardiac catheterization services and each has all the equipment necessary to perform the services offered. Both Memorial and Community have digital vascular imaging equipment, but Community's vascular imaging equipment is not available for cardiac catheterization procedures. It is used in connection with other radiological techniques and is located elsewhere in the hospital. Since Memorial does cardiac catheterization in its radiology room, its digital vascular imaging equipment is available for cardiac catheterizations. Memorial cannot get more precise images with its equipment, but computer enhancement does allow precise images to be obtained with the use of less dye. According to uncontroverted testimony, however, the difference in the amount of dye is not large enough to affect the risk "as regards [anaphylactic] type reactions" (T. 403) to the dye. Memorial also has a U-arm apparatus that Community does not have. This facilitates taking pictures from different angles, but increased facility in this regard is only important in the performance of angioplasty procedures, which Memorial does not offer. Pursuant to Rule 10-11.5(15)(i)(5)(b), Florida Administrative Code, Memorial cannot offer coronary angioplasty because, unlike Community, it does not have facilities for open heart surgery. FINANCES Memorial's charges for a routine left heart catheterization exceed Community's charges for the same procedure by half, and are about 25 percent higher than average in the country. Memorial's charges exceed Community's for all catheterization procedures. There was no showing that anybody has ever been denied a cardiac catheterization at Community for inability to pay. The evidence suggested that this is more to the credit of the medical staff than to Community's administration, however. Memorial obviously had money available to finance initiation of its cardiac catheterization service, and might even make money on the service after a couple of years, if allowed to continue. It is losing money now, at least if its catheterization service is viewed apart from the "spinoff." One effect of permitting Memorial to operate a duplicative cardiac catheterization service in Fort Myers would be to divert revenues Community would otherwise have received to Memorial. Not only revenues for the catheterization procedures themselves, but also revenues attributable to the use of hospital rooms and other hospital services would be diverted, making the resulting marginal profit available to subsidize medical care at Memorial for which full charges go unpaid. Memorial has a high charity load and about double the proportion of medicaid patients that Community has. This undoubtedly contributes to making Memorial's charges in many categories among the very highest in the state. Community realizes profits of about $3,500,000 annually and could, at least theoretically, absorb the drop in profit that would attend its loss of revenue, without raising charges. But the fact remains that the cost of medical care to the community has increased because of Memorial's higher charges for identical services. In this case, competition increases rather than decreases total charges, as well as costs. The community could expect to pay more for catheterization services in the future if there are two laboratories in Fort Myers. MANPOWER Memorial hired its chief cardiac technician away from Community, which was still seeking a replacement at the time of the hearing. There is every reason to believe that enough staff can be obtained to man both laboratories, but it is the duplication of these salaries, more than the relatively insignificant duplication of capital costs, that makes two cardiac laboratories in Fort Myers a wasteful proposition at present.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED that the Department of Health and Rehabilitative Services deny Memorial's application for a certificate of need for a new catheterization service. DONE AND ENTERED this 29th day of August 1984 in Tallahassee, Florida. ROBERT T. BENTON, II 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 29th day of August 1984.
Findings Of Fact In December 1982,, Ambulatory Care filed an application with the Department to be granted a certificate of need to construct a freestanding surgical center in Duval, Florida, to provide surgical treatment which does not involve overnight confinement, i.e. ambulatory or outpatient. The approximate cost of that project is $1,994,280. The proposed facility would be approximately 11,300 square feet in dimensions and contain four operating rooms with attendant substerile areas and scrub areas; necessary recovery, preoperative and postoperative areas; waiting areas; lounges staff changing areas; a business office area and physician space. The particulars of the description of the facility are more completely addressed in the application which is part of Department's Exhibit 1. The specific surgeries to be performed in this outpatient setting have not been determined; however, Ambulatory Care would anticipate proceeding on a basis similar to that of a freestanding ambulatory surgery center in Lexington, Kentucky, allowing for any differences in the two communities which might provide a different surgical mix by type. Information pertaining to that center was provided through the testimony of Dr. Edwin Nighbert, Transcript Pages 137-193. A further description of possible surgeries to be performed in the facility may be in the Department's Exhibit 1 through the Omission's Response of the applicant in an Appendix to that response numbered 1 entitled, "Types of Surgeries performed in an Ambulatory Surgical Facility." The surgeries to be performed are elective in nature and allow the patient to be discharged the same day of the procedure. The characterization of the facility as freestanding means that it is self-contained and not dependent upon other facilities in its normal operation. The exact location of that facility has not been established in that the purchase of property has not been concluded; however, Ambulatory Care intends to build the center in the Riverside area of Jacksonville, Duval County, Florida, as described by drawings and maps in the Omission's Response referred to before. Construction in this area would place the facility in the immediate vicinity of Saint Vincent's and Riverside Hospitals, which facilities also serve patients who undergo ambulatory surgery on an outpatient basis. Other hospitals in Duval County provide outpatient surgery, as more specifically described in latter portions of this Recommended Order. Following review, the Department issued a certificate of need for the project in its entirety, effective December 29, 1982. This action led to Petitioners' timely challenge to the proposed agency action. The Department simultaneously approved a certificate of need for another freestanding surgical facility in Duval County, Surgical Services of Jacksonville, Inc., with proposed expenditures of $2,500,000 and a plan to provide four operating rooms. That latter surgical center has not been challenged on the issue of the grant of its certificate, through protest from local hospitals. With the addition of Surgical Services and Ambulatory Care, outpatient surgery would be performed in Duval County in hospital settings, the freestanding centers, and physician's offices. The hospitals and Ambulatory Care are expected to provide the same surgical procedures either on an outpatient basis or inpatient basis. Saint Vincent's is a hospital which is owned by the Daughters of Charity, a religious order within the Catholic Church and is a nonprofit corporation. Riverside is a nonprofit hospital. Other hospitals in the area providing outpatient surgery at present or in the immediate future are Methodist Hospital, Jacksonville General Hospital, University Hospital, Baptist Medical Center, Memorial Medical Center, and Saint Luke`s Hospital. None of the hospitals referred to have freestanding outpatient surgery units, meaning all procedures provided by those institutions are hospital based. There being no rules promulgated in keeping with Section 381.494, Florida Statutes, related to the establishment of a methodology for considering the question of need for ambulatory surgical centers in Florida, the parties on this occasion attempted to establish a record basis for determining the need question. In this endeavor, objective and subjective observations and predictions were offered. Similarities and dissimilarities between hospital- based outpatient surgery centers and freestanding surgery centers were discussed and the relative merits of those sites ware debated. Given the novelty of this comparison in Florida, determination of need in the ambulatory surgery realm is less than an exact science. To accommodate this situation, factual determinations are based upon those elements of proof which tend to best describe the Duval County circumstance pertaining to the question of need for ambulatory surgeries at present and in the near future, with particular emphasis on the applicant's request for certificate. To begin, there is the issue of what constitutes a surgery for statistical purposes. In the State Agency Action Report related to the fiscal or calendar year reporting of procedures performed by Duval County hospitals ending in 1982, reference is made to the number of impatient and outpatient surgical procedures. There is uncertainty about some of the outpatient procedures reported, whether they are best described as surgical or diagnostic. As example, in Ambulatory Care's Omission's Response request it included certain procedures such as cysto which by exhibit were under a surgical heading. Subsequently, the applicant argued in the course of the hearings that these proceedings were diagnostic in nature and not surgical. One physician who testified believed that a cysto could be considered a surgery. Opinion was expressed that any procedure reported for insurance purposes as surgical should be accepted as such, even if primarily diagnostic in effect. A hospital official believed that procedures that are primarily diagnostic in effect are not surgeries. Another contributing element in the dilemma is the possibility that some procedures might be considered surgical at times and diagnostic at others depending on the intended result. Moreover, the record is not clear on whether some of the inpatient procedures reported for the 1981-82 reporting period by the Duval County hospitals would involve procedures which might arguably be described as diagnostic and not surgical. There being no consensus among the practitioners and the health care planners on the question of what constitutes a surgery and given the existence of a known statistical base, making allowances for adjustments related to numbers of outpatient surgeries in the reporting year ending 1982 which was made in the course of the hearing and consistent with Appendix 1 to the Omission's Response offered by the applicant, all procedures are considered surgical for purposes of this review, with the exception of endoscopic procedures. This determination takes into account that the applicant has not specifically delineated those procedures which it intends to perform. On a similar topic, Duval County has been identified as the service area for the Ambulatory Care facility. It is that population base which the Department used in trying to identify the surgical use rate for all surgeries and ultimately for ambulatory surgery by measure of surgeries per thousand population. This calculation fails to take into account the fact that patients from areas outside Duval County, especially from the surrounding counties use the hospitals in Duval County. It was not established in the course of the hearing what percentage or number of those patients from those outside areas were in the hospital for purposes of undergoing inpatient or outpatient surgery. Nonetheless it can be assumed based upon the facts presented that some portion of those patients did receive surgery thereby increasing the number of persons in the population base who underwent surgeries and decreasing the number of surgeries per thousand population. Moreover, the modification of statistics presented in the course of hearing to more correctly reflect the number of outpatient surgeries done in the reporting periods 1981-82 suggests that the total number of procedures was around 64,600, not the 68,000 plus first thought when the action report was prepared and the Department made its calculations. This change alone would reduce use rate for surgeries per thousand from 118 to 112. Having in mind a necessary adjustment in the population base to account for patients outside Duval County who receive surgery as well as adjustment in the outpatient surgery statistics in the 1982 reporting period, somewhat less than 112 surgeries per thousand could be expected. According to the applicant, the national experience has been an expectation of 55 to 90 surgical procedures per year per thousand population as a planning guideline. Those projections made as a result of research and data gathered are accepted as establishing the base from which more precise estimates may be made. In view of the national experience and the adjustments that are needed in the initial projection of the Department that 115 surgeries per 1,000 population would be the experience, 110 surgeries per 1,000 population is found to be a reliable figure both in 1982 and the succeeding years to include the critical years of 1985 and 1986, for Duval County, Florida, surgical procedures. This finding acknowledges the fact that 97 percent of the residents of Duval County seek their health care in Duval County. In trying to determine what percentage of all surgeries will be ambulatory or outpatient in the critical years 1985 and 1986, considerable testimony has been offered. That testimony tends to establish a potential for outpatient surgeries in the range 15 percent to in excess of 40 percent. During the reporting period for which data is available, as many as 15 percent of the surgeries performed in the Duval County hospitals have been performed on an outpatient basis. The Department has taken a median fraction or number between the extremes of 15 percent and 40 plus percent and anticipated 29 percent of all surgeries to be ambulatory surgeries in the years 1985 and 1986 in Duval County. In consideration of the dramatic increases in the number of outpatient surgeries being performed in local hospitals within the last two or three years, and the continuing improved reimbursement environment for those surgical procedures performed on an outpatient basis, 29 percent is a reasonable policy choice for making the projections. Based upon an analysis of the facts presented, it is not safe to assume that the number of outpatient surgeries performed in Duval County for its patients in the years 1985 and 1986 will approximate the 40 percent experience found in other communities outside Florida. The Department in its calculations has utilized mid-range projections of the University of Florida, BEBR, population studies showing a population in Duval County in 1985 of 387,500 and in 1986, 590,480. This midrange choice is sound. Employing the technique used by the Department, the following predictions are arrived at in terms of expected outpatient surgeries in Duval County in 1985 and 1986: 387,500 total populations x 110 procedures per thousand = 1,000 64,525 total procedures x .29 percentage of outpatient = 18,741 outpatient surgeries in 1985 * * * 390,480 total populations x 110 procedures per thousand = 1,000 64,953 total procedures x .29 percentage of outpatient = 18,835 outpatient surgeries for 1986. Who is to provide those outpatient surgeries in 1985 and 1986? In answering that inquiry, in 1981, excluding endoscopic examination, area hospitals performed 6,450 outpatient surgeries. This number increased to 9,527 in 1982 and based upon statistics provided for the first quarter of 1983 that number would approximate 11,000 outpatient procedures in 1983. This growth pattern in those reporting years reflects substantial increases in the delivery of health care related to outpatient surgeries; however, an extrapolation of percentage increases over the intervening year 1984 and into 1985 and 1986 does not give a reliable approximation of the level of outpatient surgeries to be provided by the several hospitals. Neither does the estimate by the Department that the increase in surgeries performed in the hospitals shall be only to the extent of the increase in population in Duval County in the intervening years. Therefore, the question of available capacity in the years 1985 and 1986 is considered on the basis of an inventory or audit of outpatient surgical suites which may reasonably be expected to provide outpatient surgeries in 1985 and 1986 based upon the selection or a utilization rate for those operating rooms. The applicant has initially indicated in its application that 1,200 ambulatory cases could be dealt with in one operating suite on an annual basis. Initial testimony of one of the applicant's witnesses, Andrew Miller, at transcript page 460, was to the effect that the range 1,200 to 1,250 cases approached the capacity for a single dedicated operating room performing outpatient surgery. In rebuttal testimony, Miller recanted and indicated that 1,300 cases per operating room was not a reasonable estimate for hospitals in Duval County. He suggested the use of lower figures, perhaps as low as 1,000 procedures per room. In the face of the evidence, it is determined that for purposes of this review 1,100 procedures per operating room are an acceptable approximation. Utilization of this number takes into consideration differences in the length of procedures, scheduling and turn-around time in the preparation of the operating suite for a subsequent procedure. By dividing 1,100 procedures into the 15,741 projected outpatient surgeries in 1985, there would he a need for 17 operating suites in that year. Realizing that same process of division against the 19,536 projected ambulatory surgeries in 1986, 17 plus surgery suites would be needed. At the point of hearing, there were 15 ambulatory surgery suites in the hospitals in Duval County, excluding endoscopic rooms and those rooms in which inpatients and outpatients were operated on. Eight of those rooms had capability of general anesthesia. St. Luke's, in the move of their hospital, would add two additional ambulatory surgery suites, both of which would have general anesthesia capability and both of which are under construction. The freestanding ambulatory center, Surgical Services of Jacksonville, Inc., would bring the total to 21 operating rooms with its four additional surgery rooms with general anesthesia capability. With inclusion of the St. Luke's and Surgical Center of Jacksonville, a total of 14 of the 21 operating rooms would have general anesthesia capability. This does not take into account the high number of outpatient surgery procedures which are being performed at Baptist Hospital in rooms which have an inpatient and outpatient mix, nor does it take into account future plans of area hospitals to increase their outpatient surgery capacity, which would provide even greater capacity for outpatient surgery. In summary, there is more than enough capacity to perform needed outpatient surgeries in Duval County in 1985 and 1986. Ambulatory Care and the Department have referred to the cost savings to the individual patient being treated and to the overall patient community should the Ambulatory Care Surgical Center be opened. If there was a demonstrated need for that center the proof tends to bear out the savings to the individual patient and arguably to the patient community as a whole. However, on this occasion, given the fact that the addition of Ambulatory Care's operating suites would bring the total to 25 operating rooms against the need for 17 plus operating rooms, the cost benefits to the individual patients being treated in the applicant's facility and the patient community at large, would not be realized. To the contrary, the inordinate duplication of services that would be experienced with the addition of the applicant's facility would tend to drive up health care costs in Duval County. Additionally, the applicant cannot be expected to survive financially in the overcrowded health delivery environment described in this paragraph. The innovative nature of a freestanding surgery center in matters such as ambience, related to the psychological well being of patients, especially younger patients and potential efficiency of operation of the applicant's surgical center are not sufficient to redeem its request for certificate in this instance. In a related vein, modifications to existing plans in the hospitals and the inconvenience occasioned by those adjustments are not such that those circumstances may be expected to impede the steady progress of increased outpatient ambulatory procedures in those hospitals and make them less than a viable alternative for performing the needed procedures in the 1985 and 1986 periods. Any competitive influence to be fostered by the addition of Ambulatory Care's facility would not be beneficial. Sufficient competitive influence is already present to promote quality care and cost effectiveness. Finally, if trends in outpatient surgery, particularly to be performed under general anesthesia increases beyond the predictions indicated, there is sufficient capacity in the hospitals to accommodate that eventuality by constructing new outpatient surgical suites or by conversion of inpatient surgical suites to perform outpatient surgeries to include ancillary space. This can be accomplished without having to resort to an application for certificate of need, given the $695,000 exemption or exclusion from the certificate of need review process. In view of the overburden that would be created in ambulatory surgeries by the additional capacity of the applicant, provision of needed construction of facilities is being met and can be met in the future in a less costly way then suggested by the applicant. On this occasion, the hospitals can provide more cost effective facilities. Ambulatory surgery is available and accessible in local area hospitals within Duval County in an appropriate and adequate setting. That service does not exclude any patient. Though not needed Ambulatory Care's contemplated facility addresses those contingencies set forth in this paragraph, with one proviso. That matter pertains to the fact that Ambulatory Care shall provide its services to all residents in the service area without regard for physical condition or financial standing, premised upon the willingness of the treating physician to admit those patients to the facility for treatment and subsequent screening to be done by the staff of Ambulatory Care to determine the appropriateness of that setting to achieve the surgery. This will cause a certain number of potential patients to receive their surgery in a hospital environment.
