Findings Of Fact Parkway Regional Medical Center, Inc. (formerly Parkway General Hospital, Inc.) is a Florida corporation, wholly-owned by American Medical international, Inc., of Beverly Hills, California. Parkway is located at 160 Northwest 170th Street, North Miami Beach, Florida. Biscayne Medical Center is wholly-owned by Humana, Inc. of Louisville, Kentucky. Biscayne is located at 2801 Northeast 209th Street, Miami, Florida. Both Parkway and Biscayne are located in DHRS District XI, and both propose to establish adult cardiac catheterization capabilities in DHRS District XI. The Local Health Council for District XI has not formally adopted its district plan. Both the Parkway and Biscayne applications are consistent with the State Health Plan. (Stipulated). In March, 1983, DHRS sent a letter to hospitals throughout Florida requesting information concerning the number of cardiac catheterization procedures performed in their laboratories during the calendar year 1981 and the number of cardiac catheterization laboratories now in use. Based upon information received in response to this letter, DHRS prepared an inventory which contains the following for District XI: FACILITY NUMBER OF ADULT CATHS. NUMBER OF ADULT LABS. American Hospital of Miami 531 1 Baptist Hospital of Miami 416 1 Cedars of Lebanon Hospital 367 1 Jackson Memorial Hospital 905 1 Mercy Hospital 494 1 Miami Heart Institute 1,268 1 Mount Sinai Medical Center 872 2 South Miami Hospital 485 1 St. Francis Hospital 535 1 University of Miami Hospital & Clinics 71 0 5,942 10 Although the DHRS survey letter requested information regarding number of catheterization "procedures," some of the hospitals responded on the number of patients catheterized rather than the number of procedures. This resulted in an understatement of procedures, since some patients receive multiple procedures. Rule 10-5.11(15)(d), F.A.C., defines "procedure" as follows: Procedure means an angiographic study, a physiologic study or a therapeutic activity within a cardiac catheterization laboratory which utilizes the equipment customarily used in cardiac catheterization. DHRS plans for cardiac catheterization on a two-year planning horizon. Therefore, the need for Parkway's and Biscayne's proposals should be determined based on projected procedures and population in the year 1986, since the decision is to be made in 1984. The DHRS 1986 population projection for District XI (persons 15 years and older) is 1,529,144. The DHRS inventory reflects 5,942 adult catheterization procedures performed in District XI hospitals in 1981. Rule 10-5.11(15)(1), F.A.C., contains a formula for determining need for additional cardiac catheterization laboratories. One step in the need determination methodology is calculation of the 1981 use rate. Utilizing the 5,942 procedures contained in the DHRS inventory, the 1981 use rate for District XI is 424.73 procedures per 100,000 population. Applying the need determination methodology in Rule 10-5.11(15)(1), F.A.C., to the 1981 use rate and projected population for District XI, the number of adult cardiac catheterization procedures projected for District XI from 1981 through 1986 is as follows: YEAR POPULATION 15 AND OVER 1981 USE RATE NUMBER PROJ. PROCEDURES 1981 1,399,299 424.73 5,942* 1982 1,427,404 424.73 6,061 1983 1,455,477 424.73 6,180 1984 1,483,615 424.73 6,302 1985 1,511,721 424.73 6,422 1986 1,529,144 424.73 6,494 * Actual number of procedures reported in DHRS inventory. Current information from each of the District XI hospitals with adult cardiac catheterization laboratories shows that application of the need methodology formula in Rule 10-5.11(15)(1) understates the number of adult cardiac catheterizations actually performed in District XI in 1982 and 1983, as follows: ACTUAL PROCEDURES ACTUAL YTD PROJECTED 1982 1983 1983 Mercy 441 317 543 Cedars 401 333 571 Miami Heart 833 486 833 St. Francis 917 495 990 JMH 986 580 994 American 576 321 550 Baptist 618 517 886 S. Miami 512 417 715 Mt. Sinai 983 647 1,109 6,267 4,113 7,191 Actual Use Rate 1982 - 439.17 Projected Use Rate 1983 - 494.23 For District XI, from 1980 through 1982, the use rate increased by 9 percent in 1980, 7 percent in 1981 and 3 percent in 1982. If the number of adult cardiac catheterization procedures actually performed in 1983 is projected for a full year, the District XI use rate would have increased by 12-1/2 percent in 1983. Rule 10-5.11(15)(o) provides that additional cardiac catheterization laboratories will not be approved where they would reduce the average volume of procedures performed by existing and approved laboratories in the service area below 600 adult procedures. Assuming an average of 600 procedures per lab, utilizing the projected number of procedures for 1986 and the use rates calculated for 1981, the number of adult cardiac catheterization laboratories required in District XI for 1986 would be 0.8. In accord with DHRS' policy, the 0.8 laboratory should be "rounded up" to 1.0. Therefore, under DHRS' interpretation of Rule 10-5.11(15), correct application of the need formula demonstrates a need for 1 additional adult cardiac catheterization laboratory in District XI. Initially, DHRS took the position that the 0.8 (0.7 for 1984) should be rounded down. However, this view was corrected by later testimony which established that the DHRS procedure is to "round up" such fractions. Parkway's emergency room is the third most active in Dade County and is the major emergency room between downtown Miami and the Broward County line. Parkway's proposed cardiac catheterization laboratory will be located on the same floor as and adjacent to the coronary care unit and the emergency room. Parkway's proposed cardiac catheterization laboratory will be dedicated solely to cardiac catheterization with the capability of mobilizing 24 hours a day, 7 days a week. Parkway's proposed cardiac catheterization laboratory will contain appropriate staffing and equipment. Based upon the number of patients referred by Parkway cardiologists to other institutions in the Miami area having cardiac catheterization facilities, Parkway projects utilization of its proposed cardiac catheterization laboratory in the first year of operation to be 250 to 300, increasing to 400 in the second year. Parkway does not intend to perform coronary angioplasty in its proposed cardiac catheterization laboratory but does intend to perform streptokinase procedures on an emergency basis on patients exhibiting acute chest pain and EKG abnormalities. Parkway has a written agreement with Cedars Medical Center pursuant under which Cedars will accept open-heart surgery patients from Parkway. Travel time from Parkway to Cedars under normal conditions is fifteen minutes. Biscayne's proposed adult catheterization equipment will be installed, and the procedures will be performed, in its "Special Procedures" Room, rather than a separate cardiac catheterization laboratory. If approved, Biscayne's cardiac catheterization laboratory would be available 24 hours a day and seven days a week on an "on call" basis. However, the anticipated regular hours for the laboratory will be 7:00 a.m. to 3:00 p.m., five days a week. Biscayne will staff its laboratory with a cardiopulmonary nurse, an x- ray technician, and a registered nurse. Biscayne proposes to perform only "diagnostic" cardiac catheterization procedures for the diagnosis of coronary artery disease. Biscayne takes the position that therapeutic procedures such as streptokinase and angioplasty are not medically safe without an in-house open heart surgery program. Biscayne has a written transfer agreement with Jackson Memorial Hospital in Miami whereby all Biscayne patients requiring open heart surgery will be transferred to, and accepted by, Jackson for such treatment. The driving time between Jackson and Biscayne is twenty minutes. Biscayne projects 300 cardiac catheterization procedures in its first year of operation and 400 procedures in the second year of operation. These projections are based on the number of patients Biscayne cardiologists currently transfer to other hospitals for cardiac catheterization and an assumed capture rate of 60 percent of all potential procedures generated in Biscayne's service area. Biscayne's "special procedures" room is a multipurpose facility which will be shared with the radiology department. The latter operates three radiographic/fluoroscopic rooms (R&F) and one "special procedures" room. All four rooms are equipped for doing routine radiographic studies and special procedures. "Special procedures" as used by Biscayne refers to investigational studies for the diagnosis of medical conditions through the use of special imaging equipment, such as x-ray and fluoroscopy. About 1400 special procedures were performed at Biscayne in 1982. These procedures were performed in various areas of the hospital, including the R&F rooms, the special procedures room, surgical suites and the critical care unit. Special procedures normally take about one hour to complete. However, the procedure known as angiography is only performed in Biscayne's special procedures room. An angiogram involves an investigation of blood vessels by means of x-rays of injected substances or dyes. Last year, about 400 of the 1400 special procedures performed at Biscayne were angiograms. Angiographic studies of all blood vessels except the coronary arteries are currently performed in the special procedures room. Angiographic studies of the coronary arteries require cardiac catheterization equipment. Over a year ago, DHRS issued Biscayne a certificate of need to renovate and replace equipment in two R&F rooms and the special procedures room. Also, digital angiographic equipment was added to for the special procedures room. Per this certificate of need, Biscayne has purchased the new equipment and renovated these rooms. Construction was scheduled to be complete in October, 1983, but has been delayed. Biscayne will not have to purchase all new equipment (as will Parkway) to add cardiac catheterization capabilities to its special procedures room. Instead, special General Electric equipment will be added to the existing angiographic equipment which will enhance its capabilities to include cardiac catheterization. As