The Issue The issue is whether the application for the certificate of need for a cardiac catheterization laboratory filed by Humana Hospital Bennett should be approved. The proceeding is governed by Section 381.705(1), Florida Statutes (1987), and Rule 10-5.011(1)(e), Florida Administrative Code. Humana Bennett and the Department maintain that Section 381.705(2), Florida Statutes, is inapplicable to this matter, but the other parties believe that statute applies. Not all subsections of these statutes or rules are in dispute, however. According to the prehearing stipulation, the following are either not in dispute or inapplicable: 1. Section 381.705(1) (c) , (e) , (f) , (g) (h) [except for the applicant's ability to recruit health manpower resources], (i),(j),(k),(m) 2. As to Section 381.705(2), subsection (e) is not in dispute. 3. As to Rule 10-5.011(1) (e), the following subparagraphs are not in dispute: 7.a., 7.b., 7.c., 7.d., 8.a., 8.b., 9.a., 9.c., 9.d., 9.e. (II) and (III), 13., 14., and 15.b. The parties dispute whether the application of Humana Bennett meets the following statutory and rule criteria for a certificate of need: 1. Section 381.705(1) (a), (b) , (d) , [as to health manpower] (1), and (n). As to Section 381.705(2), the following: (a) , (b) , (c) , and (d). 3. As to Rule 10-5.011(1) (e) , the following: 8.c., 9.b., 9.e.(I), 10., 11., 12., 15.a., and 15.c. FINDINGS OF FACT Description of the parties and their characteristics Humana Hospital Bennett is a 204-bed, acute care medical surgical hospital located in west central Broward County. It is the westernmost facility in Broward County. It is owned by Humana, Inc., and operated or profit. Western Broward is growing faster than the mature communities on the Atlantic Coast. Humana Bennett is fully accredited by the Joint Commission on Accreditation of Hospitals, and provides an array of services for the diagnosis and treatment of coronary disease including electrocardiology, echocardiology, nuclear medicine heart studies, stress testing, and other non-invasive procedures. It does not offer open heart surgery. Humana Bennett also has a 14-bed intensive care/coronary unit, a 22-bed intermediate care unit, and a progressive cardiac rehabilitation program. The Humana medical staff is composed of 460 physicians, 28 of whom specialize in the treatment of cardiovascular disease; 24 of these 28 are board- certified in cardiology. An additional 12 physicians are board-certified in cardiovascular and thoracic surgery. About 63% of all discharges at Humana are cardiac- related. This percentage has increased over time. In fiscal year 1985 52.3% of discharges were cardiac-related. Humana Bennett has contracts with health maintenance organizations for hospital services. These include the Humana Care Plus and International Medical Center health maintenance organizations which are owned and operated by Humana, Inc. About 65,000 Broward County residents are subscribers to these plans. The Humana Bennett catheterization laboratory would involve 2,500 square feet of new construction and 750 square feet of renovation. The hospital projects that the laboratory will be operational by September 1989. The laboratory would be capable of providing a full range of diagnostic cardiac catheterization procedures, which would include a cardiac catheterization laboratory, a control area, a storage area, a darkroom, and other related preparation, recovery and support areas. The total project cost would be approximately $1,302,600. There are both diagnostic and therapeutic uses for catheterization; the therapeutic uses include angioplasty. By Department rule, only a hospital with an open heart surgery program may perform angioplasty. Humana Bennett's laboratory could perform only diagnostic catheterizations. The South Broward Hospital District was created by a special act of the 1947 Florida Legislature, Chapter 24415, Laws of Florida, as an independent taxing authority. It does not operate to produce a profit. It was created to provide health care services to the residents of south Broward County by constructing and operating health care facilities serving all types of health care needs within its boundaries. It provides services without regard to the ability of district residents to pay for health care. The service areas of South Broward's hospital (Memorial Hospital) and Humana Bennett overlap, and numerous physicians are on the staff of both facilities. If the Humana Bennett application is approved, the number of cardiac catheterizations performed at Memorial Hospital will be reduced. The catheterization laboratory at Memorial Hospital generates a substantial amount of income for South Broward Hospital District. The initiation of catheterization services at Humana Bennett would reduce revenues at Memorial Hospital without any offsetting reduction in costs at Memorial. The substantial interests of the South Broward Hospital District are affected by the application filed by Humana Bennett. Over the years, Memorial Hospital has been expanded from a 100-bed facility to a 737-bed full service hospital. It is the only hospital in south Broward County which provides cardiac surgery, cardiac catheterization, physical rehabilitation with a distinct comprehensive unit, psychiatric services, pediatric surgical services, pediatric intensive care, full service neonatology, new born intensive care and progressive care, high-risk obstetric maternity care, and residential substance abuse programs. Some of the services Memorial Hospital provides are operated at a loss. Uncompensated care amounted to 22.1% of South Broward Hospital District's gross revenue in fiscal year 1987. The District projects that $44.9 million will be spent in the current fiscal year for uncompensated care. Operating revenues and the District's power to levy property taxes pay for the services provided to indigents. Memorial Hospital is the primary provider of services to the indigent and medically needy in south Broward County. Florida Medical Center is a 459-bed acute care hospital. It provides a broad range of cardiology services, including cardiac catheterization. It currently operates three separate cardiac catheterization laboratories. The first laboratory opened in 1974, the second two were equipped in 1983. The second laboratory was fully staffed at that time but the third was only fully staffed in December 1987. FMC has the present ability to perform three cardiac catheterization procedures simultaneously in its laboratories and the staff to perform procedures in that manner. Its third laboratory was opened primarily to accommodate the desire of physicians to perform catheterizations in the morning and is also used for other purposes. Florida Medical Center is located within five to six miles of Humana Bennett and under normal driving conditions the drive between the facilities takes 15 to 20 minutes. Florida Medical Center and Humana Bennett compete for patients within the same geographic area. Approximately 73% of the cardiac catheterizations performed at Florida Medical Center during 1987 were performed by physicians who are also on the staff of Humana Bennett. If the new cardiac catheterization service for Humana Bennett is approved, Florida Medical Center will lose patients and will therefore perform fewer catheterization procedures. Florida Medical Center would lose revenue without any offsetting reduction in its costs. The interests of Florida Medical Center are substantially affected by the CON application filed by Humana Bennett. Plantation General Hospital is a 264-bed general acute care hospital located in Plantation, Florida, which is in central Broward County. It is owned by and operated for profit by HealthTrust, Inc. It offers a broad range of cardiology services including cardiac catheterization. Its cardiac catheterization laboratory opened in April 1985. Plantation General is located approximately three and a half miles from Humana Bennett. Plantation General and Humana Bennett compete for substantially identical service areas and have overlapping medical staffs. Of the 37 cardiologists on the staff of Planation, 24 are also the on staff of Humana Bennett. Ten of 14 physicians performing cardiac catheterization procedures at Planation are on the staff of Humana Bennett. Approval of a cardiac catheterization service at Humana Bennett would result in fewer catheterizations being performed at Plantation. Plantation would suffer a loss of revenue without any offsetting reduction in costs. The interests of Plantation General Hospital are substantially affected by the CON application filed by Humana Bennett. FACTUAL FINDINGS CONCERNING THE APPLICABLE CRITERIA AGAINST WHICH THE APPLICATION MUST BE EVALUATED The criteria to be used in evaluating the application are found in statutes, and in the rules of the Department of Health and Rehabilitative Services which implement those statutes. The application will first be analyzed for consistency with Section 381.705(1), Florida Statutes, and, to the extent the rules make those criteria more specific, those considerations will be discussed in a later portion of this order. Consistency with Statutory Criteria Consistency with the state health plan and the District X local plan. Section 381.705(1) (a), Florida Statutes. a. The district health plan The District X Health Plan for 1985 is the most recent complete plan, and was the plan in effect when the Humana Bennett application was filed. it contains three recommendations relevant to approval of cardiac catheterization services. These are: Applicants for certificate of need approval should document either their intention and/or experience in meeting or exceeding the standards promulgated for the provision of cardiac catheterization and/or cardiac surgery by the appropriate national accreditation organization(s). Applicants proposing to initiate or expand cardiac catheterization or cardiac surgery must make their services available to all segments of the population regardless of the ability to pay. The provision of new cardiac catheterization or cardiac surgery programs should not be approved unless they meet or exceed the standards and criteria set forth by HRS. Humana Bennett is currently accredited by the Joint Commission on the Accreditation of Hospitals, and proposes to seek accreditation of its cardiac catheterization laboratory if approved. In 1985, Humana Bennett provided 1.2% of the total uncompensated care provided by Broward County hospitals. Humana Bennett's application, as revised in June 1987 in response to an omissions letter from the Department, proposed to provide 1% of patient days to Medicaid patients, 45% of patient days to Medicare patients, 43% of patient days to insurance patients, and 11% of patients days to private pay patients (Humana's exhibit 3, page 87).1/ Humana Bennett also has a Medicaid contract. Humana has the following emergency care policy for its hospitals Facilities will provide emergency care without regard to the patient's ability to pay. An indigent patient will be treated just as any other patient, and will receive whatever care is required to stabilize his/her condition. Non-emergency patients must make payment or arrangement for payment, before health services are delivered to them. (Humana exhibit 3, page 54.) For purposes of the Humana Bennett emergency care policy, indigent patients include "patients who are not eligible for Medicare or Medicaid, who do not have private or employer- provided health insurance, and who are unable to pay for their health care." Emergency patients are defined as patients "in a life or health threatening situation who require immediate treatment or hospitalization." After an attending physician determines that an indigent patient is stabilized, the patient is transferred to a hospital which receives government funds for indigent care; the Humana Bennett manager must approve this action before it is taken. All actions, including the attending physician's approval, are documented and maintained in the patient's business office folder. These policies indicate no substantial commitment to indigent care. Cardiac catheterization is not ordinarily an emergency procedure, but a diagnostic one. The existing emergency care policy, therefore, indicates that practically no catheterization will be done for indigents. This is inconsistent with the local health plan's requirement to make catheterization services available to all segments of the population. The application update submitted by Humana (exhibit 6, pro forma income statement) shows initial total patient revenues of $543,750, with a deduction of $27,188 for "indigent care/bad debt." This allowance is an indication of the amount the hospital expects to be unable to collect from patients it admitted with the expectation of payment. It is not the result of any community outreach to provide catheterization services to indigent residents of Broward County. The State Health Plan The 1985-87 State Health Plan discusses cardiac catheterization at pages 94 through 96. In the portion entitled "Criteria and Standards," the State Health Plan quotes from the Inter-Society Commission on Heart Disease Resources concerning the need for physical proximity and relationships between diagnostic catheterization facilities and open heart surgery programs. According to the Inter-Society Commission: ... there can be little justification for the development of these highly specialized facilities (cath labs) unless expertise in cardiology, cardiovascular radiology, and cardiovascular surgery are immediately available. Optimally therefore, catheterization laboratories should be located only in institutions with well organized and closely related programs of cardiovascular surgery. ... such an arrangement not only facilitates close inter-disciplinary cooperation and minimizes unnecessary, repetitive, inadequate, or unsafe diagnostic studies, but it also allows prompt intervention should life threatening complications develop during catheterization studies....it should be emphasized... that separation of the diagnostic laboratory from the surgical facility is less than optimal and may present serious problems. The National Health Planning Guidelines supports this emphasis through a recommendation that no new cardiac catheterization unit be opened in any facility not providing open heart surgery. (Humana exhibit 8) (emphasis supplied) Because there is no open heart surgery program at Humana Bennett, the proposal is inconsistent with the State Health Plan's clear preference for locating catheterization laboratories at facilities where open heart surgery is available. As discussed in section II B.3. of this order infra, the absence of a written referral agreement in the Humana Bennett application, identifying a facility with open heart surgery capability to which patients needing immediate open heart surgery will be transferred, is a serious deficiency in the application. 2. Availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of existing services. Section 381.705(1)(b), Florida Statutes There is no contention that existing cardiac catheterization laboratories in District X failed to provide quality care, and there is no geographic problem with the availability of catheterization services. Nothing in the Humana Bennett application would expand the availability of these services to segments of the population that are not currently being served for economic reasons. The issue of the efficiency and extent of utilization of existing services raises the question whether there is additional capacity in existing catheterization laboratories which ought to be utilized in preference to incurring the capital expenditure involved in constructing and equipping a catheterization laboratory at Humana Bennett. This consideration is related to the need calculation made under the Department rule discussed in a later portion of this order. When the Humana Bennett application was filed there were 10 existing laboratories in District X: one at Broward General, two at FMC, two at Holy Cross Hospital, two at North Ridge Medical Center, one at Plantation General, one at North Broward Medical Center, and one at Memorial Hospital. Shortly before the final hearing, Holy Cross Hospital reported that the physician who operates the catheterization laboratories there under contract with the hospital, Dr. Zachariah, had added a third laboratory. That physician opened the third laboratory for his own convenience, not because the volume of his practice required it. Florida Medical Center also added an additional laboratory for the convenience of cardiologists who practice there, which it also uses for other procedures. Expansion by existing providers can take place without certificate of need approval when the capital expenditure needed for expansion is less than one million dollars. These existing providers were able to add laboratories without the necessity of HRS approval. An additional laboratory also has been added to District X by the approval of the lab for imperial Point Medical Center, which had applied in the same batching cycle as Humana Bennett. No party objected to the issuance of that certificate of need, and therefore it should be considered in determining the statutory issue of the extent of the utilization and adequacy of like and existing health care services, because its services will be available at the planning horizon year, 1989 Humana Bennett could have prevented the consideration of that capacity by objecting to the grant of the certificate of need to Imperial Point and requiring a comparative hearing on the competing applications of Humana Bennett and Imperial Point but it decided not to do so. Some of the existing providers have argued that existing unused capacity at their facilities should be taken into consideration in determining whether there is a need for the Humana Bennett laboratory. Rule 10- 5.011(1)(e)12., Florida Administrative Code, provides in part that: The need for cardiac catheterization capacity in a service area shall be determined by computing the projected number of cardiac catheterization procedures in the service area. The capacity issue is therefore controlled by the provisions of the rule and will be discussed under the rule calculation. That competitors maintain they can provide more catheterizations than the rule projects for each provider is not legally relevant under this subsection of the statute. 3. The availability and adequacy of other health care services which may serve as alternatives to the services to be provided by the applicant. Section 381.705(1) (d), Florida Statutes. There is no persuasive evidence that there are other diagnostic procedures which serve as an alternative to cardiac catheterization which should be utilized in preference to catheterization. 4. Availability of resources including health manpower. Section 381.705(1) (h), Florida Statutes Nurses and technicians who work on cardiac catheterization teams have specialized skills and these skilled employees are difficult to recruit and retain. The proof demonstrates, however1 that Humana Bennett can staff the positions necessary for its catheterization laboratory by national recruitment and by cross-training of in-house nursing and radiology personnel. A catheterization lab requires cardiac care R.N.s, radiology technicians, and a specialized procedure/cardiovascular technician. Critical care nurses at Humana Bennett have already expressed an interest in becoming cardiac catheterization R.N.s and critical care nurses can easily be trained as cardiac catheterization nurses. Similarly, cross-training of existing radiology employees can fill the radiology technician positions. Humana Bennett has already received three resumes from cardiovascular technicians. 5. Probable impact of the proposed project on the cost of providing health services proposed by the applicant upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed. Section 381.705(1) (1), Florida statutes Humana Bennett projects gross revenue charges during the first year of operation of the catheterization laboratory of $1,450 and a net revenue per procedure in the first year of $913. The net revenue figure is lower because it reduces gross revenue by contractual allowances due to HMO/PPO discounts, and the difference between the hospital's customary charge and the amount reimbursed by Medicare or Medicaid for catheterization procedures. The gross charge for the second year of operation is $1,500 with a net revenue per procedure of $945. These projected charges are about the same as those charged by existing providers; FMC charges currently about $1,400-$1,500 with a net revenue of about $1,200-$1,300 for inpatient catheterizations. During the first four months of calendar year 1987, South Broward Hospital District (Memorial Hospital) charged about $1,431 for catheterizations. Plantation General charged approximately $2,300. Thus, there will be no increase in the charge for such procedures due to additional competition. There was no evidence from any existing provider that entry of Humana Bennett into the catheterization market would cause it to lose revenue to the point where any existing provider would withdraw from the catheterization market and thereby contract the supply of catheterization services. Providers do not have the option of simply raising charges to compensate for diminished market share because Medicare, Medicaid, and HMO/PPO charges are fixed, and open market competition will drive private pay patients to lower cost providers. Obviously, the entry of an additional provider into the market will reduce the current market share which existing providers enjoy. The certificate of need statute is not meant to protect competitors' incomes. While existing providers will be affected, the increased competition would be a positive impact, with the exception of the impact on the public health care provider, South Broward Hospital District. If the Humana Bennett catheterization laboratory is approved, South Broward Hospital District would lose approximately 50% of the catheterization procedures it now provides to persons who live in Humana Bennett's service area, and also would lose 10% of the referrals for open heart surgery or therapeutic catheterizations (angioplasty) for patients it would have served, but for the laboratory at Humana Bennett. The South Broward Hospital District would lose about $324,000 of net revenue. In 1987, South Broward Hospital District provided $41,392,000 in uncompensated care. Approximately 11 million dollars was provided by tax revenues and 30 million dollars was provided from profitable operations. This $324,000 probable loss in net revenue would add to the public hospital district's burden, but this revenue loss is not grave enough to restrict the entry of another competitor into the catheterization market in and of itself. 6. The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. Section 381.705(1) (n), Florida Statutes Humana Bennett maintains a Medicaid contract and does admit and treat Medicaid patients who present themselves. In fiscal year 1987, 5.31% of Humana's gross revenues were provided for uncompensated care, which equates to 3.15 million dollars. There is, however, no proof that this figure is anything other than money which the hospital had expected admitted patients to pay, but which, for whatever reasons, went unpaid. Accordingly, the proof is not persuasive that any portion of that 3.15 million dollar amount was generated by a conscious commitment on the part of Humana Bennett to provide hospital services to indigents on a charity basis. While prudent accounting requires a for-profit hospital to have a reserve for bad debts, it is not entitled to have its application viewed more favorably by passing off its bad debt reserve as if it were charity care. This factor, therefore, does not enhance the Humana Bennett application; neither does it detract from it. Consistency with rule criteria Service accessibility to undeserved population groups. Rule 10-5.011(1) (e)8.c. Florida Administrative Code This rule criteria requires little additional analysis to that already expressed above in Section II. A.1 and 6 of this order under Section 381.705(1)(b) and (n), Florida Statutes. While the applicant does propose to serve all persons needing catheterizations, including Medicare and Medicaid patients, the Medicaid projected utilization is only 1%, which is essentially cosmetic. It shows no real commitment to serve the medically needy and shows no commitment to indigent patients, as distinct from that group of patients which may be served but who may not pay their bills, thereby producing "bad debt" on the hospital's books. The emergency policy of the hospital is such that indigents would be eligible to be served in the unlikely event catheterization was needed on an emergency basis. The application, therefore, is sufficient to meet the requirements of this portion of the rule. The means by which it does so, however; does not enhance the application when balancing all of the statutory and rule criteria to determine whether the application should be granted. 2. Availability of health personnel. Rule 10- 5.011(1) (e)9.b., Florida Administrative Code The proof demonstrates that Humana Bennett has documented the ability to staff its cardiac catheterization laboratory under the standards in this rule. 3. Coordination of services. Rule 10-5.O11(1)(e)9.e.(I) Florida Administrative Code The rule requires that proposed cardiac catheterization laboratories and facilities not performing open heart surgery must submit, at the time of certificate of need application, a written referral agreement with a facility providing open heart surgery services which is within 30 minutes' travel time by emergency vehicle under average travel conditions. (emphasis supplied) It is undisputed that no referral agreement was included when Humana Bennett filed its application. Humana argues that it sought referral agreements with hospitals in the service district which offered open heart surgery, including Broward General Hospital, North Ridge Medical Center, Holy Cross Hospital, and Memorial Hospital, but none of those hospitals agreed to accept transfers from Humana Bennett. The executive director of Humana Bennett personally contacted an official of Florida Medical Center to obtain a referral agreement. That official specifically declined to enter into a referral agreement in order to prevent Humana Bennett from competing with FMC for cardiac catheterization services. There is no evidence that the other hospitals declined to enter into a referral agreement simply to block Humana Bennett's application. It may be that those other hospitals had other valid reasons for declining to enter into referral agreements. Nothing to the contrary was proven. Eventually, Humana Bennett did receive a referral agreement from the executive director of North Ridge Medical Center. It is dated January 8, 1988, six months after the Department of Health and Rehabilitative Services declared the Humana Bennett catheterization laboratory application complete. (Humana exhibit 30) Due to the absence of a referral agreement, the Humana Bennett application should have been rejected by the Department as incomplete when submitted. 4. Service costs. Rule 10-5.011(1)(e)10. Florida Administrative Code 43. The cost for cardiac catheterizations to be provided by Humana Bennett is projected to be about the same or less than the charges of current providers. The projected charges are reasonable. The application meets this portion of the rule. 5. Relationship with the state and local health plans. Rule 10-5.011(1) (e)11. Florida Administrative Code 44. This matter has already been discussed in Section II A.1. of this order with respect to statutory criteria 381.705(1) (a), Florida Statutes, and will not be repeated, except to say that the application is not consistent with the local and state health plans and therefore does not meet this rule criteria. 6. Need determination. Rule 10-5.011(1)(e)12. and 15. Florida Administrative Code The Department's rule provides that it will "not normally" approve applications for new cardiac catheterization services unless need is shown as calculated through an algorithm. See Rule 10-5.011(1)(e)6., Florida Administrative Code. The algorithm is found at Rule 10-5.011(1)(e)12., Florida Administrative Code. Several versions of how the formula should be applied were presented at the hearing. Witnesses for Humana Bennett and the Department of Health and Rehabilitative Services found need for an additional catheterization laboratory in Broward County according to their analysis of how "need" is defined in the algorithm. Health planners for FMC and South Broward Hospital District applied the algorithm in a manner demonstrating that there is no need for an additional catheterization service. The interpretations differed in two respects. First, the health planners disagreed on the number of catheterization procedures that were performed during the 12- month period that is used under the rule to establish an historical use rate, i.e., the number of procedures performed per 100,000 population in the district in the past. They also disagreed as to the number of catheterization laboratories presently operating in Broward County. The algorithm projects the number of catheterization "procedures" that will be performed for the year in which the catheterization laboratory will begin service. The laboratory obviously will not open on the date the application is filed; but at some date in the future. That future time is the "planning horizon" for which a projected use rate in the service area is determined. An actual use rate is first determined. It is the number of catheterizations performed per 100,000 population during the 12-month period which begins 14 months prior to the date the health care facility must file its letter of intent to file an application for a new service. This actual use rate is multiplied by the projected population at the planning horizon and then divided by 100,000. The result is the projected number of procedures at the planning horizon. The projection is divided by 600 in order to establish the number of catheterization laboratories that can be approved in the District. The number of existing laboratories is subtracted from that number to determine how many, if any, additional laboratories should be approved. It is important to determine the number of "procedures" performed in the applicable 12-month period to determine the actual use rate. The higher that number, the higher will be the number of projected procedures, and therefore the more likely it will be that additional laboratories may be approved. Rule 10-5.011(1) (e)2. and 4., Florida Administrative Code, defines the terms "cardiac catheterization" and "procedure" as follows: 2. Cardiac Catheterization. Cardiac catheterization is defined as a medical procedure used as a diagnostic and therapeutic tool for heart and circulatory conditions.... * * * 4. Procedure. Procedure means an angiographic study, a physiologic study or a therapeutic activity within a cardiac catheterization laboratory which utilizes the equipment customarily used in cardiac catheterization. These definitions are unclear because they are circular--a catheterization is defined as a procedure, and a procedure means a study utilized in cardiac catheterization. The term "study" is not defined by rule. Florida Medical Center contended that when a patient visited a cardiac catheterization laboratory, more than one study might take place as tubes are inserted into a blood vessel in the patient's arm or leg to diagnose circulatory conditions. Even if a patient undergoes multiple studies during one visit to the laboratory only one catheterization "procedure" takes place. In contrast, the Department of Health and Rehabilitative Services and Humana Bennett argued that if one patient underwent multiple studies during one visit, each should be counted as a different procedure. The substantive portions of Rule 10-5.011(1) (e) variously use the term catheterization or procedure. For example, in setting a minimum service volume for laboratories, Rule 10-5.011(1) (e)9.d. requires a minimum service volume defined in terms of cardiac catheterizations. On the other hand, in the need algorithm, the calculation is based upon the number of cardiac catheterization procedures. See Rule 10-5.011(1)(e)12., Florida Administrative Code. Rule 10-5.011(1) (e)15.a.(I), and c. further add to the difficulty in interpreting the rule by using the words "catheterization" and "procedure" interchangeably: There shall be no additional adult cardiac catheterization laboratories established in a service area unless: (i) The average number of catheterizations performed per year by existing and approved laboratories performing adult procedures in the service area is greater than 600;.... * * * Applications proposing to establish cardiac catheterization laboratories will not be approved if they would reduce the average volume of procedures performed by laboratories in the service area below 600 adult procedures. ...(Emphases added) The State Health Plan, Volume II, at page 95 contains a discussion which is informative on the issue of whether, in applying the need algorithm, one should count individual studies on a patient or patient visits, stating: Up until 1977 the literature showed a consensus on the need for minimum caseloads. Since 1977, expert opinion has become more divided on the issue, with many provider representatives advocating that the standards now reflected in federal and many state laws are no longer necessary and justifiable. However, a general opinion among the medical profession is that a certain minimum caseload is essential to assure quality results. ...The established federal and state minimum standards of 300 procedures annually for adult [patients] ... are believed to be adequate to maintain the expertise of the professional team engaged in this highly specialized service. (Humana exhibit 8) (Emphasis added) Thus, the term "cases," which focuses on number of patients, and "procedures" appear to be used synonymously. The National Health Planning Guidelines are referenced in the State Health Plan and were influential in the drafting of the catheterization rule. The Guidelines were published in the Federal Register on March 29, 1978, and Section 121.208(a) (1) of the Guidelines stated: There should be a minimum of 300 cardiac catheterizations,...within 3 years of initiation. in subsection (b), the Guidelines stated: Based on recommendations from the Inter-Society Commission on Heart Disease Resources, the Department [of Health, Education and Welfare] believes that a minimum level of 300 catheterizations per year is indicated to achieve economic use of resources. The report of the Inter-Society Commission on Heart Disease Resources, referenced in both the State Health Plan and the National Health Planning Guidelines, also assist in interpreting the use of the terms "catheterizations" and "procedures" in the Florida rule. That entity publishes a journal, Circulation, in which it is stated: To maintain adequate performance levels and to minimize risks, each team of physicians should perform, on the average, at least 600 adult examinations* a week, or 300 cases per annum. *An examination includes all cardiac diagnostic procedures (angiographic and physiologic studies) performed on a patient during one session in the laboratory. Report of the Inter-Society Commission for Heart Disease Resources. Circulation, Volume 53, No. 2, page 8-9 (1976) The Society's publications indicate an understanding that many patients have multiple procedures and specifically rejected a further breakdown of their caseload recommendation: in considering this matter, we have decided against further breakdown of caseload recommendations. The number of patients requiring only angiographic or physiologic evaluation is rapidly decreasing: in most cases both angiographic and selected hemodynamic studies are now performed. Therefore, in the hands of an appropriately trained and experienced team these "mixed" caseloads generally should be adequate to maintain an acceptable level of performance. Id. The Inter-Society Commission reports used the terms "procedure" and "case" interchangeably: Laboratories supporting an active coronary surgical program may generate a caseload close to 9 procedures a week or 450 cases per annum. Id. The representative of the Department of Health and Rehabilitative Services testified at the hearing, and stated her view that when referring to a minimum service volume of 300 catheterizations annually, Rule 10-5.011(1) (e)9.d. was speaking of the number of procedures, which could be 100 patients receiving 3 procedures, 150 patients receiving 2 procedures, or 300 patients receiving 1 procedure. Clearly more than one "procedure" can be performed during a visit to a laboratory, often through a single catheter inserted into a patient on a single occasion. Many of these "procedures" take just a few minutes. Each procedure or study may generate a separate billing to the patient, however. The more persuasive proof on how to properly county "procedures" under the rule was presented by FMC's expert health planner, Mr. Konrad, whose opinions are credited. Mr. Konrad had been employed with the Department of Health and Rehabilitative Services and had developed the first State Health Plan. He testified that the existing rule on cardiac catheterization came from the Inter-Society Commission for Heart Disease Resources Report, which is referenced in the Federal Health Planning Law. While the Florida rule has been amended since its first promulgation, no amendment has altered the original concept regarding the definition of procedure. According to Mr. Konrad the procedure means "a case" and all studies performed during one visit to the catheterization lab constitute one procedure. The number of cardiac catheterization procedures that were performed in laboratories in HRS District X during 1986 was 7,611. The laboratories then operating were located at Broward General, FMC, Holy Cross Hospital, North Ridge, Plantation General, North Broward Medical Center, and Memorial Hospital. The counts for the numbers of procedures performed at these laboratories were reported by the facilities to the District X Local Health Council. FMC originally reported it performed 2,166 procedures in 1986. Subsequently, officials at FMC realized their figures were erroneous and notified the Local Health Council and the Department that the correct number of procedures was 1,840. The lower figure is correct. The difference in figures is accounted for by the confusion over whether a single cardiac catheterization was a "procedure" or whether a single patient catheterized for a number of studies should have been recorded as the number of "procedures" equal to the number of studies performed. This reduces the total number of procedures performed in District X during 1986 to no more than 7,611. Fewer procedures than that were likely performed, because the Local Health Council never defined the term "procedure" for the hospitals reporting to it. Consequently the numbers are probably inflated somewhat because some hospitals incorrectly counted each study as a procedure, rather than counting only the number of patient visits for catheterization as one "procedure". The July 1986 population of Broward County was 1,165,922. This figure is divided by 7,611 to produce an actual cardiac catheterization use rate per 100,000 for District X in 1986, of 652.78. The total projected population for District X during 1989, the year in which Humana Bennett intends to open its service, is 1,234,484. When the 1986 use rate is applied to this population, the estimated number of procedures for 1989 is 8,058. This figure is then divided by 600 according to Rule 10- 5.011(1)(e)15.a.(I), Florida Administrative Code, to produce the number of laboratories needed in the District at the planning horizon, which is 13. At the time the application was submitted, there were 10 existing cardiac catheterization laboratories in the district. North Broward Hospital District filed in the same batch as Humana its application for a catheterization laboratory at Imperial Point. As stated earlier, that application was approved giving a total of 11 existing or approved laboratories. There is, therefore, a need projected by the algorithm for an additional laboratory which Humana Bennett can fill. None of the cardiac catheterization laboratories in Broward County are providing fewer than 300 adult catheterizations per year. The limitation on additional laboratories found in Rule 10-5.011(1) (e)15.a.(II), Florida Administrative Code, therefore does not prohibit the approval of an additional laboratory. Findings with respect to Section 381.705(2), Florida Statutes The prehearing stipulation indicates that Humana Bennett and HRS maintain that Section 381.705(2), Florida Statutes, is not applicable to this proceeding, while the other parties maintain that it does apply. Nothing in the prehearing stipulation explains the basis on which any party argues that this statute does or does not apply. The application discloses the total cost for the project is approximately $1,300,000. Consequently, it would appear to be a "capital expenditure proposal" as that term is used in Section 381.705(2) , Florida Statutes. The definition of capital expenditure found in Section 381.702(1), Florida Statutes, refers to the dollar limit of 1 million dollars found in Section 381.706(1) (c), Florida Statutes. Section 381.705(2) does apply, and the following findings of fact are made. 1. Less costly, more efficient or appropriate alternatives to inpatient services. Section 381.705(2)(a), Florida statutes 65. No party has proven that outpatient catheterization services are a more appropriate alternative to the catheterization laboratory purposed by Humana Bennett. Moreover, all parties have stipulated that the design and construction costs, as well as equipment costs and other miscellaneous costs in Humana Bennett's proposal are reasonable. Prehearing stipulation, section D. 4 and 5. 2. Use of the existing inpatient facilities in an appropriate and efficient manner. Section 381.705(2) (b), Florida Statutes 66. Existing catheterization laboratories are performing more than the minimum service volume prescribed in Rule 10-5.011(1)(e)9. d., Florida Administrative Code, of 300 catheterizations annually. On the average, they were also performing more than the 600 catheterizations annually required by Rule 10-5.011(1)(e)15. A. (I), Florida Administrative Code. 3. Alternatives to new construction such as modernization or sharing arrangements. Section 381.705(2) (c),Florida Statutes Given the demonstration of need pursuant to the need algorithm, the establishment of a new service is one appropriate method of meeting that need. Existing catheterization laboratories do have the capacity, however, to serve many additional patients. More extensive utilization of these facilities avoids the additional capital construction and equipment costs of opening a new cardiac catheterization laboratory. The ten existing cardiac catheterization laboratories each have the ability to perform, on the average, at least 1,000 catheterizations per year. The new laboratory at Imperial Point will also have a similar capacity. The laboratories in Broward County, therefore, have an ability to provide approximately 11,000 catheterizations per year (this ignores the intermittent use of the third "convenience" laboratories at Holy Cross and at FMC). Assuming the need for 8,060 catheterization procedures at the 1989 planning horizon, there is still an excess capacity, using only existing or approved laboratories, to provide annually an additional 2,940 catheterizations. More intensive use of existing and approved facilities would certainly be a more efficient way of providing catheterization services than is spending approximately $1,300,000 to construct and equip the laboratory at Humana Bennett. 4. Problems in obtaining inpatient care in the absence of the proposed new service. Section 381.705(2)(d), Florida Statutes There is no evidence that patients will have difficulty in obtaining cardiac catheterization services in Broward County if the proposed laboratory at Humana Bennett is not approved.