a result, Biscayne can provide cardiac catheterization at a projected additional cost of $298,566 compared to Parkway's projected cost of $822,701. However, Biscayne's projection does not recognize that some of the special procedure facility costs should be allocated to cardiac catheterization. Biscayne's pro forma income statement for the cardiac catheterization project allocates 43 percent usage of the special procedures room to this function. As noted by Parkway, a 43 percent special procedures room equipment cost allocation would raise Biscayne's cardiac catheterization capability costs to $683,314. Biscayne does not intend that the inclusion of cardiac catheterization capability will lower the number of special procedures that will be done in a normal eight-hour day. The capacity of the special procedures room as stated by Biscayne's Director of Radiology and supervisor of Biscayne's proposed special procedures room/catheterization laboratory, is 6 per day, 5 days week, for an annual total of 1,560. Biscayne's CON application for the special procedures room projects 1,484 special procedures in the first year and 1,524 in the second year, allowing for 76 additional procedures in the first year and 36 in the second year. Biscayne projects 300 cardiac catheterizations in the first year and 400 in the second year, thereby exceeding the capacity of the combined special procedures room/cardia catheterization laboratory by 224 procedures in the first year and 364 in the second year. Biscayne's proposed sharing of special procedure facilities is a cost savings measure, and in this respect is superior to Parkway's proposal. Although Biscayne could mobilize its cardiac catheterization laboratory on an emergency 24 hour, 7 day basis as required by DHRS Rule (discussed below), it would likely encounter scheduling and use conflicts under true emergency conditions, or even full utilization as noted above. Parkway argues that Biscayne's shared facility plan violates American Heart Association guidelines recommending cardiac catheterization labs be dedicated solely to this use. However, the evidence did not indicate that departure from this guideline would have any adverse impact on the quality of care provided. Parkway is located in Northeast Dade County directly on the Golden Glades Interchange, where Interstate 95, the Florida Turnpike and the Palmetto Expressway intersect. The majority of Parkway's service area is in Dade county, and 86.17 percent of Parkway's patients come from Dade County. Biscayne is located in Northeast Dade County near the Broward County line. The majority of Biscayne's primary service area is within Broward county, and more than 60 percent of Biscayne's patients originate from Broward County. Broward County is within DHRS District X. Comparative statistical information demonstrates that Parkway is more fully utilized, delivers more acute care and has greater patient activity than Biscayne: BASIC STATISTICAL INFORMATION PARKWAY BISCAYNE Licensed Capacity 412 458 Beds in Service 412 330 Discharges 12,917 9,202 Average Length of Stay 9.1 days 8.1 days Patient Days 110,385 79,634 Occupancy 73.4 percent 47.6 percent Bed Mix Med-Surg. 394/72.9 percent occ. 284/65.2 percent occ. Intensive Care 18/89.9 percent occ. 26/77.5 percent occ. E.R. Utilization Visits 27,520 13,110 The Hospital Cost Containment Board (HCCB) was formed in 1979 to monitor hospital costs/charges and to encourage cost containment for Florida hospitals through public awareness and the dissemination of information to the public. The HCCB is a division of the Florida Department of Insurance. Each year, the HCCB collects the prospective budget of each hospital sixty days prior to the first day of the fiscal year for each hospital. The HCCB reviews the data and budget submitted by a hospital, and then determines to accept the budget, reject the budget, or call a public hearing to make the hospital justify its budget. All HCCB action is based on the figures and budgets submitted by the hospitals themselves. The HCCB reviews the financial data submitted to it by various criteria which it labels "screens." The "total net revenue" screen is one of the screens utilized to compare a hospital's average patient charge to others in its peer group. "Total net revenue" refers to the amount of money a hospital actually receives for services provided to patients after all deductions are subtracted. In addition, the HCCB "adjusts" its various financial screens to eliminate the effect of outpatient care and revenues from inpatient activity. Thus, the screens are labeled, for example, as "adjusted revenues" or "adjusted costs." Comparisons between Biscayne and Parkway by using HCCB calculations of data and projections submitted by the two hospitals indicate the following (1983 budgets): Cost to the hospital per adjusted admission Cost to the hospital per adjusted day Total net revenue per adjusted admission Total net revenue per adjusted day PARKWAY BISCAYNE PARKWAY OVER BISCAYNE DOLLARS PERCENT $3954 $3438 $516 15.0 percent $ 458 $ 393 $ 65 16.5 percent $4263 $3595 $668 18.6 percent $ 494 $ 411 $ 83 20.2 percent Comparisons using the same screens for 1984 budgets are as follows: PARKWAY BISCAYNE PARKWAY OVER BISCAYNE DOLLARS PERCENT $4033 $3563 $470 13.2 percent $ 498 $ 422 $ 76 18.0 percent $4346 $3726 $620 16.6 percent $ 537 $ 442 $ 95 21.5 percent Cost to the hospital per adjusted admission Cost to the hospital per adjusted day Total net revenue per adjusted admission Total net revenue per adjusted day As indicated, Parkway's costs to provide hospital services and patient charges for these services have been, and are projected to be, substantially higher than those for Biscayne. PARKWAY BISCAYNE Rate of Increase from 1980 Base Year to 1983 Budget: Per Adjusted Admission 65.1 percent 48.4 percent Per Adjusted Day 65.8 percent 42.8 percent Rate of Increase from 1980 Base Year to 1981 Budget: Per Adjusted Admission 42.4 percent 33.8 percent Per Adjusted Day 50.7 percent 36.0 percent In addition to being more expensive than Biscayne, Parkway exceeds the 80th percentile of its hospital "peer group" in most financial screens. The HCCB places each hospital in a certain peer group based on a number of factors including beds in service, physician mix, Medicare utilization, hospital services index, and median family income. The objective of peer groups is to batch hospitals with similar characteristics for comparison purposes. Biscayne and Parkway are in the same peer group for budget year 1984. Each hospital is then compared to the 80th percentile in its peer group to determine whether that hospital "breaks the screen" or exceeds the standards set by law. "Breaking the screen" means that hospital is in the upper 20th percentile in its peer group. For budget year 1983, Parkway broke the screen for cost per adjusted day and adjusted admission, total net revenue per adjusted day and adjusted admission, and rate of change increases (1980-1983) per adjusted admission and adjusted day. It should be noted that Parkway's screen breaking during this period is at least partly attributable to its 25 million dollar renovation- expansion project. For budget year 1984, however, Parkway again broke the screens for cost per adjusted day, total net revenue per adjusted admission and adjusted day, and rate of change increases per adjusted admission and adjusted day for budget years 1981-1984. Biscayne did not break any of the screens during these same time periods. As noted by the HCCB, Parkway's current profit margin is 13.5 percent compared to the 9.3 percent average for proprietary hospitals in Florida.
Recommendation Based on the foregoing, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order granting the application of Biscayne Medical Center to establish cardiac catheterization capabilities in District XI, and denying the application of Parkway Regional Medical Center, Inc. DONE and ENTERED this 8th day of March, 1984, in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 8th day of March, 1984. COPIES FURNISHED: James C. Hauser, Esquire John H. French, Jr., Esquire Post Office Box 1876 Tallahassee, Florida 32302 Keith E. Rounsaville, Esquire Harold W. Mullis, Jr., Esquire Post Office Box 1102 Tampa, Florida 33601 Claire D. Dryfuss, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard, Suite 406 Tallahassee, Florida 32301 Jean Laramore, Esquire G. Steven Pfeiffer, Esquire 325 North Calhoun Street Tallahassee, Florida 32301 David H. Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
The Issue The issue in this case is whether Jose Rosado, M.D., (Respondent), violated Section 458.331(1)(t), and, if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency charged with regulating the practice of medicine pursuant to Florida law. At all times material to these proceedings, Respondent has been a licensed physician in the State of Florida, having been issued license number ME 0068035. Respondent is board-certified in internal medicine and cardiovascular diseases. On March 10, 1997, Patient W.B.C., a 72-year-old man, arrived at the Leesburg Regional Medical Center (LRMC) emergency room. He complained of a sudden onset of weakness in his left hand and arm with numbness and tingling. Respondent was Patient W.B.C.'s primary care physician. Respondent admitted Patient W.B.C. with a diagnosis of cerebrovascular accident, mitral regurgitation, sick sinus syndrome and a history of myocardial infarction. Respondent ordered that Patient W.B.C. undergo a head CT scan, carotid Doppler, 2-D echocardiogram, an electroencephalogram, and a neurological consultation. Based on the test results and the consultation, Respondent diagnosed Patient W.B.C. with right cerebrovascular accident, mitral regurgitation, sick sinus syndrome, and history of myocardial infarction. Respondent then discharged the patient with Ticlid, a medication to prevent further cerebrovascular accidents and aspirin. On March 16, 1997, Patient W.B.C. was admitted to LRMC complaining of weakness, dizziness and a fever. His vital signs revealed a temperature of 103.0 F, a pulse of 118, and a blood pressure of 139/75. The emergency room physician ordered a chest x-ray, EKG, and urine and blood cultures. The chest x-ray revealed