Recommendation It is recommended that the application of Humana Hospital Bennett for a certificate of need to establish a cardiac catheterization laboratory be denied. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 30th day of September, 1988. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1050 (904) 488-9765 Filed with the Clerk of the Division of Administrative Hearings this 30th day of September, 1988.
The Issue The issue in this case is whether the Petitioner, Charles Barocas, should be licensed as an orthotist in Florida without examination.
Findings Of Fact The Petitioner, Charles Barocas, applied for licensure as an orthotist in Florida without examination before March 1, 1998. Barocas has many years of experience as an orthotist in New York. He became involved in the field after receiving medical training in the Army during the war in Vietnam and developing an interest in acute care. When he returned to the United States, Barocas obtained additional health care training and began working with orthopedic surgeons in New York. His work included primarily direct patient care, taking X-rays, casting, and fracture bracing. In about 1975, Barocas started a three-year program of study to become an orthotist in New York. The program, which was offered through the New York Board of Certified Orthotists and Prosthetists, included a great deal of clinical experience. Barocas completed the program in 1979 and became a New York certified orthotist in 1980. Because he valued and enjoyed working with patients through the continuum of care, Barocas continued to work with orthopedic surgeons, taking X-rays, casting, removing casts, fitting and, in some cases, fabricating braces or making molds for central fabricating shops, adjusting braces, and following-up until the end of patient treatment. Barocas' work with the patients was under general prescriptions or orders of the orthopedic surgeon; however, the physicians gave him discretion in evaluating, treatment formulating, measuring, designing, fabricating, assembling, fitting, adjusting, servicing, and providing initial training. Barocas moved to Florida and continued his work with South Palm Orthopedics in Palm Beach County from September 1991 through April 1993. As in New York, Barocas worked with an orthopedic surgeon at South Palm Orthopedics, namely David Buchalter, M.D. The nature of Barocas' work with Dr. Buchalter was the same as his work with orthopedic surgeons in New York. In June 1992, Barocas began also working for Florida Bracing Center in Fort Lauderdale. Florida Bracing Center had a contract with area health maintenance organizations (HMOs) to do the kind of work Barocas was doing for Dr. Buchalter. To perform under its agreement with the HMOs, Florida Bracing Center contracted with Barocas and assigned him patients primarily in Palm Beach County. In this work, Barocas would receive a physician's prescription or order and go to see the patient. There, Barocas would evaluate the patient; formulate treatment; measure, design, and either fabricate an orthotic device or make a mold for central fabrication; assemble the device, if necessary; fit, adjust, and service the device; and provide initial training and follow-up adjustments and training, as necessary. Barocas continued to work for Florida Bracing Center until August 1993. In September 1993, Barocas began working for Baysports Orthopedic Center in St. Petersburg, Florida, under Jeffrey L. Tedder, M.D. The nature of Barocas' work with Dr. Tedder was the same as his work with Dr. Buchalter and with the New York orthopedic surgeons. Barocas continued in his employment at Baysports Orthopedic Center through June 1997. In June 1997, Barocas decided not to continue to endure the physical rigors of his brand of practice (which included lifting patients) full-time and initiated efforts to begin a school for the education and training of orthotists and related health care professionals which Barocas named the Institute for Orthopedic Technology. (Barocas continued to accept a limited number of referrals from an area orthopedic surgeon for fracture bracing.) Barocas was about to teach a course in "Orthopedic Technology and Casting" at the St. Petersburg Junior College when he learned about the new Florida Board of Orthotists and Prosthetists. He presented his course to the Board for approval. When approval was not forthcoming, Barocas cancelled the class at St. Petersburg Junior College. While Barocas has been unable to obtain course approval from the Florida Board of Orthotists and Prosthetists, he has developed correspondence/Internet courses in the field that are being utilized by seven national organizations of related health care professionals for continuing education. In addition, Barocas has courses designed to educate and train sales representatives and customers of manufacturers of casts and braces. Last year, Barocas had approximately 500 correspondence students; he expects approximately 600 correspondence students in 1999. The Board's own expert witness conceded that Barocas has at least five years of practice experience as an orthotist in Florida, as defined under Section 468.80(7), Florida Statutes (1997). The witness was of the opinion, however, that some of Barocas' experience in his chosen brand of practice (namely, taking X-rays and casting) was not experience as an orthotist, as defined by the statute. He also pointed out that Barocas did not have much if any experience in the business of operating a shop where orthotic devices are fabricated. Barocas countered that he did have experience making braces in the presence of the patient out of low temperature plastics and out of fiberglass and rivets and in making the molds used by central fabrication shops. In addition, Barocas pointed out that, by not operating a fabrication shop, little if any of his time has been spent in the business of contracting with insurance companies and HMOs and other third party payers, preparing the paperwork they require, and obtaining payment from them; instead, his time was spent on direct patient care. Finally, Barocas contends that casting is part of the practice of orthotics as defined by the statute.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board of Orthotists and Prosthetists enter a final order granting the application of the Petitioner, Charles Barocas, for licensure as an orthotist without examination. DONE AND ENTERED this 19th day of April, 1999, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON 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 19th day of April, 1999. COPIES FURNISHED: Charles Barocas Post Office Box 7440 Seminole, Florida 33775 Lee Gustafson, Esquire Department of Legal Affairs The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Angela T. Hall, Agency Clerk Department of Health 2020 Capital Circle, Southeast, Bin A02 Tallahassee, Florida 32399-1703 Pete Peterson, General Counsel Department of Health 2020 Capital Circle, Southeast, Bin A02 Tallahassee, Florida 32399-1703
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 A. whether the "Grandfather" Issue Should Be Determined. The Petitioner, Mease Hospital and Clinic (Mease), operates a 278 bed hospital in Dunedin, a 100 bed hospital in Countryside, and a medical clinic. All are located in north Pinellas County, in the North Pinellas subdistrict of HRS District 5. In 1982, Mease applied for a certificate of need to equip and operate a cardiac catheterization laboratory (CCL). At the time, Mease was of the view that a CCL would be a new service and would therefore require a certificate of need. When Mease determined that approval would not be likely under then current rules, Mease withdrew its application because it understood that a final denial legally would preclude Mease from re-applying for three years. On July 11, 1986, the Respondent, HRS, entered a Final Order adopting a Recommended Order and acknowledging that Humana Hospital Northside, also located in Pinellas County, HRS District 5, continuously had been providing cardiac catheterization services since before July 1, 1977, the effective date of certificate of need regulation of CCLs, and therefore was not required to obtain a certificate of need for a CCL as a new service. Final Order, Humana Hospital Northside v. Department of Health, etc., 8 F.A.L.R. 3910 (DHRS July 11, 1986). When Mease reviewed the Humana Northside Final Order and final hearing transcript, it concluded that it, too, should be "grandfathered." Mease was doing the same type catheterization procedures as Humana Northside. Mease decided to re-apply for a certificate of need both on the basis of need for a CCL at Mease and on the basis of the "grandfather" claim. In October, 1986, Mease filed the pending certificate of need application. In addition to the more typical components of a CON application, the Mease application states in pertinent part: EQUIPMENT/SERVICE TYPE: Mease Hospital and Clinic maintains that the Cardiac Catheterization Program is not a new service, as procedures similar to those performed at Humana Northside, which was recently approved on a grandfathering basis for cardiac catheterization have been performed at Mease Hospital and Clinic in Dunedin for more than 20 years. * * * ADDITIONAL PROJECT DETAILS/REMARKS: Mease Hospital and Clinic believes its historic performance of procedures identical to those for which Humana Northside was grand fathered a cardiac catheterization lab is sufficient to justify similar action, resulting in approval of Mease' proposal. HRS' State Agency Action Report (SAAR) was completed in April, 1987. It evaluated the Mease proposal as a typical certificate of need application and denied it on the basis of lack of need. There was no direct mention of the "grandfather" claim, but the SAAR concludes in pertinent part: "Deny a certificate of need for [the Mease] project [among others] in its entirety... Reasons for decision: Insufficient need for an additional cardiac cath lab." Mease's petition for formal administrative proceedings on the denial does not specifically address the "grandfather" claim, either. During the pendency of this proceeding, Mease continued to seek a "grandfather" exemption apart from this proceeding. But Mease's prehearing proceedings in this case were conducted in a way that indicated its assumption that the "grandfather" issue would be determined by final agency action in this case, if not before by informal means. The other parties recognized this assumption and were not prejudiced by Mease's failure to formally specify the issue in its pending petition for formal administrative proceedings or by amendment to it. By letter dated November 23, 1987, HRS finally responded to Mease's continued efforts to obtain "grandfather" status and denied the request. Mease still did not amend its petition for formal administrative proceedings (nor did it file a new, separate petition in response to the November 23 letter.) But it continued to conduct prehearing procedures in a manner so as to have the "grandfather" claim heard as part of this case. HRS and the Intervenor, Morton Plant Hospital, Inc. (Morton Plant) first objected on the record to consideration of the "grandfather" issue in this case in the Prehearing Stipulation filed on January 6, 1988. The "grandfather" issue should be determined in this proceeding. Whether Mease Has A "Grandfathered" CCL. Before July 1, 1977, and continuously since, Mease has operated a special procedures room at its Dunedin hospital. The special procedures room is the largest room in the x-ray department, with adjoining rooms that contain sinks for sterile technique and housing computers. Equipment in the room includes an x-ray generator with a high MA capability to do moderately rapid sequence films and fluoroscope. There is a table of special design to allow movement in all directions to facilitate fluoroscopy. Three different film changers are used. The room contains a large array of catheters, wires and needles for use in the catheterization process. There is a defibrillator monitor, pressure monitors, and various physiologic monitors also in the room. Finally, there is a digital vascular imaging ("DVI") machine to facilitate the computerized processing of digital subtraction studies. The DVI machine has been used to perform coronary arteriographies. During the time the special procedures room has been operational, it has been staffed with persons specifically trained in critical care of patients, with special knowledge of cardiovascular medication and catheterization type equipment. There has always been ample support staff available for patient observation, handling blood samples, performing blood gas evaluations and monitoring physiological data. The catheterization team usually consists of the physician, a special procedures nurse (an R.N. with critical care training) and at least two dedicated radiographer technologists with special knowledge of the equipment. A special procedures log is maintained by physicians using the special procedures room. Procedures typical of those contained on the log prior to and consistently since 1977 include renal arteriograms, pulmonary arteriograms, cerebral arteriograms and femoral arteriograms. Pulmonary arteriograms involve passing a catheter through a right side chamber of the heart into the lungs; the other procedures do not involve passing a catheter into the heart. Pulmonary angiograms, right ventriculography and right atrial injections are all currently performed at Mease in the radiology laboratory. Right heart catheterization procedures are being performed in the CCU units and the special procedures lab at Mease. The special procedures room is not used by radiologists or cardiologists to do any therapeutic or diagnostic studies of the left chambers of the heart. Unlike procedures such as pulmonary arteriograms, in which the catheter is inserted into or through a chamber on the right side of the heart, fluoroscopy is required for insertion of a catheter into a chamber of the left side of the heart. With fluoroscopy, left heart catheterization procedures involve no significantly increased danger to the patient. Left heart catheterization procedures require faster film sequencing equipment for fluoroscopy because the left heart is a higher pressure (faster flow) system than the right heart chambers. Mease's cardiologists perform these procedures in a CCL at either Morton Plant or Largo Medical Center in Clearwater. The Mease special procedures room does not have, and has not had, the more sophisticated equipment needed to perform catheterization procedures in the left chambers of the heart. The sophisticated equipment needed for left heart catheterizations customarily is part of a CCL. It is commonly understood that a CCL is a laboratory which includes this equipment and uses this equipment for left heart catheterizations. Mease shared this understanding until it learned of the Final Order in Humana Hospital Northside. It never contested the omission of cardiac cath services from its hospital license, never reported cardiac cath procedures to the local health council and applied for a CON for a CCL in 1982. On review of the Humana final order and the record of the case, Mease correctly concluded that its special procedures room was being operated in the same way as Humana Northside's. Mease also concluded that it, too, was entitled to "grandfather" status. But the Humana final order points out: The respondent HRS offered no evidence to dispute the fact that petitioner has indeed been providing cardiac catheterization services on a regular and continuous basis from pre-July 1, 1977 to the present time. Instead, HRS takes the position that since petitioner never reported to the Local Health Council that it was performing such services, it is now somehow estopped from claiming a "grandfather" exemption from Certificate of Need review. There is competent and substantial evidence demonstrating that petitioner began performing cardiac catheterization procedures prior to July 1, 1977, at a time when Certificate of Need review was not required, and has continued to perform such services on a regular basis. Accordingly, petitioner was exempt from Certificate of Need review when it initiated such services and continues to maintain that exempt status so long as it regularly and continuously performs such services. In this case, there was persuasive evidence disputing that Mease has been operating a CCL. Mease's special procedures room had some, but not all, of the equipment customarily used in cardiac catheterization. Its special procedures room is not the kind of room customarily used to perform cardiac catheterization procedures. This is why Mease never before claimed entitlement to "grandfather" status but rather presumed that it did not have a CCL and would need a CON to open a CCL. Mease has not been operating a CCL continuously since July 1, 1977. Need For Mease's Proposed CCL. Mease filed the pending CON application in October, 1986. At the time, the local health council for District 5 was reporting an inventory of four CCLs: St. Anthony's; Morton Plant; Largo; and All Children's. Mease also knew that HRS had entered a final order in July, 1986, recognizing "grandfather status" for Humana Northside and allowing Humana Northside to upgrade its CCL by adding up-to-date equipment required for left heart catheterization procedures. At the time of the State Agency Action Report (SAAR) denying Mease's application in April, 1987, HRS was aware of, and also counted in the inventory at the time of the SAAR, a second CCL at Morton Plant which was added without CON review. The second Morton Plant CCL became operational in July, 1986, but was not reported to the local health council until early 1987, and was not reported by the local health council until September, 1987. A second CCL also opened without CON review at Largo Medical Center. But the evidence was not clear when the second Largo lab opened. It was not reported to, or by, the local health council before the SAAR either, and HRS did not count it in the inventory for purposes of the SAAR. Since the SAAR, two additional CCLs have been approved without CON review at Bayfront Hospital/All Children's Hospital in St. Petersburg. Finally, on November 24, 1987, the District Court of Appeal, First District, rendered an opinion reversing HRS' final order denying an application for a CON for a CCL at Bayonet Point Regional Medical Center in Pasco County in District 5. This CCL was approved for purposes of meeting the need existing as of 1986. The actual District 5 CCL use rate for the period July, 1985, through June, 1986, using local health council data, was 308.47 procedures per 100,000 population. The year in which the proposed CCL would initiate service, but not more than two years into the future, is July, 1988. The District 5 population in July, 1988, is projected to be 1,124,986. The number of procedures projected for District 5 in July, 1988, is 3470. Allocating 600 procedures per CCL, 3470 procedures would create a numerical need for 6 CCLs in District 5 in July, 1988. The local health council did not report any procedures done at the "grandfathered" CCL at Humana Northside, and none were included in the data for the time period July, 1985, to June, 1986. Counting the "grandfathered" Humana Northside CCL in the inventory at the time of the SAAR without attributing any procedures to it for purposes of calculating the use rate for July, 1985, to June, 1986, amounts to a recognition that Humana Northside, while given "grandfather" status based on the facts presented in DOAH Case No. 84-4070, was not in fact operating a CCL continuously since July, 1977. Refusal to attribute procedures to Humana Northside reflects a rational policy decision in this case not to perpetuate the error resulting from the apparently less-than-adequate HRS presentation of its case in the Humana Northside case. There was evidence officially recognized in this case without objection--namely, the Final Order, Bayonet Point Medical Center v. Department of Health and Rehabilitative Services, 8 F.A.L.R. 4342 (DHRS 1986)--that 1200 Pasco County (District 5) residents were being referred to Tampa for cardiac catheterization and open heart surgery in the year preceding June, 1986. (300 were open heart surgery patients.) But there was no evidence to prove how many of the 900 cardiac catheterization patients who were referred to Tampa in the period July, 1985, to June, 1986, would have had the procedure performed in District 5 if Bayonet Point had a CCL. It necessarily follows that there was no evidence to prove that any additional cardiac cath procedures for Pasco County patients performed in District 5 as a result of the Bayonet Pont CCL will not be absorbed by and performed at the Bayonet Point CCL. District 5 has the highest percentage of 65 and over population in the state (29.7 percent for calendar year 1986), but next to the lowest number of catheterizations per thousand of all the districts in the sate. District 5 also has a large cohort of population age 45 to 64. Over 50 percent of the population in District 5 is in the age cohort for which cardiac catheterization is most frequently needed as a diagnostic or therapeutic tool. Seasonal fluctuations increase the elderly winter population. Resident death rate from heart disease is almost 50 percent higher in District 5 than it is for the state of Florida. These factors combine to create an actual use rate in District 5 that, for the past two years (1986 and 1987) has exceeded (or, for 1987, was projected to exceed) the projected horizon year (July 1988) use rate derived from using the 1985 use rate data. The actual use rate for January through September 1987, when extrapolated for the entire calendar year of 1987, shows that the number of procedures expected to be actually performed in District 5 in 1987 is 46 percent (approximately 1,000 procedures) greater than the number of procedures projected to be needed in July 1988 using the 1985 use rate. The projection of procedures for July 1988 is 700 procedures less than actually occurred in District 5 in 1986. Use of July, 1985 to June, 1986, use rate in a demographic configuration like that found in District 5 underestimates projected procedures for July, 1988. Some trends in health care and area population growth do not support the addition of a cath lab at Mease. While the population of north Pinellas County, where Mease is located, is equal in age distribution to south Pinellas County, the new growth in north Pinellas and Pasco is younger than south Pinellas. Increased use of non-invasive diagnostic procedures, such as MRI and CAT scan, will reduce the growth of cardiac cath procedures in the future. The growth in the use rate in cardiac caths is in the number of therapeutic caths, which by rule are required to be done in a facility with open heart surgery and therefore cannot be done at Mease at this time. Indeed, the number of right heart caths being done at Mease has remained constant over the past several years. Also, death from heart disease is decreasing due to improvements in life style. All the cath labs in District 5 are within a two hour drive time of 90 percent of the population in District 5. Morton Plant is six miles from Mease Dunedin. Mease Countryside is twelve miles from Morton Plant and eight miles from Mease Dunedin. One-third of the Mease cardiologist's patients are at Mease Countryside and for catheterization these patients would have to be admitted at or transported to Mease Dunedin where the proposed lab would be located. There is sufficient capacity in the existing cath labs to serve growth in the near future. Approximately 600 more procedures could be done at Morton Plant. There is no problem scheduling caths at Morton Plant. There has been some difficulty getting beds for Mease patients before and after the procedure, but Morton Plant just opened new ICU beds with specially trained nurses to accommodate Dr. Gibbs' patients. The existing labs in District 5 are financially accessible. A significant number of the labs are located in not- for-profit hospitals that serve all types of patients. E.g., Morton Plant, which has an overlapping service district with Mease, offers twice the number of Medicaid days as Mease. In addition, as previously mentioned, new approved labs at Bayfront/ALL Children's (2) and Bayonet Point (1) will be coming on line to provide additional capacity (and bring the total number of CCLs in District 5 to ten.)
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that HRS enter a final order: (1) denying Mease's request for recognition of a "grandfathered" CCL at its Dunedin hospital; and (2) denying its application for a CON for a CCL at its Dunedin hospital, CON Action No. 5108. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of May, 1988.