no acute cardiopulmonary abnormality. Urine tests revealed features consistent with the possibility of urosepsis. Blood work showed a white blood count of 9.15, elevated but within the normal range. Also on March 16, Respondent ordered that antibiotics be given prophylactically until the blood cultures came back from the laboratory. The cultures came back positive for staphylococcus aureus (staph). Staph is a notoriously “bad bug” and Staphylococci aureus bacteremia has a high mortality rate. Staph aureus can originate from several possible sources including infections through the urinary tract system, IV sites, aspiration into the lungs, and pneumonia (although not very common). Staphylococci in the bloodstream is known as bacteremia. Bacteremia can lead to endocarditis which is an infection of the inner lining of the heart and the heart valves. Endocarditis is a life-threatening condition that can quickly damage the heart valves and lead to heart failure or even death. Patients with certain cardiac conditions such as mitral valve regurgitation have a higher risk of developing endocarditis. Patient W.B.C. had such a history. On March 17, 1997, Patient W.B.C. was started on intravenous antibiotics by Respondent. Patient W.B.C. continued to receive the intravenous antibiotics for four days from March 17, 1997, through March 20, 1997. Respondent then switched Patient W.B.C. to oral antibiotics and kept the patient in the hospital one more day prior to discharging him with instruction to continue on the oral antibiotics for another ten days. Patient W.B.C. was discharged on March 21, 1997. He was not referred to an infectious disease specialist nor had Respondent obtained a consultation with any specialist to determine the length of time that the patient's infection should be treated. Respondent felt that he was adequately qualified to treat this patient, and the treatment appeared to work. Respondent thought the bacteria growing in the patient's blood "likely" originated from a lung infection. An infectious disease specialist should have been consulted to give guidance as to how long to treat the infection. The standard of care for treating a staph aureus infection where there is a known source of infection requires 14 days of intravenous antibiotics. Where the source is not known, then four to six weeks of antibiotics is recommended. In this case, the infection, a resistant staph infection found in the patient's blood, could have originated from several sources. While such staph could have sprung from a source in the lung, this is by no means likely and the infection could have originated from another source. The standard of care required that Respondent contact an infectious disease specialist for an evaluation and/or that he treat Patient W.B.C.’s staphylococcus with a minimum of 10 to days of intravenous antibiotics. On or about April 11, 1997, Patient W.B.C., presented to the emergency room at LRMC complaining of congestion, shortness of breath, fever of 100.3° F, and a cough. The emergency room physician performed a physical exam which revealed vital signs of a temperature of 101.3° F, a pulse of 104, and a blood pressure of 90/54. A chest x-ray, blood work and a urine culture were ordered. Patient W.B.C. was then admitted on April 11, 1997, with a diagnosis of pneumonia, an old cerebrovascular accident and coronary artery disease. The ER physician started Patient W.B.C. on a plan of treatment which included intravenous antibiotics, Vancomycin, IV fluids, and blood cultures. A physical examination on the patient revealed a temperature of 101.3° F, a pulse of 104 and blood pressure of 91/53. The attending physician diagnosed him with probable sepsis with pneumonia. On April 12, 1997, the blood cultures came back positive for Staphylococcus aureus bacteremia. On April 15, 1997, Patient W.B.C. was afebrile (without fever) and his white blood cell count was 10.23, which is within the normal range of 4.0 to 11.0. The patient continued in this condition through April 18, 1997, despite suffering from sepsis. On April 18, 1997, Respondent approved Patient W.B.C. for transfer to another institution for consideration for urgent mitral valve replacement. On April 19, 1997, Patient W.B.C. arrested and was pronounced dead at 5:53 a.m. Petitioner’s expert, Carlos Sotolongo, M.D., is board- certified in internal medicine, cardiovascular disease and nuclear cardiology. As established by Dr. Sotolongo's testimony, Respondent practiced below the standard of care by failing to treat Patient W.B.C. with a sufficient number of days of intravenous antibiotics and by failing to consult an infectious disease specialist. According to Dr. Sotolongo, there is a difference in the way that an uncomplicated pneumonia is treated as opposed to a pneumonia complicated by bacteremia. The latter must be treated more aggressively. Based on the foregoing, Respondent violated Section 458.331(1)(t), by failing to practice medicine with that level of care, skill and treatment which is recognized by a reasonably prudent similar physician as being acceptable under similar conditions and circumstances.