Findings Of Fact Petitioners Flagler and St. Augustine have each applied for a CON to establish an inpatient cardiac catheter-ization program within HRS Service District IV. Each had the opportunity of responding to HRS' "omissions letter" for the cure of certain initial flaws. However, in its preliminary review of the applications, HRS denied both applicants and this proceeding followed. HRS initially denied Flagler's application, stating it had only partially complied with Sections 381.705(1)(a), (b), (i), (l), (n), and (2)(b) and (d) F.S. (1989) and Rule 10-5.011(1)(e)4.a, 4.c., and 8.b. F.A.C. HRS initially denied St. Augustine's application, stating it had only partially complied with Sections 381.705(1)(a), (b), (h), (i), (l), (n), and 2(b) and (d) F.S. and Rule 10-5.011(1)(e)4.a., 4.c., and 8.b. F.A.C. and that the applicant failed to demonstrate any compliance with Sections 381.705(1)(m) and (2)(a) F.S. Prior to formal hearing, the parties stipulated that there is a numerical need under Rule 10-5.011(1)(e)8. F.A.C. for one additional inpatient cardiac catheterization laboratory in HRS District IV for the applicable planning horizon for these applications. That planning horizon is January 1992. The parties further stipulated that both applicants have provided quality care; that, except for existing inpatient catheterization laboratories, there are no alternatives to the proposed facilities; that health manpower and management personnel are available for operation of the proposed programs; that the salaries listed on each application are reasonable; that the costs and methods of construction proposed are reasonable; that either applicant, if approved, would meet the scope of services, hours of operation, and health personnel requirements of Rule 10-5.011(1)(e) F.A.C.; and that St. Luke's Hospital in Jacksonville provides open heart surgery and is within one-half hour ambulance travel time from either applicant. It was also stipulated at formal hearing that the equipment costs proposed by both applicants are reasonable and that the costs of construction, as proposed in the applications, are reasonable. Facilities operated by Flagler Hospital, Inc. and St. Augustine General Hospital, L.P. are located in the city of St. Augustine, St. Johns County, Florida. The two facilities are less than 500 yards apart and, for all practical purposes, are directly across U.S. 1 from one another. Both facilities are 115-bed general acute care hospitals providing the same services except that Flagler provides obstetrics and St. Augustine does not. The service areas of the two hospitals consist of the five zip codes immediately surrounding the two facilities as the primary service area and St. Johns County, except the Ponte Vedra area, as the secondary service area. Flagler operates as a not-for- profit hospital. St. Augustine operates for profit. The applicant for CON 6011 is "Flagler Hospital, Inc." This corporation is based out of its only and local facility described supra and is locally operated. Regardless of any other terminology applied during HRS' review leading up to the formal Petition in DOAH Case No. 90-2035, and regardless of any inadvertent changes of the style of that cause thereafter, the "applicant" for CON 6012 is, in fact, "St. Augustine General Hospital, L.P.," a limited partnership. The applicant's August 23, 1989 Letter of Intent in CON 6012 is in the name of "St. Augustine General Hospital, L.P. d/b/a St. Augustine General Hospital." The Identification of Principal Parties form submitted by the applicant states that the legal name of the applicant/parent corporation is "St. Augustine General Hospital, L.P." and that the facility/project name is "St. Augustine General Hospital." As of the date of formal hearing, "St. Augustine Hospital, Inc." (no "General" in this name) was a wholly-owned subsidiary of "Healthtrust, Inc." and the only general partner in the applicant, and "Healthtrust, Inc." was the sole limited partner in the applicant. "Healthtrust, Inc." purchased the shares of all the other former limited partners in July 1990, only after this cause had reached the formal hearing stage. The Board of Directors of the general partner, "St. Augustine Hospital, Inc.," is located in Nashville, Tennessee, as is the Board of Directors of "Healthtrust, Inc." Health Corporation of America (HCA) owns a significant number of shares (approximately 30-34%) of "Healthtrust, Inc." "Healthtrust, Inc." is a nationwide hospital chain with approximately 90 hospitals, which "spun off" from HCA in 1987. Thus, "Healthtrust, Inc." is both the sole owner of the general partner and the sole limited partner in the applicant, a limited partnership. The past lineage of the several St. Augustine legal entities is somewhat convoluted, but it is a significant and material consideration for purposes of this CON proceeding that "Healthtrust, Inc." collects management fees from St. Augustine General Hospital, which is the applicant's d/b/a namesake, and that "Healthtrust, Inc." seems to have been underwriting St. Augustine General Hospital in one context or another for an uncertain period of time. St. Augustine General Hospital has been losing money annually. Its net loss for fiscal year 1990 was $2 million. By a September 25, 1989 letter from Stephen C. Brandt, "Healthtrust, Inc.," otherwise known as "The Hospital Company," has committed to loan "St. Augustine General Hospital, Inc." sufficient funding to implement and provide cardiac catheterization services at "St. Augustine General Hospital." The proposed recipient of "Healthtrust Inc.'s" commitment, which is "St. Augustine General Hospital, Inc.," is not the same entity or legal "person" as the applicant, "St. Augustine General Hospital, L.P.," and the parties further agree that there is no such legal entity as "St. Augustine General Hospital, Inc." (TR-132-133) Also, it is not clear from this record what other enterprises or ventures are attributable to "St. Augustine Hospital, Inc.," the general partner in the applicant. Therefore, even if the true intent of Mr. Brandt's letter was to show that the general partner, "St. Augustine Hospital, Inc." and not the nonexistent "St. Augustine General Hospital, Inc.," would receive funding from "Healthtrust, Inc.," there is no guarantee that "Healthtrust Inc.'s" funding commitment to the general partner would be used as a simple conduit to St. Augustine General Hospital, L.P., the applicant. With regard to quality of care, either applicant is capable of providing high quality cardiac catheterization services. However, St. Augustine's proposed physical plant is less ideal than that proposed by Flagler. St. Augustine proposes a lab with a procedure room that contains only 314.5 square feet of floor space. The industry standard is 480 square feet. The State of Florida has not adopted by rule a standard for the minimum size of a cardiac catheterization procedure room. However, the Inter-Society Commission for Heart Disease Resources has issued a report, relied upon by architects in designing cardiac care facilities, which recommends a minimum size for a procedure room of 50.4 square yards, which equals 453.6 square feet. The State Health Plan has adopted the Inter-Society Commission Report. Undersizing the lab has the potential to downgrade the quality of care in St. Augustine's proposed lab in several respects. It limits the storage space necessary and required to conduct routine procedures and crash procedures in cardiac arrest situations and interferes with maintaining the "sterile field," essential to routine catheterization procedures, but more importantly, in the event of a cardiac arrest or other emergency situation, there may not be adequate room for as many as five additional persons to enter the room, together with emergency equipment, to resuscitate and stabilize the patient. Concerns about undersizing of space are not applicable to Flagler's proposed catheterization lab. St. Augustine submitted that it could convert space adjacent to its proposed lab for its cardiac catheterization program at a cost of approximately $33,000, but expert testimony was persuasive that such a conversion could be considerably more expensive. To the extent that St. Augustine's planning would need to be revised, additional drawings would have to be prepared to show the reconfiguration of the room with the cost increase. Even assuming, arguendo, that St. Augustine's $33,000 figure is correct and that $33,000 is a proportionately low cost of such a change of plans in relation to St. Augustine's entire proposed project costs, it is found that such a construction conversion as proposed would constitute a change in the St. Augustine application so substantial that it would require amendment of St. Augustine's pending application and therefore such a conversion cannot be considered anew and without prior HRS review at this stage of the CON proceedings. The State Health Plan contains certain preferences relevant to this comparative CON review. Both applications benefit from the State Plan's favoring of an applicant proposing to provide cardiac catheterization services in a county that does not presently have a catheterization lab if it can be demonstrated that patients are leaving the county for such services. Upon the credible evidence as a whole, including but not limited to the testimony of Messrs. Jernigan and Nelson, Ms. Dudek, and Drs. Matthews, Prakash, and Mehrotra, it is found that a minimum of 225 patients had to travel outside St. Johns County, primarily to Jacksonville, Duval County, for such services in 1988, and there is competent, substantial evidence upon which a reasonable person may infer that that number is increasing (See Finding of Fact 20). HRS' viewpoint that freestanding labs which do not require a CON in order to operate in the proposed service area now accommodate these patients or will soon take up this slack is not supported by credible, competent substantial evidence. (See Finding of Fact 19) The State Health Plan also favors disproportionate Medicaid providers. Flagler is a federally designated disproportionate share hospital and qualifies for this preference. (See, also, Findings of Fact 15 and 20). Both applicants have committed to provide services to all patients regardless of their ability to pay and therefore both applicants meet this State Health Plan preference. The Local Health Plan also contains criteria relevant to these applications, among which is that plan's preference for an applicant who proposes to provide catheterization services in an area of concentrated population which is currently without an existing program. The city of St. Augustine constitutes such a designated area, and since both applicants' facilities are located there, they are each entitled to such preference. Both facilities are located in the District IV subdistrict with the highest use rate, and both are entitled to the Local Health Plan's preference for an applicant in the area of highest catheterization use. St. Augustine would be the logical place to put a catheterization lab if need were shown, and HRS' own rule reveals the need for one lab. (See also Finding of Facts 4, 14, 20) The Local Health Plan also prefers the applicant who will provide the proposed services in the most cost effective manner. Hospital Cost Containment Board (HCCB) figures suggest that Flagler is superior in this regard but are not persuasive in and of themselves. Historically, the applicants have been comparably cost-effective, dependent upon the procedure or service assessed. However, for the reasons set forth infra in respect to long-term financial feasibility in general, Flagler has the edge in this preference area. The Local Health Plan contains a preference for an applicant addressing a current access problem. HRS determines need for inpatient cardiac catheterization labs on a district-wide basis rather than a county-by-county basis. No cardiac catheterization subdistricts have been designed and promulgated by HRS rule. The Local Health Plan uses a subdistrict basis; subdistrict 3 contains St. Johns County without any inpatient cardiac catheterization programs and southeastern Duval County where three hospitals provide such services. Either applicant's facility meets the access standard of Rule 10-5.011(e)4.a. F.A.C., that is, access within one hour of automobile travel time under ordinary conditions for 90% of the district population. However, the access problem bears some further specific commentary. St. Johns County residents now regularly travel, primarily to Jacksonville, Duval County, and to a lesser extent, to Gainesville, Alachua County, to receive these services. Increased costs and duplicate procedures often accrue unnecessarily to patients who seek treatment outside the service area/county. Moreover, the need to travel probably depresses the number of catheterization procedures done on St. Johns County residents, either because of the genuine logistics of lack of continuity of care, travel costs to the patient and family, and stress on the patient and family caused by out-of-county procedures or because of the patients' perceptions that these problems exist. Health care of patients who forego catheterization for these reasons would be qualitatively improved if they could submit to the procedure in their own locale; likewise, health care and costs to all catheterization patients would be improved it they could access the procedure close by with lesser travel, stress, and peripheral costs. That an access problem exists has been thoroughly and conscientiously demonstrated by both applicants. It has also been established that the city of St. Augustine location of either applicant would enhance accessibility for the elderly, handicapped, and medically indigent who are the least likely patients to submit to travel for inpatient catheterization services. For those reasons and since the two facilities to be utilized by the applicants are in such close proximity, it can only be concluded that the award of a CON to either applicant would equally improve access to inpatient cardiac catheterization services on a geographic basis alone. Both applicants will be able to meet the personnel requirements of Rule 10-5.011(e)5.b. F.A.C. The premise that a de minimis higher FTE projection by St. Augustine automatically translates into better patient care was not proven and is suspect due to the size limitations of St. Augustine's proposed lab. (See Finding of Fact 10) Flagler's argument that because Flagler assigned a higher pay rate to different members of its catheterization team and because Flagler is willing to pay higher salaries overall does not translate into an advantage upon the state of this record as a whole. Either applicant will provide services to all persons in need, regardless of ability to pay, and each applicant further proposes serving Medicare, Medicaid, indigent, private pay, and HMO/PPO. Both applicants must, by law, comply with any conditions HRS may place on their CONs. In these respects, it is concluded that each applicant equally meets those respective Local Health Plan preferences, even though Flagler has clearly shown that its past "track record" in the area of Medicare, Medicaid, and indigent care exceeds that of St. Augustine in both quantity and quality. (See Findings of Fact 11 and 20) All capital projects or expenditures proposed by St. Augustine have to be approved by Healthtrust, Inc., although the hospital management can approve "substitutions" of capital items of less than $5,000 per invoice. This restriction on local management, St. Augustine's potentially imprudent freezing of its per procedure cost for two years, and its perennially low occupancy rate overall (42 out of 115 beds last year) impact unfavorably on both the short-term and long-term feasibility of its project. St. Augustine raised the valid point that since, due to litigation, neither applicant can meet its projected opening date, some adjustment of each applicant's pro forma, based on inflation, is in order, however what this adjustment should be was never persuasively quantified by the witnesses. St. Augustine challenged Flagler's pro forma statement on basically three grounds: that the nine-month earlier projected starting date (now past) for Flagler's lab projects an artificially lower patient charge due to inflation; that Flagler's supply expense of $200 is too low; and that Flagler did not amortize remodeling costs of $147,000. Both applicants' projections in the category of patient charge per procedure are found to be reasonable, but St. Augustine also suggested that Flagler's patient charge per procedure should be increased by 3.75%, which assumes a nine-month adjustment, at a 5% annual interest rate to increase Flagler's procedure charge from $1,385 to $1,437 for year one and from $1,475 to $1,530 for year two. Such a result would not render Flagler's proposal unreasonable and would have the effect of increasing Flagler's profitability. However, no evidence showed Flagler intended to increase its charge. Flagler's projected supply expense per procedure is reasonable. Assuming Flagler depreciates renovation costs over a 20 year period, the resulting minimal increase in depreciation is not a significant concern proportionate to Flagler's "bottom line" profitability. HRS opposes both applications in part upon its assertion that neither applicant can attain its proposed number of procedures so as to insure long term financial feasibility. One of HRS' premises for this assertion is its contention that there are few cardiologists residing or practicing in St. Johns County. This is a truism so far as it goes, but not a controlling factor in light of significant other forces at work. Rather than cardiologists' clientele "feeding" a cardiac catheterization lab, as HRS originally supposed, the undersigned finds, upon the greater weight and credibility of all witnesses, including HRS' Ms. Dudek, that the absence of an inpatient cardiac catheterization lab in the city of St. Augustine, St. Johns County, has, in fact, depressed the availability of cardiologists in the county. Upon the testimony of Mr. Conzemius and Dr. Lambert, it is found that because there is no inpatient cardiac catheterization lab available, cardiologists currently cannot be recruited by either applicant. Establishment of such a lab by either applicant would result in more cardiologists locating in St. Augustine and St. Johns County with a concomitant improvement in patient accessibility to cardiology services. HRS' assertion that neither applicant can attain its break-even use rate is not based upon any definitive or even cursory study by HRS of existing county use rates, CONs are not required for outpatient catheterization services which may be offered in freestanding facilities. The record does not establish with specificity the extent of utilization or service volume of outpatient cardiac catheterization labs, if any, in St. Johns County. There is expert cardiologist testimony that freestanding catheterization labs are not a medically acceptable alternative to inpatient programs in a hospital. HRS contended that neither applicant has projected reasonable patient utilization figures guaranteeing long-term financial feasibility of their respective projects, but conceded that either proposal would be financially feasible if it attracted the projected patient numbers. The greater weight of the credible evidence supports a finding that sufficient numbers of inpatient cardiac catheterization patients can be captured by either applicant. Typically, 20% of cardiac catheterizations are done on an outpatient basis, so the 225-patient figure demonstrated for 1988 understates the potential cardiac catheterization patients in St. Johns County by 20%. Thus, approximately 55 more patients obtained catheterization out of county in 1988 than are shown by the inpatient figures, so mathematically one could project 270 such procedures on St. Johns County residents actually occurred in 1988. Application of the statewide use rate of 8.9 such procedures per 1,000 people applied to the appropriate January 1, 1992 planning horizon with the predicted population increase would yield an even higher potential patient figure of 674. Subdistrict 3 has historically experienced a yet higher use rate of 10.1 cardiac catheterization admissions. Either Flagler's 250 (first year) and 300 (second year) or St. Augustine's 275 (first year) and 325 (second year) is a reasonable projection which meets the HRS recommended minimum volume of 300 procedures per year in the second year. See, Rule 10-5.011(e)8.a. and e. F.A.C. Having a cardiac catheterization program would complement the obstetrical care which is exclusive to Flagler. Both applicants indicated their willingness to make their services available to a broad payor mix. St. Augustine projects utilization by class of pay for both year one and year two of operation as 2.2% Medicaid, 56.9% Medicare, 38.9% insurance, and 2.2% indigent. Flagler projects utilization by class of pay for both years as 7% Medicaid, 60% Medicare, 31% insurance, and 2% indigent. St. Augustine's projection of 2.2% of its cardiac catheterization services for Medicaid patients is reasonable but its projection of that same percentage for charity is inconsistent with St. Augustine's prior service and is unreasonable. Considering Flagler's historical Medicaid and indigent service history, its several contracts to provide care to these classes of pay, and the comparable cardiac catheterization utilization experience of similar providers, Flagler's projections in this respect are reasonable. If Flagler has erred in this portion of its assessment, increased percentages of patients covered by insurance reimbursements would only improve Flagler's "bottom line" for long- term financial feasibility. Both applicants' pro forma statements are based on operation of the proposed cardiac catheterization lab only, not including ancillary services and other charges related to the entire patient episode of care. Both applicants will receive an incremental layer of profit from establishing a cardiac catheterization lab, but that amount was not quantified on this record. The greater weight of the credible expert evidence shows that St. Augustine's understatement of a number of expenses will result in its lab experiencing a net loss which it will be tempted to "pass on" through other hospital charges. St. Augustine's commitment to following Healthtrust, Inc.'s policies with regard to depreciation, amortization, and assigning useful life to equipment is not persuasive that these corporate principles are preferable to the generally accepted accounting principles used by Flagler. If St. Augustine's commitment to freezing its charge per procedure does not result in its raising fees elsewhere, this commitment may still aggravate instead of alleviate St. Augustine's financial predicament, for the entire facility currently operates at a net loss. Rule 10-5.011(1)(e)6. F.A.C. as amended, August 1988, requires that CON cardiac catheterization applicants who do not provide open heart surgery services include a written protocol for the transfer of emergency patients to a hospital providing open heart surgery which is within 30 minutes' travel time by emergency vehicle under average travel conditions. No statute, rule, or credible testimony herein defined "protocol" contrary to the interpretation given that term in Florida Medical Center et al. v. HRS, 11 FALR 3904 (1989). HRS' Ms. Dudek determined that each submittal met HRS' intent in the current rule. Her rule interpretation, based on agency expertise, is entitled to great weight. Flagler filed a protocol which is specific to cardiac catheterization patients in need of open heart surgery but did not specify which open heart surgery facility would be utilized. St. Augustine submitted a current transfer agreement between St. Augustine General Hospital, L.P. and St. Luke's Hospital, Jacksonville, the closest open heart surgery provider. This agreement is not specific to cardiac catheterization patients. St. Augustine also has an agreement with doctors at St. Luke's for open heart services backup. St. Luke's is within one-half hour's emergency travel time from either applicant's facility. There was no valid reason advanced in this record to suppose that Flagler could not also obtain travel and backup services with St. Luke's if it were granted the CON applied-for. Therefore, it is found that both applicants have complied with the current rule. Inherent in all challenges to the applicants' respective financial projections is the completeness of each application, and evidence as to the completeness of both applications has been received. Upon the testimony of HRS' health planning expert and agency representative, Elizabeth Dudek, it is found that at the time both applications were filed and at all times material to these applications, there was no consensus at HRS as to what constituted a "capital project" pursuant to Section 381.707(2)(a) F.S.; HRS had no definitional rule in place; HRS regularly looked to an applicant's audited financial statements with respect to the impact statement required under that section; and HRS did not require that there be a separate page labelled "assessment" for compliance with that section. Ms. Dudek reviewed both applications in the context of Section 381.707(2)(a) for HRS against other information already internal to HRS (exemptions, determinations for exemptions, or non-reviewables) and determined for purposes of initial review that both applicants had "captured" what HRS needed to know under Section 381.707(2)(a). This remained her opinion at formal hearing. (TR-586-589, 591- 593) St. Augustine expressly stated in its omissions response that it "has no capital projects applied for, pending, approved or underway in any state" (emphasis in original). In fact, the HCCB reported that for the eight-month period ending August 31, 1989, St. Augustine had $59,000 in construction in progress. Moreover, St. Augustine failed to list a lobby and patient wings renovation project costing approximately $540,000. St. Augustine's application contained no mention of these projects and no assessment, discussion, or analysis of their impact. St. Augustine's own Comptroller, David Chapman, would have defined these as capital projects (TR-93-94), and a common understanding of the English language would suggest that his is a reasonable interpretation of the clear statutory language. Flagler provided a page titled "FLAGLER HOSPITAL, INC. CURRENT CAPITAL PROJECTS" (Flagler-10), which listed the following "capital projects," as their expert witnesses defined that term under the statute. Maintenance and Yard Service Facility $61,000 (Review exemption pending) Storage Room Improvements $75,000 (Review exemption pending) Flagler Hospital Replacement Facility CON #2883; $21,728,558 Cost overrun application is being developed Rick Knapp, a certified public accountant and Flagler's expert in health care finance, accounting, and financial feasibility, also testified that Flagler's inclusion of the replacement hospital in the application as a "capital project" when the replacement hospital was essentially paid out before Flagler's CON application was even filed was probably not necessary under the statute but was intended for full disclosure. In fact, the evidence at formal hearing shows that Flagler's $21 million-plus replacement facility was completed, occupied, and paid for prior to Flagler's submission of the CON application to HRS in September 1989. The audited financial statements submitted with Flagler's application also indicated that, as of September 30, 1988, there had been construction in progress of $17 million, and an estimated $7.5 million for expected completion of construction in fiscal year 1989. Evidence admitted at formal hearing showed that the construction had been completed and the facility occupied in February 1989. Flagler began to depreciate its replacement facility upon occupancy. An overrun of approximately four million dollars was accrued and paid as of February 1989, but determining its exact amount was delayed by litigation with the architect and retainage by the general contractor. It cannot be determined from the application and omissions response that the cost overrun had been financed in full, but the two smaller capital projects were considered in the preparation and submission of Flagler's omissions response and specifically, depreciation expenses are included in the omissions response for all three of the above-identified projects. The hospital-wide pro forma contained in Flagler's omissions response shows a "healthy bottom line" for Flagler, even after consideration of the then-pending capital projects. Mr. Knapp represented that pages R-1, 2 of Flagler's omissions response (Flagler-11) meet the requirements of Section 381.707(2)(a) F.S., requiring a complete listing of all capital projects and an assessment of the capital projects' impact on the applicant's ability to provide the proposed cardiac catheterization lab. However, a close reading of pages R-1, 2 reveals that pages R-1, 2 do not repeat the list of capital projects just described or "showcase" Flagler's capital projects' impact on Flagler's ability to provide the services of the proposed catheterization lab, but rather, they make the detailed evaluation of the impact of the proposed cardiac catheterization lab on the cost of other services provided by Flagler, which detailed evaluation is required by Section 381.707(2)(c) F.S. Indeed, R-1 is entitled "IMPACT OF PROPOSED PROJECT ON COSTS OF OTHER SERVICES PROVIDED BY THE APPLICANT." Flagler's own witnesses concede that pages R1, 2 must be read in conjunction with Flagler's audited financial statements in order to arrive at the analysis of how other "health facility development projects and health facility acquisitions applied for, pending, approved or underway" will affect Flagler's ability to finance its catheterization lab. However, when compared to the pro forma on Table 3.3 of the application, it is clear that there is no impact of the listed capital projects on the proposed program. According to Mr. Conzemius, Flagler applied to HRS in March 1989 (six months prior to the filing of Flagler's CON application) and was turned down for an exemption on its overrun, and in the future Flagler will be applying for a CON regarding it. Flagler has disguised none of its activities from HRS and resolved and paid out the cost overrun prior to formal hearing so that the overrun, if it ever could have impacted on Flagler's proposed project, cannot do so now. Flagler's proposed cardiac catheterization lab will be paid for by cash funds in hand; the application contained a typographical error indicating that the funds were assured, when in fact, they are in hand. There will be no debt incurred by Flagler for the construction of the project.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that HRS enter a final order granting CON 6011 to Flagler Hospital, Inc. and denying CON 6012 to St. Augustine General Hospital, L.P. RECOMMENDED this 29th day of January, 1991, at Tallahassee, Florida. ELLA JANE P. DAVIS, 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 29th day of January, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 90-2034 and 90-2035 The following constitute specific rulings pursuant to Section 120.59(2) F.S. upon the parties' respective proposed findings of fact (PFOF): Petitioner Flagler's PFOF (1-77): Accepted: 7, 10, 15, 16, 22, 23, 30, 34, 58 Rejected as irrelevant, unnecessary and nondeterminative: 4, 5 Rejected as subordinate or unnecessary: 66, 67, 68, 69, 70 Accepted except where subordinate, unnecessary, or cumulative to the facts as found; not necessarily adopted: 1-3, 11, 12, 13, 14, 17, 18, 19, 20, 21, 24, 25, 26, 27, 31, 33, 38, 39, 40, 41, 42, 53, 54, 55, 56, 59, 61, 62, 65 Rejected as mere legal argument: 6 Subjects covered but proposals rejected in form proposed because they are mere legal argument or recital of unweighted, unreconciled testimony and/or exhibits: 71, 72, 73 Covered as modified to reflect actual stipulations and credible record evidence as a whole, eliminating subordinate matters and mere legal argument: 8, 9, 28, 29, 32, 35, 36, 37, 43-52, 57, 60, 63, 74-77 The weight and credibility of all the evidence has been weighed within the RO and applies to all rulings. Petitioner St. Augustine's PFOF 6-(69)-73: [NOTE: St. Augustine numbered its preliminary matters 1-5 and its PFOF begin with #6; it also proposed two #69's] Accepted, except where subordinate, unnecessary, or cumulative to the facts as found: 6-15, 17-24, 26, 27, 28, 33, 35, 37, 38, 40, 41, 47 Accepted as modified to more closely conform to the material facts of record or to eliminate subordinate or unnecessary proposed facts or facts which were not proven: 31, 34, 48, 49, 52, 53, 54, 55, 58, 66, 67, 68, 69#2, 72 Accepted, except where subordinate, unnecessary or mere legal argument: 39, 43 Rejected as subordinate, immaterial or mere legal argument: 16, 25, 29, 32, 36 Subjects covered but proposals rejected in the form proposed because they are mere legal argument or recital of unweighted, unreconciled testimony and/or exhibits: 30, 42, 44, 45, 46, 50, 51, 60, 70 Rejected as not proven for the reasons set out in the RO: 56 Accepted in part, the remainder is rejected in part as mere legal argument, recital of unweighted, unreconciled testimony and exhibits, and/or not proven: 57 PFOF 59: First paragraph cumulative. All paragraphs beginning with a dash on the same page under 59: Subordinate and unnecessary to the facts as found or mere recital of unweighted or unreconciled testimony and/or exhibits and legal argument. Dash 1 on next page: Rejected as contrary to the credible record evidence as a whole. Remaining dashes beginning on that page: subordinate and not determinative and/or mere recitation of unweighted or unreconciled testimony and exhibits. Credibility determination made. Accepted but cumulative that historically Flagler has served more Medicaid patients than St. Augustine and is a disproportionate Medicaid provider. The remainder is rejected as mere legal argument or recital of unweighted or unreconciled testimony and/or exhibits: 61 Rejected that the same payor mix may be expected. The evidence supports Flagler's projected 7% Medicaid rate. The remainder is mere legal argument, subordinate and cumulative to the facts as found, and/or contrary to the weight of the credible record as a whole: 62-65 Accepted as modified to eliminate mere legal argument and to more closely conform to the material facts of record: 69#1 In all its parts, is rejected as mere legal argument and not determinative of any material fact: 71 PFOF 73: The subject matter is covered within the RO. Recital of deposition testimony in a belated attempt to impeach a witness who has testified has been rejected as not a proposed finding of material fact. The remainder is mere recitation of unweighted or unreconciled testimony/exhibits. The weight and credibility of all the evidence has been weighed within the RO and applies to all rulings. Respondent's PFOF (1-13): Accepted, except as subordinate or unnecessary: 1, 2, 3, 4, 7, 11, 13 Rejected in part as mere legal argument or unweighted or unreconciled testimony or exhibits (not proven upon the credible record evidence as a whole); otherwise accepted: 5, 6, 8, 9, 10, 12 The weight and credibility of all the evidence has been weighed within the RO and applies to all rulings. COPIES FURNISHED: Kenneth F. Hoffman Patricia A. Renovitch Attorneys at Law Oertel, Hoffman, Fernandez & Cole, P.A. Post Office Box 6507 Tallahassee, Florida 32314-6507 Jay Adams, Esquire Attorney at Law 1519 Big Sky Way Tallahassee, Florida 32301 Richard Patterson Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Drive Fort Knox Executive Center Tallahassee, Florida 32308 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue Should the Board of Medicine (the Board) discipline Respondent's license to practice medicine in Florida, based upon allegations that he violated Sections 456.072(1)(bb), and 458.331(1)(t), Florida Statutes (2003), in the care and treatment of Patient H.J.?
Findings Of Fact Stipulated Facts Respondent is and has been at all times material hereto a licensed physician in the State of Florida, having been issued license number ME: 65565. Petitioner is the state agency charged with regulating the practice of medicine pursuant to Section 20.42, Florida Statutes. On or about July 21, 2003, the Respondent performed peritoneal dialysis catheter removal on Patient H.J. at Bay Medical Center (Bay Medical). Peritoneal dialysis is a technique that uses the patient's own body tissues inside of the abdominal cavity to act as a filter. On or about August 25, 2003, Patient H.J. presented with erythema (a redness of the skin resulting from inflammation) and induration (localized hardening of soft tissue of the body) in the area where the peritoneal dialysis catheter had been removed. On or about December 3, 2003, the Respondent performed exploratory surgery of Patient H.J.'s wound. Additional Facts Patient H.J. suffers from end-stage kidney failure, diabetes and heart disease. Dr. Ahmad Oussama Refai treated Patient H.J. for his kidney failure. Dr. Refai is a board- certified Nephrologist. Dr. Refai referred Patient H.J. for placement of a peritoneal dialysis catheter (catheter) to address the end-stage kidney failure. The catheter, as Dr. Refai describes it, was intended to remove the poisonous material in the blood of Patient H.J. By using the catheter clean fluid is introduced into the abdomen where it remains for a period of about four hours. The fluid introduced contains electrolytes put in the patient's blood stream. After the residence time for the fluid expires, the fluid is withdrawn through the catheter removing the harmful material. The patient, once instructed, is capable of performing the procedures described. The other option in performing this method of dialysis is to use a device that is employed at nighttime called a cycler, used while the patient is asleep and without the need for the patient to conduct the process. The patient's use of the catheter for dialysis is referred to as "home dialysis." Before Dr. Refai referred the patient to Respondent to place the catheter, the patient had been treated for his end- stage renal disease through a forearm AV graph to provide hemodialysis. That technique allows access to the patient's blood through a shunt, with the blood being run through a machine and cleansed and returned back to the patient. This procedure is done several times a week at out-patient centers, whereas the peritoneal dialysis is done daily by the patient or at night. On June 30, 2000, Respondent saw Patient H.J. and determined that the patient was a good candidate for the surgery necessary to place the catheter to perform peritoneal dialysis. On July 19, 2000, Respondent placed the catheter and peritoneal dialysis treatment was commenced. Following the placement the catheter was used by the patient as overseen by the Dr. Refai. As Dr. Refai describes it, the catheter is a silestic tube that has two cuffs. The cuff at the lower level sits on the fascia where it is secured and the other cuff is just under the skin or in the subcutaneous tissue. Dr. Refai describes the cuffs as fuzzy. The cuffs are expected to induce an inflammatory process promoting scarring so that the body forms tissue to hold the catheter in place. Dr. Refai calls this a bond. Dr. Refai explains that the other parts of the catheter are "slippery." It is the fuzzy part that holds the catheter in place. Petitioner's Exhibit No. 5 is an unused catheter similar in design to that placed in Patient H.J. On July 7, 2003, Respondent, Dr. Refai, and a Dr. Dean discussed Patient H.J. and the plan to remove the catheter that was no longer adequately performing the dialysis. On July 21, 2003, Respondent did surgery to remove the catheter from Patient H.J. On July 17, 2003, before Respondent did the surgery to remove the catheter, an explanation was made to Patient H.J. of the risks associated with the surgery as to bleeding, infection, MI stroke, death, and allergic reaction following removal of the catheter. Following the surgery Dr. Refai as the treating physician was aware that the wound associated with the surgery was not healing well and Dr. Refai sent Patient H.J. back to Respondent. Dr. Refai is familiar with the course of antibiotics prescribed for Patient H.J. to respond to the condition and the surgical exploration done by Respondent where a piece of cuff, as Dr. Refai describes it, was removed and the wound healed. December 3, 2003, was the date of the exploratory surgery. At that time, Patient H.J. was on hemo-dialysis and was being seen by Dr. Refai once a week. In Dr. Refai's opinion Patient H.J. was doing remarkably well, making allowances for his underlying condition (illnesses). At present Dr. Refai is aware that the patient is on the list to receive a kidney transplant. On August 1, 2003, Respondent saw Patient H.J. In his notes Respondent stated: His wounds look good. There is no evidence of infection. No fever or chills. He looks well. He is not taking any pain medicine. I am going to see him back in a month for a final visit. On August 25, 2003, Respondent saw Patient H.J. again. The Respondent's notes stated: His p.d. catheter removal site which was removed 4 weeks ago has some erythema and induration around it. I ultrasounded it here in the office and it looked like there was a little fluid. I anesthetized the area and opened it. There was no gross pus. I am going ahead and treat [sic] him with some Keflex and have him see Dr. Beaver on Friday as I am going to be out of town. This may come to a head and become an abscess. It may just be some cellulitis. I am not real sure why he would have cellulites as it certainly did not look like a hernia. I am going to have him see Dr. Beaver on Friday and make sure it is improving. On August 29, 2003, a note was made by Dr. Beaver concerning his visit with Patient H.J. In that note Dr. Beaver said: Patient of Dr. Kinsey. He was seen back for re-check. Apparently he was having some questionable cellulites around his p.d. cath today. He states that he is feeling much better. On examination, I see no redness at all and per the office assistance it has much improved. There is really not tender [sic]. It looks to me like it is improving. We will plan for him to see Dr. Kinsey back next week. On September 12, 2003, Respondent saw Patient H.J. and in the office note stated: The area in his left lower quadrant is completely healed. He is doing well. I am going to see him back in one month for a final visit. On September 16, 2003, Respondent saw Patient H.J. again and in the office note stated: He had some drainage from his previous p.d. catheter site. It does not appear to be infected. I am going to follow this area and see him in the office in a month. On September 30, 2003, Respondent saw Patient H.J. again and in the office note it states: He still has some drainage from the p.d. catheter exit site [sic] it was done about eight weeks ago. I told him that I would like to leave that along [sic] for at least three months and follow that. If it does not improve after three to four months then we may need to explore the wound but it may be a piece of suture that it [sic] trying to spit. We will see him back in the office in about 6 to 8 weeks. On November 11, 2003, Respondent saw Patient H.J. and noted: He is still draining from his p.d. catheter exit site. This has been 5 months. It is time to explore the wound. We will proceed to the operating room for exploration in the sinus tract. I suspect that there will be a piece of the catheter in the bottom of the wound. On December 1, 2003 Respondent saw Patient H.J. for the pre-operative visit. At that time he noted: He is here for a pre-op for a wound exploration for his p.d. catheter removal site. He still has some granulation tissue there. I am going to plan to probe the area and evaluate where the sinus goes. On December 3, 2003, the surgery was conducted on Patient H.J. and Respondent noted: He underwent a left lower quadrant wound exploration. The p.d. catheter cuff was within the subcutaneous tissue and that is why his wound [sic] not close. This was removed and then the would [sic] was closed. He tolerated the procedure well. The various surgeries that have been discussed which were performed by Respondent took place at Bay Medical in Panama City, Florida. In the operative procedure report at the hospital related to the December 3, 2003 exploratory operation Respondent described a pre-operative diagnosis as: Non-healing wound, left lower quadrant of the abdomen. The post-operative diagnosis stated: Non-healing wound, left lower quadrant of the abdomen. Foreign body (peritoneal dialysis catheter cuff), left lower quadrant abdominal wound. The procedure performed was described as: Wound exploration and foreign body removal. The intra-operative findings related to the operation were: He was found to have a cuff of the catheter within the tissue. He had a small piece of p.d. catheter attached to it. The cuff had obviously broken. The catheter was broken with a cuff remaining in the subcu tissue. There was no intra-abdominal portion. In comparison, on July 21, 2003, in the operative/procedure report at Bay Medical through the description of the procedure to remove the catheter Respondent stated: . . . The previous incision in the left hypogastric area was anesthetized with local anesthetic and sharply incised. This was carried into the subcutaneous tissue and p.d.-catheter dissected and divided. The catheter was then pulled from the subcutaneous tissue at the exit site. The catheter was then delivered into the wound and abdominal wall cuff sharply incised and the catheter removed. The fascial edges were then reapproximated with 2 figure-of-eight0- vicryl sutures. On July 21, 2003, when Respondent removed the catheter from Patient H.J. no pathology was ordered. On December 3, 2003, following the exploratory surgery and retrieval of the catheter pathology was ordered. Daniel G. Dena was the pathologist at Bay Medical who addressed the specimen which was described by the pathologist as: "Tissue-p.d. catheter cuff" The anatomic diagnosis referred stated: "p.d. catheter cuff: plastic catheter, with attached fibro-fatty tissue at one end, showing acute and chronic inflammation." The macroscopic examination in the pathology report stated: "The specimen is labeled 'pd catheter cuff'. Received is a portion of plastic tubing measuring approximately 5 cm in length and up to 0.5 cm in diameter, with a cuff of soft tissue at one end measuring 2.5 cm in length and 1.2 cm in diameter." On July 26, 2004, in responding to the investigation that led to this prosecution Respondent stated in writing in relation to Patient H.J.: The original peritoneal dialysis catheter removal had gone uneventfully and I felt that both cuffs of the catheter had been removed in their entirety. But this was found not to be the case. I have placed a number of these catheters and removed a number as well and have not had this type of problem before. Visual inspection of the catheter on removal is routinely undertaken to ensure that the cuffs are removed and I felt that this had been completely removed but I was obviously mistaken. I am not sure if this was a defect in the catheter. Evaluation of the catheter and assurance of complete cuff removal would have probably prevented this process. I am certainly more cognizant of this being a problem in subsequent catheters that I have removed. At the original time of catheter removal the operative site appeared appropriate. At hearing Respondent offered additional explanation concerning the July 21, 2003 operation to remove the catheter from Patient H.J. and the exploratory surgery on December 3, 2003. As Respondent explained, in the July 21, 2003 surgery Respondent made a 3-to-4 cm incision about the belly button towards the middle of the abdomen through the skin, subcutaneous tissue, the fascial layer and muscle and peritoneal layer. The peritoneal layer is a semi-permeable membrane that waste products removed in the dialysis will cross. The catheter is placed into the abdomen. The catheter is 12 to 14 inches in length with a curlicue tail and holes in the end of the catheter that allows the fluids to be introduced and withdrawn from the abdomen. As Respondent explained the catheter has two cuffs, the smaller of which is designed for placement in the rectus muscle located along the inset part of the abdomen. The smaller cuff sits inside that muscle. Tissue attaches to that cuff to keep fluid from leaking out, to keep the catheter in place and to prevent bacteria from going down the outside of the catheter. There is a segment of the catheter between that cuff and a larger cuff which sits underneath the skin in the subcutaneous tissue. The tissue in that area attaches to the cuff and serves to hold the catheter in place. When removing the catheter on July 21, 2003, Respondent used an incision of about 3 cm and encountered the mid-portion of the catheter located between the two cuffs which was dissected down through the fascia and taken out with the portion in the abdomen being removed first. Before making the incision to remove the catheter, Respondent cut the portion of the catheter outside the body of Patient H.J. off, including the metal and plastic valves and other paraphernalia hanging out of the patient. The purpose of removing the catheter outside the patient's body was in the interest of protecting the surgical field from contamination to avoid wound infection. The part removed inside the patient initially was the intra-abdominal portion. The intra-abdominal portion of the catheter, including the cuff in that area was sharply removed. The cuff was 2 or 3 times the size that it would have been when first placed and the part around the cuff was cut to allow the catheter to be extracted. The area of the fascia was closed. Next Respondent addressed the subcutaneous portion of the catheter by following it out and sharply cutting the tissue around the catheter and the subcutaneous cuff with scissors to remove that portion which also had an ingrowth of scar and fibroblastic tissue. Once the portions of the catheter with the cuffs, had been removed Respondent looked to determine if he had both cuffs which appeared at that time as a wad of scar and tissue. Respondent then closed the wound. Respondent believed that he had removed the whole catheter, to include the cuffs. In fact the subcutaneous cuff was not entirely removed and another portion of the catheter remained in the patient following the July 21, 2003 surgery. Respondent's estimate of what had been left in the patient and removed on December 3, 2003, was about 2 cm of the subcutaneous cuff and then a portion of the balance of the catheter. In commenting on the difference between the pathology report and his visual assessment on December 3, 2003, Respondent remarked about "all the stuff" grown onto the cuff and catheter. He also said it had a lot of specimen, taken to mean the "stuff" attached to the cuff and catheter. Although in the operative notes from December 3, 2003, Respondent says the catheter broke, at hearing he stated that he did not know whether the catheter had been cut or broke during the July 21, 2003 procedure to remove the catheter. No independent tests were conducted to determine whether the catheter broke during the July 21, 2003 surgery or was cut by Respondent. Respondent does not precisely remember the appearance of the catheter, to include the cuffs, when examining it on July 21, 2003. But he believed that he had successfully removed the entire catheter. In his testimony Respondent describes the office visits subsequent to the July 21, 2003 surgery. When he saw Patient H.J. he observed cellulitis around the area of the incision which was treated with oral antibiotics and resolved. Respondent used ultrasound to determine whether fluid had collected in the area where he observed the cellulitis. No fluid collection was seen. Drainage was noticed around the exit site where the catheter came out of the skin, which ordinarily takes a month to six weeks to heal. Concerning the drainage around this exit site, Respondent expected the drainage to resolve within around five weeks unless there were a piece of suture or other kind of event keeping the site opened and draining. The wound site where the incision was made healed without incident. The exit site continued to drain. After a time Respondent concluded that the reason for the drainage was either an epithelilized sinus tract, a piece of suture, a piece of catheter, a piece of cuff, or a piece of dressing for the wound. Respondent waited a time before doing the exploratory surgery in view of the use of an absorbable suture in the July 21, 2003 surgery which would have dissolved over time, precluding the need to do the exploration. Respondent, given the problem with the drainage from Patient H.J. following the July 21, 2003 surgery to remove the catheter, does not believe that the failure to remove this fragment would have killed the patient or have caused a lot of problems, but it was bothersome enough that it was worth the effort to try and find it and get the patient healed. Respondent in dictating his post-operative note on December 3, 2003, thinks that the catheter had broken and continues to hold to that belief, although he recognizes that it may have been cut in the prior surgery. Concerning his practice at Bay Medical, Respondent did not routinely have an X-ray done for patients undergoing surgery without a more specific reason for ordering it. Nor did he order a pathology examination following surgery absent the need for specific information. Patient H.J. in his testimony described the level of pain following the July 21, 2003 surgery to remove the catheter as "a little pain." Expert Opinion Dr. Stanley P. Kococki is a general surgeon licensed in Florida. He is board-certified in general surgery. He has had experience placing and removing peritoneal dialysis catheters. He was qualified to offer expert opinion testimony concerning Respondent's treatment of Patient H.J., in particular, the surgery performed July 21, 2003. Dr. Kococki expressed the opinion that the Respondent fell below the standard of care in treating Patient H.J., in that Respondent failed to recognize that he had left a portion of the catheter in the patient, which Dr. Kococki describes as a retained foreign body and that this caused the patient to undergo a second unnecessary procedure, meaning that the second procedure would not have been necessary if the catheter had been removed completely in the first surgery. The failure to remove could possibly have caused serious problems for the patient, to include septicemia and death, according to Dr. Kococki. Dr. Kococki refers to the Respondent's obligation in removing the catheter, to make certain that the whole catheter was removed and that the wound properly healed beyond that point so that the patient would not experience problems. While recognizing that there are different techniques for removing the catheter from Patient H.J., Dr. Kococki took issue with the method employed by the Respondent. Dr. Kococki believes that there are other methods for avoiding the problem with infection than to cut the catheter outside the body. There was no description of the use of a hemostat or clamps to hold the retained part of the catheter once the outside segment had been cut, so that the remaining portion of the catheter would not be lost under the skin. In addition, by cutting the catheter in two places there was a chance of leaving a piece of the catheter in the patient. Dr. Kococki expressed the opinion that when you cut the catheter in several places you have to remember where the pieces of the catheter are left in the patient. Given other circumstances during the surgery that occupy the surgeon's mind, it can lead to leaving a piece of catheter behind. Dr. Kococki expressed the opinion that leaving the catheter behind was not in the best interest of the patient because it led to subsequent surgery and had the sinus tract closed over the foreign body would have caused a localized infection and abscess formation around that area and possibly allowed for the bacteria from the abscess to enter the patient's bloodstream causing sepsis, and abscess formation in other organs, possibly the abdominal cavity, with a possible rupture intra-abdominally causing the patient to have generalized peritonitis. That can be life threatening and ultimately lethal. It is more of a problem with the person that has end-stage renal failure, in that the patient has a weakened immune system and lessened prospects to fight off infection. Dr. Kococki relied upon the pathology report made after the December 3, 2003 surgery to accurately describe the size of the segment that was left in the patient. In order to ascertain what actually happened with the catheter Dr. Kococki believes that the company or an independent examining body would have to determine if the catheter was defective. Even in the instance where the catheter may have broken in the initial surgery to remove it on July 21, 2003, the onus is still on the surgeon removing the catheter to examine it to make certain it was removed intact. Dr. Kococki characterizes the catheter as commonly present and utilized in surgical procedures to place and remove peritoneal dialysis catheters. Dr. Kococki describes the catheter as a medical device, unlike a sponge, forceps, clamp or surgical needle. Dr. Kococki recognizes that the purpose of the catheter is to perform dialysis but the retained portion left after the initial surgery to remove the catheter does not have a medical purpose, in his judgment. Dr. Kococki describes the cuff in the field related to the abdominal wall as providing a seal to avoid bacteria. The cuff as he understands it has an antibiotic coating that will help fight off infection. The cuff reacts with the patient's body tissue to act as a sealant. To have avoided the problem of failing to account for a portion of the catheter during the initial surgery to remove it from Patient H.J., Dr. Kococki believes that the easiest thing to have done was while the patient was in the operating room send the catheter to a pathologist and have it measured for comparison against the known size of the catheter when first placed. A second safe-guard would be to use a portable X-ray of the abdominal cavity to make sure that there was no radiopaque material in the abdomen or subcutaneous tissue. The catheter has radiopaque material allowing this identification in Dr. Kococki's understanding. Dr. Kococki was not familiar with the procedures at Bay Medical where the catheter removal from Patient H.J. was performed. The bylaws of the institution do not require that the catheter be sent to pathology following removal. Dr. Thomas A. Gadacz testified in the interest of Respondent. He is licensed in several states. He is not licensed in Florida. He is an expert in the field of general surgery. He has placed and removed peritoneal dialysis catheters. Dr. Gadacz describes the catheter as a medical device. It has nothing in common with a sponge, forceps, clamp or surgical needle, in his opinion. As a surgeon Dr. Gadacz refers to sponges, forceps, clamps and surgical needles as items whose sole purpose is to assist during an operation, not intended to be left in the body. They are to facilitate an operation to provide exposure, to conduct the operation but they are not a therapeutic modality. By contrast the peritoneal dialysis catheter is used primarily for therapy by remaining in the patient for specified periods of time to treat the patient. Other aids in performing an operation are cotton balls called kitners, metal retractors and cannulas. Dr. Gadacz explains that the purpose of the cuffs related to the catheter is to react to the body so that tissue grows around them. The other part of the catheter made of Teflon is designed to be non-reactive. Dr. Gadacz is aware that catheters of the type under discussion have fractured or broken. Dr. Gadacz explained that the fracture of a cuff is not common. In his experience, in the instance where a segment broke in a catheter, Dr. Gadacz removed it. On the other hand the failure to remove the piece is not necessarily below the standard of care as Dr. Gadacz explains, "because some times this happens, and its, you don't know that that has happened." The possibility of knowing that the segment broke off is difficult. As Dr. Gadacz describes, it was impossible given the tract involved with the surgery here. The gross inspection of the catheter once removed from the patient is a process in which it is difficult to make certain that both cuffs are there because of the encrusting fibrous tissue found after removing the cuffs, causing the cuffs to no longer have the same appearance as when first placed. The visual inspection made of the catheter after removal would not necessarily reveal whether it was removed in its entirety, according to Dr. Gadacz. Dr. Gadacz is unfamiliar with surgeons who would use an X-ray after removal of the catheter to confirm that the entire catheter had been removed. Instead he defers to Respondent's operative note on December 3, 2003, where the Respondent says that the catheter had obviously broken to explain the failure to retrieve the catheter. Dr. Gadacz does not believe sending the catheter to pathology after it was removed on July 21, 2003, would necessarily have been useful because it would take familiarity on the part of the pathologist with that form of catheter to recognize that a part was missing. Dr. Gadacz recognizes that the fragment from the catheter left in Patient H.J. at the end of the initial surgery to remove the catheter is medically considered a foreign body because it was not part of the human body. Dr. Gadacz found nothing in the care provided by Respondent by to Patient H.J. after the July 21, 2003 surgery that was questionable. Dr. Gadacz did not find the technique Respondent used in removing the catheter on July 21, 2003, from the Patient H.J. to be below the standard of care. Generally Dr. Gadacz did not express the opinion that Respondent practiced below the standard of care. Dr. Gadacz explained that had the segment continued to be present in the patient there would have been a major risk of continuing infection and ultimately the patient could have developed a serious abscess in the subcutaneous tissue that could become life-threatening or nothing may have happened, and the segment may have been walled off by the patient's body. In determining the comparability of what is described in Section 456.072(1)(bb), Florida Statutes (2003), as "other paraphernalia," to those items listed within that section, "such as a sponge, clamp, forceps, surgical needle," that are "used in surgical examination, or other diagnostic procedures," reliance is made upon testimony from Dr. Gadacz. As a surgeon, the opinion by Dr. Kococki is rejected for reasons that will be explained in the conclusions of law. When considering whether Respondent failed 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, as envisioned by Section 458.331(1)(t), Florida Statutes (2003), with the specificity called for in that provision, Dr. Kococki is more compelling in his opinion that the fragment left in Patient H.J. should have been removed in the earlier operation whether it broke or was cut by Respondent. The notion that there are times when some portion of the catheter may have been left in the patient, as was the case here, with no consequences to the practitioner, as expressed by Dr. Gadacz is not persuasive. Disciplinary History The Respondent has no prior disciplinary history.