Recommendation Based on the foregoing, it is recommended that a Final Order be entered finding that Respondent violated Section 458.331(1)(t), and imposing a penalty which includes a formal reprimand, payment of an Administrative Fine in the amount of $5,000.00 within 180 days, and eight hours of Continuing Medical Education (CME) to be completed within the next 12 months dealing with the diagnosis and treatment of infections and/or risk management. DONE AND ENTERED this 1st day of October, 2003, in Tallahassee, Leon County, Florida. S DON W. DAVIS 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 1st day of October, 2003. COPIES FURNISHED: William M. Furlow, Esquire Katz, Kutter, Alderman, Bryant & Yon, P.A. Post Office Box 1877 Tallahassee, Florida 32302-1877 Kim M. Kluck, Esquire Department of Health 4052 Bald Cypress Way, Bin C-65 Tallahassee, Florida 32399-3265 R. S. Power, Agency Clerk Department of Health 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1701 Larry McPherson, Executive Director Board of Medicine Department of Health 4052 Bald Cypress Way Tallahassee, Florida 32399-1701
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that petitioner's applications for certificates of need to institute cardiac catheterization and open heart surgery services be GRANTED. Respectfully submitted and entered this 15th of January, 1979, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Kenneth F. Hoffman Rogers, Towers, Bailey, Jones and Gay Post Office Box 1872 Tallahassee, Florida 32302 Robert M. Eisenberg District IV Legal Counsel Post Office Box 2417-F Jacksonville, Florida 32231 Charles Collette Art Forehand, Administrator Assistant General Counsel Office of Community Medical Department of HRS Facilities 1317 Winewood Boulevard Department of HRS Tallahassee, Florida 32301 1323 Winewood Boulevard Tallahassee, Florida 32301
Findings Of Fact St. Mary's Hospital, Inc. ("St. Mary's"), is a certificate of need ("CON") applicant for an adult open heart surgery program in Department of Health and Rehabilitative Services ("HRS"), District IX. The Agency for Health Care Administration ("AHCA") is the state agency responsible for the administration of CON laws. Intervenor, Martin Memorial Hospital Association, Inc., d/b/a Martin Memorial Medical Center ("Martin Memorial") has standing to intervene as a CON applicant for an open heart surgery program in HRS District IX. Intervenors, JFK Medical Center, Inc., ("JFK") and Palm Beach Gardens Community Hospital, Inc., d/b/a Palm Beach Gardens Medical Center ("Palm Beach Gardens") have standing to intervene as existing providers of open heart surgery services in HRS District IX. AHCA published a net need projection for zero additional adult open heart surgery programs in HRS District IX, with the following notice: Any person who identifies any error in the fixed need pool numbers must advise the agency of the error within ten (10) days of publication of the number. If the agency concurs in the error, the fixed need pool number will be adjusted prior to or during the grace period for this cycle. Failure to notify the agency of the error during this ten day time period will result in no adjustment to the fixed need pool number for this cycle and a waiver of the person's right to raise the error at subsequent proceedings. See, Volume 18, Number 32, Florida Admiministrative Weekly, at page 4501 (August 7, 1992). By letter dated August 14, 1992, St. Mary's notified AHCA that it believed an error had been made in the fixed need pool projection for adult open heart surgery programs in HRS District IX. This letter was hand delivered to AHCA on August 14, 1992, within the ten days required by the fixed need pool publication. All of the parties to this proceeding agree with St. Mary's that the numeric need formula in Rule 10-5.033(7), Florida Administrative Code (subsequently, renumbered as Rule 59C-1.033(7), showed a need for one additional adult open heart surgery program in District IX, except that AHCA determined that the provisions of subsection 7(a)2. were not met. St. Mary's letter also asserted that there was evidence that all existing adult open heart surgery providers performed in excess of 350 adult open heart surgery operations during the applicable base period calendar year 1991. The minimum of 350 operations in each existing program is an additional prerequisite to the publication of need for a new open heart surgery program in subsection 7(a)2. of Rule 59C-1.033, which the parties refer to as a "default" provision. The default provision is invoked in this case because JFK reported fewer than 350 operations. The subsection provides that a new adult open heart surgery program will not normally be approved if: One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 6 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the 12 months ending 6 months prior to the beginning date of the quarter of the publication of the fixed need pool. (Emphasis added). In its letter of August 14, 1992, St. Mary's stated that: According to the information provided by JFK to the local health council JFK performed 347 adult open heart surgery operations during the applicable base period (calendar year 1991). Notwithstanding the data reported by JFK to the local health council, data obtained from the Health Care Cost Containment Board for the same 12 month period reflects a total of 356 adult open heart surgery discharges from JFK. All parties agree that for calendar year 1991, JFK Medical Center, Inc. ("JFK"), reported a total of 356 discharges within DRG's 104 through 108 to Florida's Health Care Cost Containment Board and, for the same period of time, JFK reported 347 adult open heart surgery operations to the Treasure Coast Health Council, Inc. Based on the