Recommendation Based upon the findings of fact, and conclusions of law, and the guidance set forth in Florida Administrative Code Rule 64B8- 8.001, it is RECOMMENDED: That a final order be entered finding that Respondent did not violate Section 456.072(1)(bb), Florida Statutes (2003); that Respondent did violate Section 458.331(1)(t), Florida Statutes (2003); placing Respondent on probation for two years; imposing an administrative fine in the amount of $2,500.00; requiring Respondent to perform 50 hours of community service; requiring the completion of 5 hours of continuing medical education on "risk management" and requiring him to present a one-hour lecture to a group of peers discussing retention of foreign bodies in surgeries and techniques to avoid the retention. DONE AND ENTERED this 14th day of February, 2006, in Tallahassee, Leon County, Florida. S 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 14th day of February, 2006. COPIES FURNISHED: William F. Miller Ephraim D. Livingston Assistants General Counsel Department of Health 4052 Bald Cypress Way, Bin C-65 Tallahassee, Florida 32399-3265 Albert Peacock, Esquire 8554 Congressional Drive Tallahassee, Florida 32312 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 Cleveland Clinic Florida Hospital's application for a Certificate of Need to operate an adult inpatient cardiac catheterization program in AHCA District 10 should be granted or denied by the Agency for Health Care Administration?
Findings Of Fact The parties Cleveland Clinic Florida Hospital, ("CCFH,") is a not-for-profit corporation which owns and operates a 153 bed acute-care hospital located within the incorporated limits of Fort Lauderdale on Route A1A in the mid-section of Broward County, AHCA District 10. Among its 153 medical and surgical beds are approximately 11 beds in the intensive care unit and a similar number of intermediate care beds. CCFH is not a Level II trauma center; nor does it provide comprehensive medical rehabilitation services or the tertiary health care services of open heart surgery or organ transplantation. But, fully accredited by the Joint Commission of Health Care Organizations for Special Care Units, provision of tertiary care services in South Florida is a long-term goal of CCFH. Amisub (North Ridge Hospital), Inc., d/b/a North Ridge Medical Center, owns and operates a general acute-care hospital located in Broward County. It provides adult inpatient cardiac catheterization services as well as open heart surgery services. North Broward Hospital District, (the "District,") owns and operates hospitals in Broward County. Among the hospitals are three that provide, individually, adult inpatient cardiac catheterization services. The three hospitals, each a division of the District, are known as Broward General Medical Center, ("BGMC,") Imperial Point Medical Center, ("IPMC,") and North Broward Medical Center, ("NBMC.") In addition to cardiac cath services, BGMC provides open heart surgery services. Holy Cross Hospital is located in the northern part of Broward County within thirty minutes travel time of CCFH by emergency vehicle. It has 587 total licensed beds; 535 are acute care beds, 9 are level II NICU beds and 43 are rehabilitation beds. There is an open heart surgery program at Holy Cross and an adult inpatient cardiac catheterization program with two cardiac cath laboratories. The Agency for Health Care Administration is the single state agency authorized by Section 408.034(1), Florida Statutes, to issue or deny certificates of need, "written statements ... evidencing community need for a new ... health service [such as an adult inpatient cardiac catheterization program.]" Section 408.032(2), Florida Statutes. Other Cleveland Clinic Organizations Cleveland Clinic Florida ("CCF") is a not-for-profit corporation separate and apart from CCFH. Comprised originally of 24 or 25 physicians, most of whom came from the Cleveland Clinic Foundation in Cleveland, Ohio, it began operation in Broward County on February 29, 1988. CCF initially established an outpatient diagnostic and treatment facility on Cypress Creek Road in the eastern middle part of Broward County with the long- term aim of providing tertiary health care services in the South Florida market. It contracted for hospital services with North Beach Hospital, and with the growth of its practice, purchased the hospital in 1990. Converted into a separate not- for-profit corporation, (the applicant in this proceeding,) the hospital was re- named Cleveland Clinic Florida Hospital in 1993. In the six years since the inception of its practice, CCF has expanded into a multi-specialty group practice of approximately 85 physicians, representing more than 30 specialties. Both CCF and CCFH are subsidiaries of the same parent corporation. Although governed by separate entities, a Board of Trustees in the case of CCFH and a Board of Governors in the case of CCF, both entities' boards report to a common Board of Trustees. That board is the Executive Committee of the Board of Trustees of the parent corporation, the Cleveland Clinic Foundation. The Foundation, located in Cleveland, Ohio, is a not-for-profit corporation that serves as the sole corporate member of CCFH. Presently a multi-disciplinary group of approximately 500 salaried physicians, the Foundation is an integrated physician hospital organization, composed of hospital and clinical divisions and a research institute. In contrast to a traditional hospital environment in which a hospital governance may or may not be in accord with its service components' goals, these divisions and the research institute act in concert. The Foundation's organizations and its physicians, therefore, through collaborative effort, carry out the same mission: to provide better care of the sick, to investigate the problems of their illnesses, and to advance those who serve in like capacities. Fundamental values associated with this mission include quality, integrity, compassion, collaboration and commitment. Established in 1921, the Foundation has an extraordinarily distinguished history in cardiac care including coronary cardiac catheterization. Staff members, for example, performed the first valve transplant with bypass surgery. More pertinently, coronary angiography, a diagnostic procedure involving placement of a catheter into the heart, and which accounts for more than 80 percent of diagnostic cardiac catheterization activity, was performed for the first time at the Foundation. Today, the Foundation enjoys wide-spread recognition as a leader in cardiovascular care, research, and education. It is a major tertiary referral center for cardiac patients, treating high risk patients, many of whom have recurring heart disease. The Foundation's hospital in Cleveland has approximately 1,000 beds and is a full service tertiary care center with the exception that it does not provide obstetrics. The Foundation has seven cardiac cath laboratories used primarily for adult cardiac cath or angiography. An eighth laboratory is used to evaluate the arteries in the legs. There are approximately 17 cathing cardiologists on staff at the Foundation's hospital, compared to two on staff at CCFH. On average, 280 adult diagnostic cardiac cath procedures are performed there annually. 12. Despite the close relationship among the Cleveland Clinic organizations, CCFH is a separate entity from the others. The Foundation hospital, as outlined above, is both much larger than CCFH, and a major tertiary referral center when CCFH, at the moment, can only hope to provide tertiary services in the future. Most importantly, while advantages enjoyed by the Foundation may flow directly to CCFH because of their close relationship, the Foundation is not a co-applicant with CCFH in this proceeding. Nor is CCF a co-applicant. The applicant in this case is CCFH only. Pre-hearing Proceedings Including a Projection of Numeric Need Leading to the Agency's Intent to Grant CCFH's Application. 13. On August 6, 1993, the AHCA published in the Florida Administrative Weekly its Summary Need Projections. The Agency's publication projected a need for one additional adult inpatient cardiac catheterization program in District No party challenged the Agency's projection of numeric need. By letter dated August 19, 1993, CCFH notified the Agency of its intent to submit a Certificate of Need application for an adult inpatient cardiac catheterization program in District 10. On the same day that the letter of intent was filed with the agency, August 23, 1993, CCFH filed a copy of the letter with the Broward Regional Health Planning Council. Within fourteen days of the filing of the notice of intent with the Agency, CCFH twice published in the Fort Lauderdale Sun Sentinel a Notice of Filing. The first publication was on August 23, 1993, the second, on September 3, 1993. On September 22, 1993, CCFH filed the application with the Agency and on the same day filed a copy with the Broward Regional Health Planning Council. On October 7, 1993, the Agency acknowledged receipt of the application and informed CCFH that, "[c]ertain elements have been omitted from your proposal which are needed to implement formal review." Cleveland Clinic's Composite Ex. No. 2, Tab 3. Attached to the letter were a list of the omissions under the heading, "Omissions - Certificate of Need No. 7449." The letter informed CCFH that it was required by law to file an omissions response with both the Agency and the appropriate local health council by 5 p.m. on November 8, 1993, or else the application would be incomplete and deemed withdrawn by operation of Agency rule. On November 8, 1993, CCFH timely filed an omissions response with the Agency and a copy with the Broward Regional Health Planning Council. One week later, the Agency acknowledged receipt of the response and deemed the application complete effective November 9, 1993. On January 10, 1994, the Agency by letter to CCFH informed it of its intent to issue: Certificate of Need Number 7449 to Cleveland Clinic Florida Hospital for the establishment of an adult inpatient cardiac catheterization program at Cleveland Clinic Hospital located in Ft. Lauderdale, Broward County, District 10. Cleveland Clinic Composite Ex. No. 2, Tab 6. The letter also informed CCFH that the Agency intended to deny Certificate of Need No. 7551 for the establishment of a like program to be conducted by NME Hospitals, Inc. Outpatient Cath Lab Not Subject to CON Review At the time of hearing, CCFH had no outpatient cardiac catheterization program in operation. But, in October of 1993, CCFH requested a determination from the Agency as to whether it could establish an outpatient cardiac catheterization laboratory without certificate of need review. It received word that an outpatient lab would not require review by letter from the Agency dated October 25, 1993. Whatever one may think of the wisdom of a policy of allowing outpatient cardiac cath labs to escape CON review, (and the apparent conflict with requiring inpatient labs to undergo such review,) the Agency's determination is in keeping with the policy of this state. For its part, CCFH is committed to opening an outpatient cardiac cath lab, regardless of whether it receives the approval it seeks in this proceeding. Commencement of operation for the outpatient laboratory will occur prior to start-up of an inpatient program. At the time of hearing, the outpatient lab was expected to commence operation sometime between November, 1994 and January, 1995. CCFH's aspiration to have an inpatient, as well as an outpatient, cardiac catheterization program at its hospital supports its long-term objective of providing the tertiary services provided in open heart surgery. An inpatient program will be capable of providing immediate endocardiac catheter pacemaking in cases of cardiac arrest, and pressure recording for monitoring and evaluation of valvular disease, or heart failure. The Application Conversion of the Outpatient Lab CON Application No. 7449, (the "Application,") seeks authority to establish an adult inpatient cardiac catheterization program at the Cleveland Clinic Florida Hospital. If granted, the outpatient cardiac catheterization laboratory will be converted to inpatient use. But approval of the application will provide authority to perform diagnostic cardiac catheterization only, not therapeutic cardiac catheterization. To implement the inpatient cath program, CCFH will not incur any construction, design, or equipment costs beyond those incurred with the outpatient cardiac cath facilities. Location, Design and Equipment The proposed location for the cardiac cath laboratory has not changed since the application was submitted in September of 1993. Well situated in relation to the central supply, surgical, telemetry and intensive care areas of the hospital, the laboratory will be on the second floor of the hospital, the site of the pathology lab at the time of the application. It has the added benefit of being near where families can wait while procedures are conducted. And, near the elevator on the second floor and an adjacent post-procedure monitoring area, the location is well-suited to good patient flow. The proposed design has not changed either since the filing of the application. The design calls for special procedure x-rays, film storage, and a dark room for proper processing of films. There will be adequate and appropriate space allocated to each area of the laboratory including the patient holding area. The equipment, manufactured by Picker and Hewlett-Packard, is "state of the art." To be purchased, whether the laboratory remains outpatient or not, is x-ray equipment with the capability of cineangiography or cineangiocardiography, an image intensifier, an automatic injector, a diagnostic x-ray examination table for special procedures, a blood gas analyzer and a multi-channel polygraph. A Closed Lab Currently there are no closed cardiac cath labs in Broward County. But, CCFH intends to operate its cath program, if converted from outpatient to inpatient, as "closed," meaning use of the laboratory by medical staff will be restricted. In the case of CCFH, the restriction will allow only physicians employed by CCF to have access to the lab. Initially, medical staff will be restricted to two members of CCF. When warranted by volume of procedures, CCF will recruit additional physicians to perform cardiac catheterization procedures at the lab. Modeling the Foundation with its Assistance With the assistance of the Foundation, CCFH will model its cardiac cath program after the program in place at the Foundation, allowing for the unique needs of its patient base. The Foundation model entails guidelines and protocols that ensure procedures performed are appropriate, cost-effective, efficient, with acceptable morbidity and mortality, and in a setting that allows education, research and training of medical personnel. It involves salaried staff physicians, in a closed laboratory where the performance of the physicians, themselves, as well as of nurses and technicians are monitored and evaluated. The Foundation has developed standardized protocols for determining whether catheterization procedures are indicated, how they should be performed, and for the evaluation of patients before and after the procedure. It has also developed quality assurance, credentialing, recredentialing, and peer review protocols. Standardized protocols improve efficiency, lower costs, and contribute to better patient care. The Foundation will assist CCFH in developing standardized protocols, based on the protocols used at the Foundation. The Foundation will assist CCFH in training the staff which will perform procedures at the laboratory. The Foundation will make available staff to visit the hospital and will allow CCFH staff to participate in training at the Foundation. The Foundation's assistance should enable CCFH to implement the program expeditiously and efficiently. Other Protocols CCFH has in place a transfer protocol for the transfer of emergency patients to Holy Cross Hospital where open heart surgery and other coronary procedures not available at CCFH can be performed. Holy Cross has agreed to accept emergency transfers. Another Application In addition to the filing of the application in this case, CCFH filed another application for the batched cycle in the Spring of 1994. There are differences in the two applications because the data used by the two are different; the data for the second application being newer. The application in this case used the best data available at the time the application was prepared. Certificate of Need Criteria The criteria upon which the Agency "shall ... review applications for certificate-of-need determinations for health care facilities," Section 408.035(1), F.S., are listed in subsections (a) through (o) of the statute. In addition, Section 408.035(2), Florida Statutes, mandates the Agency to make certain findings of fact, listed in subsections (a) through (e) "[i]n cases of capital expenditure proposals for the provision of new health services to inpatients." Benefits and Absence of Harm Approval of the project is advanced by CCFH as meeting principally three public needs. First, it will further the development of the only fully- integrated health care provider in South Florida. This innovation into the South Florida market will improve quality and control cost. Second, it will improve access to services, albeit limited to cardiac care, for the uninsured population. Access to health care services for the uninsured population is one of the main needs of the health care system in Florida. Third, it will further expanded medical research and education in District 10 by allowing the Cleveland Clinic organization through the presence of CCFH in South Florida to sponsor research and postgraduate medical education in cardiology. Approval of the application will not do any harm. It will not result in any significant expenditure or duplication of equipment since CCFH has already committed to the equipment for its outpatient facility. It will not result in harm to the quality of inpatient cardiac cath services at existing providers. Nor will it cause significant financial injury to existing providers. Need in Relation to the Applicable District Health Plan and State Health Plan The State Health Plan The 1989 State Health Plan, superseded for the most part by the 1992 Interim State Health Plan, contains the latest statement at the state level of policy preferences for approval of new inpatient cardiac cath programs. The 1989 Plan lists four preferences, three of which apply to the application. The second preference applies to counties without any cardiac cath programs and so is not applicable to this proceeding. Of the remaining three preferences, CCFH's application does not conform to the third preference: "Preference shall be given to hospitals with a history of providing a disproportionate share of charity care and Medicaid patient days in the respective acute care subdistrict...". (Cleveland Clinic's Composite Ex. No. 2, Tab 4, p. 18, Testimony of Dr. Luke, Tr. 989.) The application conforms to the first and fourth preferences. The first preference is: "Preference shall be given to an applicant who proposes the establishment of both cardiac catheterization services and open heart surgical services provided that a need for open heart surgery is indicated." Id. The application conforms to this preference because CCFH has applied for authority to implement an open heart surgery program and because the "Florida Need Projections Adult Inpatient Cardiac Catheterization and Open Heart Surgery Programs and Pediatric Cardiac Catheterization and Open Heart Surgery Programs, January 1996 Planning Horizon" indicates a net need for one adult inpatient cardiac catheterization program and a net need for one adult open heart surgery program in District 10. Id. The fourth preference is: "Preference shall be given to an applicant who agrees to provide services to all patients regardless of their ability to pay." Id., p. 19. Consistent with its mission, CCFH has agreed to provide services to patients regardless of ability to pay as evidenced by its commitment to deliver 76 diagnostic caths per year to the uninsured population. The application is consistent with the goals of the 1992 Interim State Health Plan and "Healthy Homes, 1994," the 1994 Health Security Plan. Both of those plans demonstrate the intent of the State to promote improved access, quality, and cost control, based on the model of managed competition. The Cleveland Clinic is cited specifically in those plans as the type of organization that will facilitate managed competition. The District Health Plan The application conforms to both of the recommendations contained in the 1990 District 10 Comprehensive Health Plan. The application conforms to the sole applicable recommendation contained in the 1993 Certificate of Need Allocation Factors Report for Broward County. That recommendation, (also the second recommendation in the 1990 plan,) requires an applicant to document its willingness to make services available to all segments of the service area population, regardless of ability to pay. The recommendation is satisfied by CCFH's commitment in the application to perform seventy-six (76) diagnostic catheterization per year to the uninsured population. Availability, Accessibility, Quality of Care, Efficiency, Appropriateness, Extent of Utilization, and Adequacy of Like and Existing Services in the Service District of the Applicant Geographic Availability and Accessibility There are twelve existing providers of adult inpatient cardiac cath services located in District 10. There are five of these providers within five miles of CCFH: Holy Cross, North Ridge, IPMC, BGMC and Pompano Beach Medical Center. Less than eight miles away are three other providers: Plantation General Medical Center, Florida Medical Center and North Broward Medical Center. A thirteenth program was approved at University Medical Center in 1994. The road system in Broward County is highly developed. There are many facilities within a few minutes drive of any resident in Broward County. In sum, even were CCFH's aspiration of obtaining approval for an inpatient cardiac cath lab never granted, there is no portion of Broward County that is without close, easy and reasonable geographic access to diagnostic inpatient cardiac care. Extent of Utilization Several providers have multiple laboratories, including North Ridge with three separate cardiac catheterization labs. Not counting the new program at University Medical Center, there are 19 cardiac cath laboratories in the District. At a minimum, a single cardiac catheterization laboratory can reasonably accommodate between 1500 and 2000 cardiac catheterizations in a single year. The nineteen labs of the providers existing and in operation at the time of hearing, therefore, had the capacity to perform between 28,500 and 38,000 cardiac catheterizations per year. During 1993, there were 14,701 cardiac caths performed at existing providers in District 10, a number, it may be safely assumed, no more than half of the capacity supported by existing providers. Individually, no existing provider operated at as much as 80 percent capacity and six of the twelve operated at less than 30 percent capacity. Excess capacity led the Agency to conclude in its State Agency Action Report, ("SAAR"): the need for an additional program cannot be supported in total, although based on current and proposed referral patterns, the impact of an additional cardiac cathe- terization program in the district on these underutilized facilities appears minimal. Cleveland Clinic Composite Ex. No. 2, Tab 6, SAAR, p. 13. The primary impact of an inpatient program at CCFH will be on BGMC and Holy Cross, where CCF physicians currently perform diagnostic caths. The adequacy of existing capacity was confirmed by testimony from the Chief of the Certificate of Need and Budget Review sections of the Agency that she is not aware of any individuals within two years of June of 1994 who have been denied access to inpatient diagnostic cardiac cath services because of lack of capacity. Quality of Care Quality assurance, peer review, and credentialing processes are established in order to ensure the highest quality of care. The objective of these processes is to reduce the possibility of unwanted events during the course of treatment. The American College of Cardiology and American Heart Association ("ACC/AHA") have established guidelines regarding the number of diagnostic cardiac catheterization procedures a physician should perform in order to maintain proficiency in the procedure. The guidelines provide, generally, that each physician perform a minimum of 150 procedures annually. And, in general, the guidelines provide that where a physician performs at multiple laboratories, a minimum of 50 procedures should be performed at each laboratory. Some hospitals in Broward County do not require physicians to meet the guidelines. For example, the clinical criteria for performing cardiac cath services at BGMC require that a physician perform as few as 25 diagnostic procedures annually. During 1992 and 1993, only two of the nineteen physicians credentialed to perform diagnostic cardiac catheterization services at NBMC performed more than 40 procedures at the facility. But the guidelines are nothing more than for the purpose of offering guidance to a director of a laboratory in making decisions for what is appropriate in terms of operator experience with regard to credentialing. They are "not written in stone." (Tr. 367.) Exceptions are justifiably made on a case-by-case basis and do not necessarily reflect on quality of care. And there are exceptions in the guidelines, themselves, made for physicians who have extensive experience, that is, more than a thousand independently prepared cases. Nonetheless, one would expect that adherence to the guidelines would enhance quality of care. With the exception of the indirect negative reflection on quality of care that failure to adhere to the guidelines might have, and which could arguably lead to an inference that quality of care was suffering in some existing providers, there was no evidence that quality of care for inpatient cardiac catheterization patients suffers in Broward County. To the contrary, existing providers in District 10 are providing good quality of care. Access for Uninsured Persons Whether on an outpatient or an inpatient basis, CCFH has committed to perform 76 cardiac catheterization on uninsured patients annually, if their application for an inpatient service is granted. On an age-adjusted basis, the use rates for the District 10 uninsured population for diagnostic cardiac catheterization services are significantly below those for the insured population. But whether the use rates signify that the uninsured population of Broward County does not have adequate access to needed cardiac catheterization services is difficult to determine. Dr. Luke, CCFH's expert in health care planning, concluded that uninsured residents of District 10 do not have adequate access. His opinion was met with forceful resistance by other experts in health care planning presented by Cleveland Clinic's opponents. Even the Agency, CCFH's supporter in this proceeding, does not share Dr. Luke's opinion. But Dr. Luke's opinion gains support form the nature of cardiac catheterization. It is a service dependent on referrals. Uninsured persons plainly have more difficulty navigating the referral chain. While there are a number of vulnerabilities in the data Dr. Luke used to reach his opinion, without doubt, there are at least 76 members of the uninsured population per year in Broward County who need cardiac catheterization services annually. Whether they would receive such services, were Cleveland Clinic's application granted, is dependant upon whether they can successfully make their way along the referral chain. CCF, as a multi-specialty practice group, has few primary care physicians, the physicians who would make the initial referral that would lead to a cath procedure at CCFH. But, CCFH and CCF will engage in a program of outreach to identify appropriate uninsured candidates for cardiac catheterization services. CCFH and CCF will inform primary care physicians and clinics of their commitment to provide care to the uninsured population, and will encourage physicians to refer candidates for diagnostic cardiac catheterization services to CCF and CCFH. This outreach program enhances the chances that District 10's uninsured in need of cardiac catheterization services will receive them but there is no guarantee that the outreach program will be successful. Nor has CCFH, in its application or otherwise, offered such a guarantee. Ability and Record of the Applicant to Provide Quality of Care The CCFH cardiac catheterization program will enhance the quality of care offered in Broward County. The CCFH program will model its quality assurance, peer review, patient care, and credentialing/recredentialing protocols upon those used by the Foundation. These protocols meet or exceed the elements necessary to a successful quality assurance program contained in "Guidelines for Continuous Quality Improvement in the Cardiac Catheterization Laboratory" by Members of the Laboratory Performance Standards Committee of the Society for Cardiac Angiography & Interventions, a committee chaired by an employee of the Foundation, Frederick A. Heupler, Jr., M.D. The Foundation's quality assurance and peer review programs provide expressly for sharing quality assurance data with all physicians who perform procedures in the laboratory. The Foundation conducts weekly conferences at which data and specific cases are discussed among all the physicians performing procedures in the laboratory. The CCF physicians who will perform procedures in the CCFH laboratory will participate in the Foundation's conferences via the Foundation's telemedicine capability. The conferences perform an important educational function because in order to bring about quality improvement, the purpose of quality assurance, it is essential to provide feedback to all the physicians, nurses and technicians involved. The closed nature of the inpatient laboratory will enhance quality of care in several ways. Low-volume operators will be excluded thereby enhancing quality control. It will be easier to assure that the physicians with access to the lab meet recommended minimum volume standards necessary to assure quality. Cooperation is enhanced in the standardization of indications for procedures, practice of procedures and protocols. And, the ability to evaluate physicians' performances for purposes of recredentialing is enhanced. CCFH's status as an academically oriented organization enhances quality of care. For example, the presence of post- graduate fellows training in cardiology not only provides support to the laboratory but through their enthusiasm and inquisitiveness provide an animated atmosphere that brings out the best in the practitioners. As well as taking time to educate the fellows, the physicians spend more time educating the nursing staff. The nursing staff, therefore, benefits, in turn, from the stimulating environment afforded by the academic orientation to be provided in the Cleveland Clinic setting. The establishment of a cardiac catheterization program at CCFH will allow the CCF cardiologists to interact clinically with the rest of the CCF staff physicians, who practice predominantly at the hospital. The collegial clinical relationship among the CCF staff physicians enhances quality of care. The CCFH program will perform a minimum of 300 procedures annually by the second year of operation, consistent with the minimum number of procedures called for by the ACC/AHA Guidelines to ensure quality of care. The CCFH program will have a sufficient number and complement of staff to provide high quality services to the patients projected to be served by the program. The number and complement of staff are sufficient to allow for rapid mobilization of an on-call team 24 hours a day, seven days per week. The staff projected for the CCFH program will include a program director, board certified or board eligible in cardiology, radiology, or with subspecialty training in cardiology or cardiovascular radiology; a physician, board- certified or board-eligible in cardiology, radiology, or with specialized training in cardiac catheterization and angiographic techniques who will perform the examination; support staff, specially trained in critical care of cardiac patients, with a knowledge of cardiovascular medication and an understanding of catheterization and angiographic equipment; support staff, highly skilled in conventional radiographic techniques and angiographic principles, knowledgeable in every aspect of catheterization and angiographic instrumentation, with a thorough knowledge of the anatomy and physiology of the circulatory system; support staff for patient observation, handling blood samples and performing blood gas evaluation calculations; support staff for monitoring physiological data and alerting the physician of any changes; support staff to perform systematic tests and routine maintenance on cardiac catheterization equipment and be available immediately in the event of equipment failure during a procedure; and support staff trained in photographic processing and in the operation of automatic processors used for both sheet and cine film. The CCFH plan for care both before and after the procedure will be of high quality. 