data provided by JFK to the HCCB, St. Mary's requests that AHCA enter a final order finding that there is a need for one additional open heart surgery program in District IX in the September, 1992 review cycle. The determinative factual issue, in this proceeding, is whether the term "discharge" is equivalent to the term "operation" and, if it is, should the HCCB data be accepted as more reliable than the Health Council data. The term "open heart surgery operation" is defined by Rule 59C- 1.033(2)(g), Florida Administrative Code, to mean: Surgery assisted by a heart-lung by-pass machine that is used to treat conditions such as congenital heart defects, heart and coronary artery diseases, including replacement of heart valves, cardiac vascularization, and cardiac trauma. One open heart surgery operation equals one patient admission to the operating room. Open heart surgery operations are classified under the following diagnostic related groups (DRGs): DRGs 104, 105, 106, 107, 108, and 110. (Emphasis added). The definition of "open heart surgery operation" was also considered in Humhosco, Inc. v. Department of Health and Rehabilitative Services, 14 FALR 245 (DOAH 1991). The hearing officer found that: [D]iagnostic related groups, or "DRGs," are a health service classification system used by the Medicare System. The existing rule does not include the reference to DRG classifications. Some confusion had been expressed by applicants as to whether certain organ transplant operations which utilized a bypass machine during the operation should be reported as open heart operations or as organ transplantation operations. The amendment was intended to clarify that only when the operation utilizes the bypass machine and falls within one of the enumerated categories should it be considered an open heart surgery operation. The inclusion of the listed DRGs was meant to clarify the existing definition by limiting the DRG categories within which open heart surgery services may be classified. There is no dispute that the primary factor in defining an open heart surgery procedure is the use of a heart-lung machine. Florida Hospital argued that the proposed definition is ambiguous and vague because not all procedures which fit into the listed DRG categories necessarily involve open heart surgery. Florida Hospital's fear that the new language would seem to indicate that each procedure falling into the listed DRGs qualifies as an open heart surgery operation is unfounded. While the provision could have been written in a simpler and clearer manner, the definition adequately conveys the intent that the use of a heart-lung bypass machine is an essential element to classify an operation as open-heart surgery. Humhosco, supra, at 255. (Emphasis added).
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order determining that the fixed need pool publication, dated August 7, 1992, for Department of Health and Rehabilitative Services District IX for the July 1994 planning horizon is accurate. DONE and ENTERED this 22nd day of December, 1992, at Tallahassee, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of December, 1992. APPENDIX Both parties have submitted Proposed Recommended Orders. The following constitutes my rulings on the proposed findings of fact submitted by the parties. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. Accepted in Findings of Fact 5 and 6. Subordinate to Findings of Fact 13. Accepted in Findings of Fact 11, conclusion rejected in Findings of Fact 13-15. Accepted in Findings of Fact 15, conclusion rejected in Conclusions of Law 18-19. Rejected in Conclusions of Law 17-19. Rejected in Findings of Fact 13-15. Accepted in Conclusions of Law 1. Accepted in Findings of Fact 7 and 9. Accepted in Findings of Fact 7 and 9. Accepted, in part, and rejected, in part in Findings of Fact 10 and 11. Rejected in Findings of Fact 11 and 13-15. The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. Accepted in Findings of Fact 5. Accepted in Findings of Fact 5. Accepted in Findings of Fact 6. Preliminary Statement Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Findings of Fact 7 and 9. Accepted in Findings of Fact 10 and 11. Accepted in relevant part in Findings of Fact 4. Subordinate to Findings of Fact 9 and 11. Subordinate to Findings of Fact 7. Subordinate to Findings of Fact 12. Subordinate to Findings of Fact 12. Subordinate to Findings of Fact 12. Subordinate to Finding of Fact 11. Accepted in Conclusions of Law 17. Accepted in Findings of Fact 13-15. Accepted in Findings of Fact 13-15. COPIES FURNISHED: W. David Watkins, Esquire Oertel, Hoffman, Fernandez & Cole, P.A. 2700 Blair Stone Road Tallahassee, Florida 32301 Lesley Mendelson, Esquire Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Byron B. Mathews, Jr., Esquire 201 S. Biscayne Boulevard Suite 2200 Miami, Florida 33131 Gerald M. Cohen, P.A. Steel Hector & Davis 4000 Southeast Financial Center Miami, Florida 33131-2398 Robert A. Weiss, Esquire John M. Knight, Esquire Parker, Hudson, Rainer & Dobbs The Perkins House 118 N. Gadsden Street Tallahassee, Florida 32301 Sam Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, General Counsel Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
The Issue The issues for determination are whether Petitioners should be awarded certificates of need authorizing the establishment of inpatient cardiac catheterization services at their respective facilities. As a result of stipulations of the parties, matters for consideration with regard to award of those certificates of need primarily involve a determination as to whether Petitioners' applications meet rule criteria relating to need (numeric and non-numeric), provision of a written protocol or transfer agreement, and utilization standards.