74. CCFH's cardiac catheterization program will be capable of providing immediate endocardiac catheter pacemaking in case of cardiac arrest and pressure recording for monitoring and to evaluate valvular disease, or heart failure. The following noninvasive cardiac or circulatory diagnostic services will be available at CCFH: Hematology studies or coagulation studies; Electrocardiography; Chest x-ray; Blood gas studies; and Clinical pathology studies and blood chemistry analysis. Availability of Alternatives to the Project While there was expert opinion that an appropriate alternative would be to use the expertise of CCF physicians by operating "a high quality Cleveland Clinic program in one of the existing combined diagnostic and open heart approved facilities," (Tr. 1415,) there are disadvantages to this alternative. First, the transfer of patients from CCFH to a hospital providing inpatient cardiac catheterization services poses risks to patients and anxiety for both the patient and family. Transfer of patients also disrupts continuity of care. Second, the equipment for the laboratory has been purchased. If the project is not implemented, inpatients at CCFH will bypass that equipment and be transferred elsewhere. Third, there are no cost savings associated with the alternative since CCFH will implement an outpatient program if the inpatient program is not approved. Fourth, the South Florida community will not benefit from the research and education capabilities of CCFH and Foundation. Finally, the community will not benefit from whatever free care it might receive if CCFH is able, in fact, to make good on its pledge for the provision of free care. In contrast, the proposed program will benefit the community by enhancing the chances of improving access to the uninsured population, expanding and enhancing medical research and education, and furthering development of the only fully-integrated health care provider in South Florida, which, in turn, will improve quality and control costs. The Need For Research and Educational Facilities North Broward Hospital District has a division of academic affairs related to the training of medical students. It has established medical student affiliations with Nova Southeastern College of Osteopathic Medicine in Broward County and the University of Florida School of Medicine. Broward General Medical Center is seeking approval to establish a residency program and currently instructs third and fourth year medical students on a regular basis. These students often observe cath lab procedures at both BGMC and NBMC. By 1995, BGMC will be listed as an available point of residency in the catalog for the University of Florida School of Medicine. In addition to assisting in the education of medical students, the District is seeking national approval as a continuing medical education (CME) site. CME programs are presently approved by the Florida Medical Association. The week the hearing in this proceeding commenced, for example, the District's division of academic affairs hosted a program on emergency cardiology services sponsored by the University of Florida. Research programs serve an important function as a point of dissemination of new medical techniques. The District is engaged in secondary research. It was recently selected to participate in a multi-center lifestyle heart trial. Six sites were selected nationwide with BGMC being one of the approved sites. The program will do research regarding the reversal of coronary heart disease. The District's hospitals, moreover, have an Institutional Research Board. Any physician can propose a research program to the Board. But, despite BGMC's research activity, there are no recognized research institutions in District 10. Unlike the research in which the District is engaged which is secondary in nature, academic centers such as the Foundation, perform primary or original research. The Foundation, together with CCF and CCFH, is actively engaged in research related to cardiology. Included among CCF and CCFH's research activities are multi- center research studies, most of which are coordinated with the Foundation. The Foundation serves as the principal investigator for those studies but District 10 will benefit from the close relationship with the Foundation enjoyed by CCF and CCFH. There are substantial benefits associated with graduate medical education, including enhancing the quality of medical services provided. When patient care takes place in the milieu of education and research, as it does at the Foundation's facility in Cleveland, it enhances a hospital's opportunity to recruit physicians interested in that type of activity more than in the economics of medicine. Because of the close relationship between the Foundation and CCFH, the benefits provided by the Foundation's research and educational environment spill over to the applicant. For example, the Foundation has one of the largest cardiology residency programs in the United States. Residents from that program, as well as other Foundation residency programs, rotate to CCF/CCFH for part of their training. The number of Foundation residents rotating to CCF/CCFH has grown from 6 to 29 over five years. Most of the residents are in primary care and internal medicine programs. CCFH will provide educational benefits independent of the benefits that flow from the Foundation. There exists a need for additional graduate medical education training sites both in Florida and in District 10. Florida ranks 41st among the 50 states in the number of residents per population. To help meet this need, CCFH provides an independent residency in surgery under the guidance of CCF. It is the only accredited graduate medical education program in District 10. The proposed inpatient cardiac cath lab will further the training of graduate medical students both in Florida and Broward County by increasing their educational opportunities. The program will provide CCFH with the full diagnostic capabilities needed in order to train internists and other primary medicine specialists in evaluating and caring for cardiovascular patients. The ability of primary care physicians to evaluate and care for cardiovascular patients is critical, given the high rate of cardiovascular disease in South Florida. The provision of graduate medicine education requires institutional commitment. The applicant is so committed and its application is backed by the commitment of CCF. The approval of the application will enhance medical research and education in District 10 and the State of Florida. Availability of Resources CCFH's estimate of project costs is found on the second page of Schedule 2 on page 63 of its omissions response. A breakdown of the estimated costs appears at pages 114 and 115 of the omissions response on Table 25, AHCA Form 1455, 1993. The total of the estimate, $117,000, accurately reflects the total costs for the application. CCFH has available the $117,000 necessary to meet the costs and to finance implementation. CCFH will be able to recruit the nursing and technical staff necessary to the implementation of the project. Long-term Financial Feasibility The immediate financial feasibility of the project is not in doubt. CCFH has available funds in cash from operations with which it intends to fund the start-up of the project. The long-term financial feasibility of this project is another matter. Measured by whether the project produces a positive net income following its start up period, long-term financial feasibility should not be an impossible matter to judge within accepted norms. But, determining long-term financial feasibility in this case is difficult because of the troublesome task of sorting out the truth when experts, all duly-qualified, have opinions, either as to the underlying data and assumptions or the ultimate conclusion, that are diametrically opposed. Petitioners and intervenor attacked fervently the assumptions underlying the opinion of CCFH's expert in health care finance that the project is financially feasible in the long-term. These assumptions were, in the main, provided to the finance expert by CCFH's expert in health care planning, Dr. Luke. The attack was launched from various angles. One expert witness noted that the Agency reported in its SAAR that it was unable to determine long- term financial feasibility and that such an observation by the Agency ordinarily would lead to preliminary action by the Agency in the form of a denial. Moreover, inconsistencies between the Application and the subsequent application were viewed by experts other than Dr. Luke as "profound." (See e.g., Tr. 1300.) Conclusions reached in the application were seen as inconsistent by opposing experts when compared with data that was used to support the opinion of CCFH's finance expert, data provided by the Foundation with regard to its hospital in Cleveland, Ohio. Furthermore, internal inconsistencies in the Application were observed by experts called by CCFH's opponents. These included that CCFH overstated volume projections, overstated its service area, used a flawed charge methodology, understated its average length of stays for four DRGs related to cardiac catheterization and failed to account for expenses associated with the outpatient cath lab that would support the inpatient lab, if approved. These inconsistencies led the opponents' expert witnesses either to offer the opinion that the project was not financially feasible in the long-term or to view the data and assumptions used by CCFH's financial expert as so flawed as to prevent the expert from reaching the opinion held by CCFH's financial expert and to constitute a failure in proof by CCFH that its project is financially feasible in the long term. The flaws observed by CCFH's opponents' experts, however, were explained by Dr. Luke so that the opinion of CCFH's expert in health care finance, as best can be determined, remains valid. For example, Petitioners and intervenor pressed hard on the average length of stay assumptions provided for various DRGs. Dr. Luke conceded that the average lengths of stay provided, based on the cardiac cath inpatient treatment by CCF physicians at BGMC and other area hospitals, are "certainly shorter than the [overall] experience of other area providers." (Tr. 1100, 1101.) But, in response to the assertion that the shorter length of stay could be due to treatment at CCFH prior to the transfer to another area hospital where the cardiac cath procedure was to be performed, Dr. Luke offered two explanations. First, there was no evidence to suggest that a much larger percentage of CCF cardiac cath patients were transferred than were patients of other physicians. Second, the total length of stay in the hospital would be less if a patient were treated solely at CCFH and not transferred to another hospital because of efficiencies in scheduling and time lost in the transfer, itself. Dr. Luke's opinion, in this regard, was bolstered by analysis as to length of stay of patients under the care of CCF physicians in DRGs comparable to inpatient cardiac cath DRGS. With regard to DRG 143, (Chest pain), CCFH's average length of stay is tied for the lowest in the district. Others are the lowest. CCFH's 2.7 average length of stay for DRG 140, for example, the lowest in the District, may be contrasted with NBMC's average length of stay for DRG 140, which is 4.3, nearly 160 percent higher than CCFH's. The notion, therefore, that CCFH would have significantly lower average lengths of stay for cardiac cath patients is not inconsistent with available data. Average length of stay is the critical building block in the financial feasibility model used by CCFH in its application. But, on rebuttal, CCFH's expert in health care offered the opinion that the project is financially feasible in the long term based on a methodology under which average length of stay is eliminated as a variable. This methodology uses "Cost per Case" data. CCFH's expert compared CCF physicians' cost per case to the costs per case of both petitioners and their experts in this proceeding as well as data from three clients of the expert who provide inpatient cardiac cath services and employ casemix cost accounting systems: Holmes Regional Medical Center, Sarasota Memorial Hospital and Memorial Medical Center of Jacksonville. The outcome of the analysis was that the cost per case projected by CCFH, $2225, fell in the middle of the range of the other providers, which ran from a low of approximately $1600 to a high of approximately $3000. Based on a cost per case analysis, CCFH's health care finance expert concluded that even were the CCFH cost per case understated and turned out to be as high as the average cost per case of any of the petitioners in this case, the project would still be financially feasible in the long term. To take another of the attacks raised by petitioners, that CCFH failed in its application to take into account for expenses associated with the outpatient cardiac cath lab that would support an inpatient lab, it was not necessary that there be such consideration in the application. CCFH has committed the costs associated with constructing and equipping it outpatient cardiac cath program. This commitment makes these costs "sunk." They will be undertaken regardless of whether CCFH's application is granted or not and so are not part of the costs of the inpatient project. It is difficult to determine whether Dr. Luke or his critics are right. On balance, it seems that the matter swings in Dr. Luke's favor. In any event, the testimony on rebuttal which established financial feasibility based on a cost-per-case methodology was not overcome by the parties opposed to CCFH's application. In sum, the project will be financially feasible in the long term. The project will generate a positive net income and positive cash flow after its start-up period. The projections of utilization relied upon in evaluating the long- term financial feasibility of the program are reasonable and achievable. Those projections are based on the historical experience of CCF physicians who perform cardiac catheterization services at other Broward County hospitals. Those physicians performed in excess of 400 procedures in 1992 and 1993. There was growth of approximately 2000 diagnostic cardiac catheterization procedures performed in District 10 between 1992 and 1993. The CCF physicians will need to obtain modest increases in their market shares in order to meet the projections of utilizations. The payor mix assumptions contained in the application are reasonable and achievable. The application accounts for all operational expenses necessary to the provision of inpatient cardiac catheterization services at CCFH. The Needs of a Multidisciplinary Clinic A multidisciplinary clinic is an organization which employs salaried physicians in a variety of medical specialties to provide diagnostic and therapeutic services to its patients. The physicians practice in a collegial collaborative environment. The multidisciplinary group clinic model promotes ease and economy in the diagnosis and care of patients. The clinic model uses a unified medical record, affording each physician who comes into contact with a patient all data and information pertaining to the patient. CCF is the only multidisciplinary group clinic in South Florida. Approximately eight percent of the discharges by CCF and CCFH in Major Diagnosis Category Five ("MDC-5"), which is the cardiac diagnostic group of the International Classification of Diseases, are attributable to patients who reside outside District 10 and the service districts adjacent to District 10. For purposes of health planning, a service district is a geographic area from which at least two-third's of a health care provider's patients are expected to come. The one-third to 20 percent remainder of the health care provider's patients come from outside the service district. A service district is used in analyzing growth in population or growth in demand for services because such growth will occur most intensively within the service district. The service district for CCFH includes all of Broward County and the southern portion of Palm Beach County. On average, approximately four percent of the MDC-5 discharges for other District 10 facilities reside outside District 10 and the adjacent service districts. The difference between the percentage of CCF and CCFH MDC-5 discharges from outside District 10 and service districts adjacent to District 10 and the average percentage of other District 10 hospitals' MDC-5 discharges from outside District 10 and adjacent service districts is statistically significant. Impact on Costs and Effects of Competition The CCFH program will sharpen competition for cardiac cath services in Broward County. CCFH, in conjunction with CCF and the Cleveland Clinic Florida Health Plan ("CCFHP"), constitute a fully-integrated health care delivery system. A fully integrated system enables a person in need of any type of medical care to receive services through the system. The relationship that exists between CCFH, CCF and CCFHP are unique in the Broward County market. Fully integrated health care delivery systems have been shown generally to produce efficiencies of operations and to improve the quality of care. The Cleveland Clinic system has had a positive impact on both the quality and cost efficiency of care offered in Broward County. CCH's average length of stay for patients and average charges for treatment of common cardiac problems are, on average, the lowest in Broward County. Both in Broward County and generally, health care is moving toward an environment of managed care and managed competition. Managed care and managed competition will result in a more competitive system, which will involve providers of health services bearing risk, in terms of prospective payment or prepaid medical plans. Managed care is intended to achieve high quality and cost efficiency in the delivery of medical services. The integrated health care delivery system model in place at CCFH is well suited for an environment of managed care and managed competition. Similar models in California, for example, have proven effective in offering high quality services at a lower cost in the California managed competition environment. In order for an integrated health care delivery system to achieve the goals of lower consumer costs and high quality, it must be able to control all elements of service delivery, including the costs of delivering services. The better the system can control its costs, the more competitive it can be. If the application is approved, CCFH will be able to control all its elements of the delivery of cardiac catheterization services. The approval of the application will enable CCFH to compete more effectively in the managed care environment because of the desire on the part of purchasers in the marketplace to receive the maximum number of services available. The more comprehensive CCFHP is the more its competitive stature is enhanced in the local market for health care services. To the extent that managed care entities compete on the basis of price, lower prices for health care services will occur. CCFHP has formed an accountable health partnership, ("AHP"). AHPs are organizations comprised of a service delivery system and a financing vehicle. The CCFHP AHP recently submitted a bid to a community health purchasing alliance ("CHPA"), which entities are organized under Florida law to serve as a clearinghouse of information to purchasers of health care, including the assembling and dissemination of information on constituent AHPs to interested parties. The CCFHP bid was the second lowest of the proposals offered to both the Broward County and Palm Beach County CHPAs. While the approval of the application is likely to lower the number of procedures done at all other programs in District 10, it will not have a material adverse impact on the quality of services offered at any existing inpatient cardiac cath program in the District. For those most likely to be affected by the program, approval does not at all threaten that they will drop below 300 procedures since the number of procedures conducted in their programs is in the thousands. For other programs operating at or about 300 procedures annually, approval should not impede their ability to perform in excess of 300 procedures annually. The approval of the application will not have a material impact on University Hospital, which recently received a certificate of need authorizing the development of an inpatient cardiac cath program. The approval of the application will result in the redirection to CCFH of cases primarily from BGMC and Holy Cross. Even with the redirection of cases, both BGMC and Holy Cross will retain in excess of 1000 procedures annually, which is more than adequate to ensure a program's quality. Nor will approval have a material adverse financial impact on any of the petitioners or intervenor. Both Holy Cross and North Ridge have enjoyed substantial operating margins and are otherwise extremely solvent. In the cases of IPMC, BGMC and NBMC, it is appropriate to evaluate the impact on the District system as a whole. The District has substantial financial resources. In the contexts of these organizations' financial strength, the impact of the CCFH inpatient cardiac cath program will be inconsequential. Past and Proposed Provision of Services to Medicaid and Indigent Patients It is the policy of CCFH to accept all patients, regardless of ability to pay. In addition to its commitment to provide free services to 76 uninsured patients as a condition of approval of the application, CCFH will also seek out Medicaid patients. This conditional commitment has the potential to be a substantial contribution to alleviating problems of the uninsured in obtaining needed inpatient cardiac catheterization services. But, as stated above, there simply is no guarantee that the commitment will be fulfilled. The Decision in the Dr. John T. MacDonald Foundation Case On April 1, 1994, slightly more than two months before final hearing in this case commenced, Hearing Officer Michael M. Parrish rendered a Final Order in Dr. John T. MacDonald Foundation, et al., v. Department of Health and Rehabilitative Services, DOAH Case Nos. 91-6390R (consolidated). The issue in the case was whether Rule 10-5.032, Florida Administrative Code, is an invalid exercise of delegated legislative authority. By the Final Order, the hearing office declared only a relatively small part of the rule invalid, leaving almost the entire text of the rule intact. Rule 10-5.032 "implements the provision of section 381.706(1)(c), F.S., which provides that certificate of need shall not be required for an expenditure to provide an outpatient service." Pertinently to this case, the rule goes on to define[] the requirements for the establish- ment of inpatient cardiac catheterization services, including minimum requirements for staffing, equipment, and a need methodology for cardiac catheterization programs. A certificate of need for the establishment of inpatient cardiac catheterization services shall not normally be approved unless the applicant meets all relevant statutory criteria, including the standards and need criteria set forth in this rule. Dr. John T. MacDonald Foundation, at 8. Sub-section (8) of the rule is entitled, "Need Determination." Paragraph (c) of subsection (8), also entitled, "Need Determination," sets out the "need formula" as follows: A new adult cardiac catheterization program may be approved if the difference between the projected program volume and the number of adult cardiac catheterizations performed in the service planning area during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool, minus the number of approved adult programs times 300, is at or exceeds a program volume of 300 for the applicable service planning area. This need formula is expressed as follows: NN = PCCPV - ACCPV - APP Where: NN is the 12-month net adult program volume need in the service planning area projected 2 years into the future for the respective planning horizon. Net need projections are published by the department as a fixed need pool twice a year. The planning horizon for applications submitted between January 1 and June 30 shall be July of the year 2 years subsequent to the year the application is submitted. The planning horizon for applications submitted between July 1 and December 31 shall be January of the year 2 years subsequent to the year which follows the year the application is submitted. PCCPV is the projected adult cardiac catheterization program volume which equals the actual adult cardiac catheterization program volume (ACCPV) rate per thousand adult population 15 years and over for the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool, multiplied by the projected adult population 15 years of age and over 2 years into the future for the respective planning horizon. The population projections shall be based on the most recent population projections available from the Executive Office of the Governor which are available to the department 3 weeks prior to the fixed need pool publication. ACCPV equals the actual adult cardiac catheterization program volume for the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool. APP is the projected program volume for approved adult programs. The projected program volume for each approved program shall be 300 admissions. Id., at 14 and 15. The rule goes on in (8)(d): Irrespective of the net need calculated under paragraph (c), no additional cardiac catheterization program shall normally be granted unless ACCPV divided by the number of operational programs for the service planning area is at or exceeds a program volume of 300 patient admissions. Id., at 15. The Hearing Officer summarized the rule as follows: it, projects a number of anticipated admissions to cardiac catheterization programs in the horizon year by multiplying the current use rate (number of admissions per thousand adult population) times the projected population. If the difference between the current volume and the projected volume is greater than 300, a new program may be awarded, so long as all of the existing programs, plus the proposed program, are projected to perform an average of 300 admissions each. An approved program is assigned a value of 300 for purposes of determining the average. Id., at 15 and 16. After summarizing the rule in the Final Order, the hearing officer took it to task on the basis of a number of deficiencies, not the least of which is that the rule fails to take into account the number of cath laboratories as opposed to the number of cath programs within a district. This point is found in Finding of Fact No. 29 in the Final Order. Even the most cavalier reading of Finding of Fact No. 29 shows the point could not have been made more plainly: The rule does not take into consideration the number of individual catheterization laboratories, rather it considers the number of cardiac catheterization programs. The difference is that an individual hospital will have only one program, but it may have more than one laboratory in each program. Id., at 19. In addition to deficiencies, the rule, in the view of the hearing officer, contains a fatal flaw. It does not address the capacity of existing cardiac catheterization programs or the capacity of existing laboratories. Furthermore, its use of 300 as the threshold number of procedures was an unexplained deviation from an earlier standard of 600 procedures as the threshold. This deviation was also an "unexplained departure from the National Guidelines for Health Planning, and an unexplained departure from other published guidelines recognized as authoritative." Id., at 25. The hearing officer went on in the Final Order to find that "[a]n essential ingredient of any functional need determination methodology is a method for identifying unmet need." Id., at 26. To do so, the methodology must identify "not only ... a reasonable estimate of future need," but also "a reasonable estimate of the future capacity of existing providers to meet that need." Id. The rule's shortcomings are summarized in Finding of Fact 43 of the order: The failure of the subject rule to consider the future capacity of existing providers in calculating future need has an adverse effect upon the ability to accurately predict future unmet need and also has a potential for adverse effect upon the quality of care offered by the existing providers. The rule authorizes the approval of a new inpatient cardiac catheteri- zation program even though many of the existing programs may be operating substantially below their capacity. The addition of new programs under such circumstances has the adverse effect of tending to reduce utilization of existing facilities that are already functioning well below capacity. Id., 26, 27. Ultimately, parts of the rule were determined by the Hearing Officer to be beyond the bounds of "reasonableness" and therefore arbitrary and capricious, and hence, an invalid exercise of delegated legislative authority, see Section 120.52(8), F.S., as follows: The term "operational programs," was determined arbitrary and capricious because the term failed to take into account the number of laboratories within each program. The hearing officer wrote, "[I]llogical results [produced by the use of the term] can be avoided only by use of a methodology that takes into account the number of existing and approved laboratories." Id., at 32; The use of the phrase "a program volume of 300 patient admissions" was determined un- reasonable because it is inconsistent with the National Guidelines For Health Planning and other authoritative guidelines and because it bears no rational relationship to the actual capacity of cardiac catheterization laboratories, Id., at 33; and, Paragraph (9) of the rule was determined to be arbitrary and capricious because "it has the effect of ignoring the existence of any new laboratories added to existing facilities." Id., at 34. The effect of the hearing officer's ruling and the explanation underpinning the ruling was to turn much of the rule, and certainly the numeric need formula, into mincemeat. It clearly called for the initiation of rulemaking if AHCA wanted a rule establishing "need methodology" for calculating numeric inpatient cardiac catheterization program need. But AHCA chose to look at the Final Order in a different way, a way that one would think would occur only in a hearing officer's wildest nightmare. Instead of reading the Final Order in its entirety, and taking it as a whole in able for the order to make sense, AHCA, followed only the strict, literal, reading of paragraphs 4., and 5., on pages 35 and 36 of the order, where it is declared: That the following portions of Rule 10-5.032, Florida Administrative Code, are an invalid exercise of delegated legislatively authority for the reasons stated above: the use of the term "operational programs" at paragraph (8)(d), the use of the phrase "a program volume of 300 patient admissions" at paragraph (8)(d), and the last sentence of paragraph (9). That, with the exception of the portions of the rule described in the immediately preceding paragraph, Rule 10-5.032, Florida Administrative Code, has not been shown to be an invalid exercise of delegated legislative authority, and the chal- lenges to other portions of the rule are hereby dismissed. Id., at 35, 36. By reading the declaration of partial invalidity "literally," in the strictest sense of the word, AHCA chose to leave in effect the numeric need formula: "NN = PCCPV - ACCPV - APP." This decision was made despite the fact that nearly the entire Final Order is devoted to an explanation of why the formula is dysfunctional in ways which strike at the very heart of the Certificate of Need program. Moreover, the strictly literal reading of the Final Order by AHCA leaves a rule on the books with portions which make no sense. AHCA conceded as much, through its Chief of the Certificate of Need and Budget Review sections of the Agency, elicited during the hearing in direct examination by AHCA's own counsel: Q: ... Now, specifically, as to paragraph 59C-1.0328, I think it is (d), with the language that has been stricken by the hearing officer in the John T. MacDonald case, does that paragraph make any sense to you? A: Not without that language in there, no. It doesn't read as something that could actually function. (e.s., Testimony of Elizabeth Dudek, Tr. 1468-1469.) The remainder of the Final Order was characterized in this manner by the Agency, Well, in looking through the final order, and then discussing it with other members of my staff and the legal staff, and in determining how we actually utilize the rule and what the difference in what is stated within the final order and the rule ... there did not appear to be any language that indicated ... that we needed to review capacity, nor the number of laboratories that were there. There were some comments related to both, but the findings were only such in the final order that the provisions of (8)(d) and then of (9) were deleted. (Tr. 1470-1). Suffice it to say, as will be articulated in the Conclusions of Law, below, this hearing officer does not read the Final Order in the Dr. John T. MacDonald Foundation case in the same way as does the Agency.
Findings Of Fact Fawcett's Application. Petitioner, Fawcett, is a 254 bed acute care hospital located in Port Charlotte, Charlotte County, Florida. Its primary service area is Charlotte and DeSoto Counties, Florida. Fawcett's secondary service area includes parts of Sarasota and Lee Counties, and all of Glades County. Fawcett timely filed an application for a CON to establish an adult cardiac catheterization lab at its facility in Port Charlotte, Florida, on October 15, 1985. Fawcett's application was denied by Respondent, HRS, on February 28, 1986. Fawcett's proposed cardiac cath lab would be located in the special procedures suite at Fawcett, specifically, special procedures Room NO. 2. It is the intention of Fawcett that the cath lab operate in conjunction with the special procedures laboratory as it exists currently at Fawcett. The cardiac cath lab will have an open staff policy, meaning that any physician meeting the training and experience criteria under the medical staff bylaws will be able to participate in the lab. Regular service hours will be from 7:00 a.m. to 4:30 p.m., Monday through Friday. In addition to this, the lab will be capable of providing emergency care twenty-four hours a day, seven days a week. Cardiac cath services will be available to all persons regardless of race, ethnic minority, sex, handicap, and inability to pay who, by physician's order, are in need of a cardiac cath. Fawcett proposes to open the cardiac cath lab as soon as is practicable, setting a target date to open no later than July 1, 1987. Need. Rule 10-5.011(1)(e)12, Florida Administrative Code (1986), states that need for a cardiac cath lab is to be determined by computing the projected number of cardiac cath procedures in the service area, using a mathematical formula. "Service area" is defined as the entire HRS district, in this case District 8. Utilizing this formula, the actual use rate in the service area for the 12-month period beginning 14 months prior to the letter of intent deadline for the batching cycle is multiplied by the projected population in Year "X", the year in which the proposed cardiac cath lab would begin service, to give a projected number of cath procedures for Year "X". This projected number of cath procedures is then divided by 600 (the average number of caths required by the rule to be performed per year by existing and approved labs) to yield the number of labs needed in the District. Utilizing this formula, a mathematical need is not shown for District 8. Indeed, the rule methodology shows a need for only five cardiac cath labs in District 8 in July, 1987, and there already are seven existing and approved labs in District 8, not counting Fawcett's proposed lab. Rule 10-5.011(1)(e)6, Florida Administrative Code (1986), states that "[t]he Department will not normally approve applications for new cardiac cath laboratories in any service area unless additional need is indicated." (Emphasis added.) Mortality Rate. Charlotte County has a significantly higher mortality or death rate per 100,000 persons than either the State of Florida or the United States as a whole. Charlotte County's mortality rate is high even when compared to the rest of District 8. The mortality rate from cardiovascular disease in District $ is likewise high. The mortality rate from heart disease in District 8 is 453.2 per 100,000 deaths, with the rate for Florida being 389.4 per 100,000 deaths, and the United States 325 per 100,000 deaths. In contrast to the death rate in other District 8 counties due to cardiovascular disease, Charlotte County's rate of mortalities due to cardiac disease is 619 per 100,000 deaths. Cardiac cath has become the standard treatment modality for dealing with serious cardiovascular disease. Cardiac cath has the potential to greatly decrease deaths due to cardiovascular disease in Charlotte County, where there is a large patient population in Charlotte County who could benefit from this service. Population Growth. Charlotte County has a very high rate of population growth in relation to Florida and the rest of the United States. The rate of growth between 1986 and 1991 will be approximately 23 percent, compared to Florida's overall growth rate of approximately 11 percent and the United States' growth rate of 3 percent. Charlotte County ranks ninth in the United States in terms of population growth from 1980 to 1985 for counties with populations of 50,000 or more. A large proportion of the overall 23 percent growth rate is comprised of the elderly population, aged 65 and over. The 65 and over population is expected to grow by 31 percent between 1986 and 1991 in Charlotte County. This is compared to a projected 18 percent growth of this group in Florida, and a projected 11 percent growth in the United States as a whole for the same time period. Elderly Population. Charlotte County has a population which is heavily weighted toward the elderly when compared to Florida and the United States. An estimated 36.5 percent of the Charlotte County population is aged 65 and over, compared to 19 percent for the State of Florida and 12 percent in the United States as a whole. Fawcett is dependent on the elderly population for its patients, including in the area of cardiac-related services. The majority of cardiac cath patients in Charlotte County are taken from the 65 and over population. Upward Trend in Number of Cardiac Caths. Cardiac cath is the process of taking a sterile plastic tube and placing it into the left or right section of the heart. This allows the cardiologists to perform a combined study, obtaining pressures from the right and left ventricles, as well as injecting dye into the heart's various arteries to take pictures. These two combined studies allow the physician to make as accurate a diagnosis as possible. Cardiac cath has become very important in recent years, so much so that hospitals with advanced cardiac programs which are willing to make the commitment should have cardiac cath to ensure state of the art quality care to the patients. Cardiac cath has become a routine procedure in the treatment of heart- related disorders. Patients with a myocardial infarction (development of lack of blood flow to the heart muscle) are now immediately cathed and diagnosed. This is important in light of the major advances recently made in angioplasty, a non-surgical method of treating blocked cardiac vessels. The current treatment modality is to get information on the problem immediately and reopen the blood vessel that is obstructed to allow blood to get in the heart muscle, thereby avoiding further damage to the heart muscle. There has been a consistent trend upwards in the rate of cardiac caths performed in District 8 relative to its population. The actual use rate for cardiac caths has increased, and the 1986 use rate is higher than the use rate utilized by the rule methodology. In other words, the use rate called for in the rule understates what is actually happening in 1986. The use rate increased approximately 40 percent between 1985 and 1986. The Charlotte County area has experienced an increase in the rate of growth of cardiac caths overall. The evidence reveals an upward trend in utilization of cardiac cath on a national scale. Cardiac cath probably will become a more and more prevalent treatment modality and therefore should be more readily available, with wider application of technological advances, in the future. As more caths are done, the procedure becomes safer and more accessible to people. Medical science has now made it possible for 20 to 30 percent of all persons who suffer heart attacks to be treated without major cardiac surgery, i.e., via a technique called angioplasty, whereby an occlusion or blockage is decreased by the expansion of a balloon in the diseased vessel. Cardiac cath is a necessary step in identifying the need for the angioplasty procedure. Fawcett's Degree of Reliance on the Elderly Population and Its Cardiac Programs. Fawcett is unusual in its degree of reliance on the elderly population. Over two-thirds of all Fawcett's patients are Medicare patients (over age 65), an unusually high number of elderly patients. Approximately 20 percent of Fawcett's 1985 admissions were cardiac disease related. These patients constitute a large percentage of Fawcett's patient revenues. In an area like Port Charlotte, which is so heavily populated with the elderly, it is desirable from the standpoint of patient care to have needed cardiac cath services available to patients at their primary care hospital. Fawcett is the primary care hospital for a large portion of the Charlotte County population. New Service at Minimal Cost. Fawcett proposes to establish its cardiac cath lab at a cost of roughly $90,700. This is a relatively small capital expenditure to add a new cardiac cath service to a facility. Many hospitals must make expenditures of as much as $1,000,000 to add a cardiac cath lab to their facilities. Fawcett already has the bed capacity to handle any additional inpatients which may result from the addition of a cath lab. No recruiting of physicians or the cost associated with such recruiting would be involved. Fawcett currently has 11 cardiologists on staff. Additionally, the rule requires that a certified or board eligible cardiologist be director of the cardiac cath lab, and Fawcett has several certified cardiologists on staff who qualify for this position. Medical Center And Other District 8 Providers. Intervenor, Medical Center Hospital (Medical Center) is a 208-bed facility. 52 beds are used for substance abuse psychiatric service, 156 are acute care beds with psychiatry, oncology, and cardiac facilities. The hospital is a not-for-profit hospital. Medical Center has a Medicaid provider number and has had one for at least seven years. For 1984, Medical Center provided approximately $37,000 worth of charity care; $105,000 for 1985; and through December 4, 1986, $258,000. The amount was anticipated to be as high as $350,000 for 1986. Medical Center is in Punta Gorda, 5 1/2 miles south of Fawcett. Medical Center's primary service are is Charlotte County; it draws approximately 90 percent of its patients from Charlotte County. The remaining ten percent come from Lee, Sarasota and DeSoto, with some as far as Hardee County. The only cardiopulmonary services not offered by Medical Center are open- heart surgical procedures and angioplasty, which goes along with open-heart. There are no conditions existing at Medical Center with respect to the lab that would preclude its availability to patients who might be in need of a cardiac cath. Medical Center has an open cardiac cath lab staff. Dr. Rosenfield and Dr., Popper presently do cardiac caths at the hospital but do not perform cardiac caths at any other laboratory in the District now. From March, 1985 through June, 1986, 57 caths were performed at the Medical Center lab. But from January, 1986, through November 1986, 194 caths were performed. Medical Center estimates that they will perform approximately 250 cardiac caths during calendar year 1986, and 486 are projected for calendar year 1987, Medical Center's cardiac cath lab is currently open 8 hours a day, 5 days a week, 52 weeks a year. The maximum capacity for the cath lab is 2,080 procedures a year. It is a shared lab with the hospital special procedures room. The shared procedures have not caused Medical Center to have any scheduling problems with the laboratory yet, but optimal capacity probably is about 1040 caths per year under present conditions. The Medical Center lab is not over-utilized at this point in time. There is no reason why Medical Center could not perform the 650 projected procedures in 1987 for Charlotte and DeSoto counties; 675 for 1988, 694 for 1989, or 727 for 1990. Approval of a new cardiac cath lab at Fawcett would have an adverse economic affect on Medical Center's cardiac cath lab. Medical Center Hospital operates on a fairly tight margin for profitability. There would be potential impact on the level of indigent care offered at Medical Center if its profit margin should decline due to a loss of patients. Medical Center might not give the same amount of indigent care that it would have given otherwise. Medical Center projects, for 1987, to perform 486 procedures at $1,250 charge per procedure. If approximately 21 procedures (4.3 percent of the total) are drawn away from Medical Center in 1987, Medical Center probably would be a minus-loss situation rather than a plus-profit situation. Fawcett's projected market share of the number of the projected caths to be performed in 1987 for Charlotte and DeSoto counties, i.e., 650, would mean that Fawcett would do approximately 260 cases. Charlotte and DeSoto counties are the primary area in which Medical Center receives its cardiac cath referrals. It is probable that Fawcett would capture at least 4.3 percent of the total of referrals from Charlotte and DeSoto Counties since they project a 40 percent market share from the same area. Including the lab at Medical Center, there are seven existing or approved cardiac cath labs within District 8. The labs are accessible in terms of financial availability to individuals such as Medicaid and indigent patients as well as Medicare, insurance, and private pay. They are also geographically located such that access is available throughout the entire District. There was no evidence to suggest that over 10 percent of the District 8 population is two hours away from cardiac cath services. There is sufficient capacity at the existing labs to take on additional patients. No information was provided HRS to indicate that physicians have had patients who were unable to receive services at the existing facilities or that the quality of services within those labs was such that it was detrimental to individuals in need of a cardiac cath within the area. At this time, Medical Center's cath lab, 5 1/2 miles south of Fawcett, is underutilized. There was no evidence that District 8 existing and approved cath labs are over-utilized or that quality of care is suffering from over- utilization. Other Circumstances. The medical population is growing faster in Port Charlotte than in Punta Gorda. Fawcett and St. Joseph's Hospital are located across the street from one another and are the largest facilities in Port Charlotte. Both hospitals together have the ability to draw a large number of patients. Medical Center, on the other hand, is the smallest hospital in the area. Cardiac procedures are rapidly increasing in volume and as the number of cardiac patients in the area increase, Medical Center will be filling more and more of its beds with cardiac patients if it has the only cath lab in the county. However, Medical Center's medical-surgical beds are only 55 percent occupied, and there is ample room at Medical Center to accommodate growth in cardiac caths up to maximum capacity at Medical Center's lab. An indefinite but small number of patients choose not to have cardiac caths that are indicated because the service is not available at Fawcett, their primary care provider. A cath lab at Fawcett would enhance quality of care to those persons, alleviate the trauma of transferring to another hospital, and eliminate duplicate billing occasioned by such transfers. When Fawcett opened, it had a fully equipped intensive care unit that has been upgraded with time so that Fawcett now has a complete non-invasive cardiology program in operation. Fawcett's cardiopulmonary department has grown since the opening of the hospital. When it opened, the hospital only provided basic 12-lead electrocardiograms. Since then Fawcett has added 24-hour holter monitoring, cardiac stress testing and echocardiography, and performs two-dimensional echocardiograms. In addition, the hospital has a peripheral vascular diagnostic lab, and recently has started MUGA testing. Catheterizations are already being performed at Fawcett on a daily basis. Qualified physicians are currently catching every part of the body but the heart, utilizing state of the art procedures and equipment. The provision of cardiac cath is the next logical step in Fawcett's growth and desire to provide a full range of services to its patients. The safety of cardiac cath has been enhanced due to the increased numbers being performed, in that proficiency increases with practice. Accessibility has increased both as to numbers of physicians performing cardiac caths, as well as facilities providing the service. Also, the procedure of angioplasty is increasing in use, and cardiac cath is a prerequisite to angioplasty. Aflgioplasty is a major alternative to cardiac surgery. Fawcett is well-qualified to provide cath lab services with the idea of eventually expanding its cardiac services into other areas of cardiac care, i.e., angioplasty and open heart surgery. The addition of a cath lab at this time is a logical and necessary step toward this goal. At present, Fawcett patients requiring cardiac cath are sent to anther facility providing the service, usually Ft. Myers Community Hospital (FMCH). Fawcett's procedure when transferring a patient is to discharge the patient from the hospital. If it is an emergency situation, he or she would be transferred via the Charlotte County Ambulance Service or by Air Ambulance through an arrangement with that service out of Tampa. A transfer to FMCH could be accomplished by air ambulance in under 30 minutes if the helicopter were based at Fawcett. But the total time from the request for the Tampa-based air ambulance to arrival at FMCH is more than 30 minutes. By ground ambulance, the 31-mile trip from Fawcett to FMCH takes approximately 40 minutes. Transferring a patient in cardiac distress is not without its costs, to the public as well as the patient, the patient's family, and the doctor involved. Every time an ambulance makes that transfer, it is at a cost of several hundred dollars. The patient, the patient's family and perhaps the physician must commute from one facility to the other. Visiting can become a problem because of the travel involved. Transferring a patient also involves a risk to the patient's health because of the trauma of riding in an ambulance. Patients suffer a loss of comfort and continuity of care in having to leave familiar surroundings and familiar doctors. Dr. Collado and other cardiologists in his group, on staff at Fawcett, are unwilling at the present time to transfer patients to Intervenor, Medical Center Hospital (Medical Center), for a cardiac cath because of Medical Center's perceived lack of a proven "track record." These doctors watch a program, see how the program and its physicians perform and how the patients feel about that program, and establish their own relationship with the physician to whom they refer patients, before routinely transferring patients to that physician. Because of this, Dr. Collado presently sends all of his patients to FMCH or Lee Memorial. This is not a minor undertaking. Dr. Collado's group alone refers out at least 100 patients a year in cardiac cath, some years close to 200 patients. Without a cardiac cath lab at Fawcett, considering the medical advances made in the treatment of cardiac disease, it is envisioned that in two or three years, Fawcett will have to transfer more and more patients in order to keep up with common cardiology practices. But more and more of these patients could be transferred to Medical Center, a five to ten minute drive south in Punta Gorda, instead of to Ft. Myers as Medical Center's track record becomes more established. HRS' Policy. Before former Rule 10-5.11(15) [now 10-5.011(1)(e)] was amended, HRS locked applicants into a 1981 use rate. Under this policy, HRS would use the rate at which cardiac caths were performed in 1981 to determine need in the applied-for year. Fawcett's original application, filed in October, 1985, was reviewed and denied under this use rate. Since Fawcett's original review, however, the rule was amended in June 1986. The new rule provides that need is determined using the actual use rate (number of procedures per hundred thousand population) in the service area for the 12-month period beginning 14 months prior to the letter of intent deadline for the batching cycle. Less than two months prior to Fawcett's hearing, HRS' policy was to utilize a planning horizon that was fixed by the application's submittal date. If a formal administrative hearing was held, HRS then applied the need methodology using current population and utilization data available for the most recent 12-month period before hearing. This resulted in the use of more current data than had been used previously or, often, is used now. Three months prior to Fawcett's final hearing, HRS issued three CONs, Nos. 3539, 3964 and 3971, at the same time for the establishment of cardiac cath labs in District 6. One application was filed in October, 1984, targeting the July, 1986, planning horizon, and the other two were filed in April, 1985, for the January, 1987, planning horizon. These applications were initially reviewed under a 1981 "use rate" and denied due to lack of need under the methodology for the given horizon. Subsequently, HRS reconsidered its position on the CONs under the "use rate" as amended in the rule and utilized data from the most recent twelve month period. As a result of this review, 2 cath labs were approved in the same city, Bradenton, and another in Brandon. However, a need for all of these applications also would be shown using a strict interpretation of the current rule, as urged by HRS in this case. In this case, HRS urges a strict interpretation of the rule to lock utilization data regarding district cath labs on the 12-month period beginning 14 months before the letter of intent deadline. But HRS urges looking at current data as of the hearing date in counting approved cath labs. Long Term Financial Feasibility and Quality of Care. Fawcett's proposed project shows a profit by its second year of operation. There will be sufficient utilization of the proposed cardiac cath lab. Projected utilization of Fawcett's cardiac cath lab was derived by first multiplying the projected total population of Charlotte and DeSoto Counties (Fawcett's primary service area) for the first two years the cath lab will operate by the projected 1986 use rate to give the total number of cardiac caths for these counties. Fawcett will capture approximately 40 percent of the Charlotte County and DeSoto County cardiac cath market in its first year of operation, increasing to 50 percent in the second year. Forty percent of the total caths in Year 1 would give Fawcett 274 caths in its first year of operation. Fifty percent of the total caths in Year 2 would give Fawcett 355 total caths in its second year of operation. These projections are reasonable and obtainable. Utilization will surpass 300 procedures per year by the second year of operation, enough caths for its staff to remain proficient, satisfying both Rule 10-5.011(1)(e)'s minimum volume requirement and the sole issue regarding quality of care not already stipulated by the parties. Fawcett's pro forma for the cardiac cath project is based on reasonable and realistic assumptions: The charge per cath is $1,250 for the first year, with an inflation of 5 percent for the second year. This assumption was based upon average charges from area labs. The contractual allowances or the difference in charges and actual reimbursement for Medicare patients are based on the hospital's historical experience for Medicare patients. Uncollectible charges were forecast as 6.2 percent of patient service revenue, based upon historical experience of uncollectible charges (4.9 percent) and an assumption that approximately 2.3 percent of revenues would be service to Medicaid patients. Fawcett does not have a Medicaid provider number and will not be reimbursed for these patients, so these are treated as uncollectible. Salaries and wages were based on area averages of approximately $12.60 an hour for a trained cardiac technician at 2,080 hours a year. Employee benefits were based on the hospital's current budget of approximately 19.7 percent of salaries and wages for employee benefits. The assumption for supplies and other expenses was based on discussions with the people at the hospital and FMCH's experience. e. Repairs and maintenance depreciation assumes an eight year life on the equipment and an equipment purchase price of $90,230. g. Federal and state income tax assures an overall corporate rate for Basic American Medical, Inc. of 34 percent for federal tax, and 5 1/2 percent for State tax. Based on these assumptions, the proposed cath lab is financially feasible, with a projected net income of nearly $35,000 the first year, and $65,000 the second year. These numbers reflect the relatively low fixed cost involved in the project. In fact, Fawcett's break-even point is less than 140 cardiac caths per year. Indigent Care. Fawcett is willing to condition its CON on the provision of 5 percent care to indigent patients. But Fawcett does not have a Medicaid provider number and its commitment to provide indigent care is suspect. Currently, 4 percent of Fawcett's patients are non-paying, this includes charity indigent care and bad debt. According to HCCS data, Fawcett did no Medicaid and its deductions from revenue for charity work was only one-tenth of one percent in 1985. Without a Medicaid provider number, Fawcett would be writing off approximately $7,500 in Medicaid revenue if it provided 2.3 percent care to Medicaid patients. This is additional financial disincentive from meeting or exceeding its projected Medicaid service. As stated in its application, Fawcett's proposed policy for its cath lab will be to treat Medicaid patients in need of the service, regardless of ability to pay. But actual Medicaid care provided under the policy is dependent upon the actual number of Medicaid patients Fawcett's doctors refer for cardiac cath.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that Respondent, Department of Health and Rehabilitative Services, deny the application of Petitioner, Fawcett Memorial Hospital, for certificate of need to establish an adult cardiac catheterization lab, CON Action NO. 4313. RECOMMENDED this 6th of April, 1987 in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of April, 1987.