Findings Of Fact The legislature has deregulated the establishment of outpatient cardiac catheterization laboratories (cardiac cath labs), but a certificate of need (CON) is required before a hospital can operate an inpatient cardiac cath lab. The Department of Health and Rehabilitative Services (HRS) has not approved, as the result of initial agency action, a new cardiac cath lab CON in HRS' Service District Five since 1977. The Parties Palms Petitioner NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital (Palms), is a 310 bed acute care hospital located in Pasadena, Florida. Pasadena is geographically located in the southern portion of Pinellas County, Florida. Pasadena, though geographically small, is one of the most densely populated cities in the United States. Within one half mile of Palms are 10,000 people of whom 60 percent are 65 years of age or older. Palms is a full service hospital with an extensive range of medical and surgical services, including a 24 hour emergency room; a coronary care intensive care unit; a surgical intensive care unit; and a respiratory intensive care unit. Palms also offers a full spectrum of non-invasive cardiology services including electrocardiography, echocardiagraphy, nuclear medicine, stress testing and 24 hour monitoring. Palms has five cardiologists, four of them invasive cardiologists, on its active staff and five cardiologists on its courtesy staff. The four invasive cardiologists would utilize a cardiac cath lab or program at Palms. Palms is situated on 13 acres with a main hospital complex that encompasses over 400,000 square feet. There are over 300 physicians on Palms' medical staff, representing virtually every medical specialty. The hospital is accredited by the Joint Commission on Accreditation of Healthcare Organizations. HRS Service District Number Five, which encompasses Palms location, is composed of Pinellas and Pasco Counties. The service district is heavily populated by persons age 65 and over; the persons who, nationally, have the highest rate of cardiac catheterization admissions per 1,000 persons. The rate for deaths resulting from major cardiovascular diseases and heart disease in Pinellas County is 150 percent above the rate for such deaths within the entire State of Florida. Notably, thirty percent of the approximately 200,000 persons within Palms' primary service area are age 65 or older. Further, sixty-eight percent of Palms' patients are medicare patients with an average age of 77 to 78 years. The average age of the medicare population at other hospitals in Pinellas County ranges from 72 to 73 years of age. During 1987 and 1988, 516 inpatients at Palms required cardiac cath services (238 in 1987 and 278 in 1988). A diagnostic cardiac catheterization (cardiac cath) is an invasive medical operation in which a catheter is passed via vascular access in the arm or leg into the heart for purposes of diagnosing cardiovascular diseases or measuring blood pressure flow. Significant advances in the technology of cardiac catheterization permits usage of cardiac caths in the emergency treatment of heart attacks through injection of thrombolytic agents directly into the blood clot causing the heart attack. While these medications can be given intravenously, such an option is not available in the case of elderly patients, who run a higher risk of internal bleeding as a side effect of the drug, and patients who delay seeking medical attention after the onset of a heart attack. Approximately 30 percent of the patients arriving at Palms' emergency room have a cardiac related problem. The number of these patients who are candidates for intravenous injection of thrombolytic agents is small. Approval of Palms' application would significantly improve the quality of care of these patients by permitting the injection of thrombolytic agents directly into the blood clot causing the heart attack, a permitted medical procedure in the process of administering a diagnostic cardiac cath. After the onset of a heart attack, there exists a six hour window during which potentially life-saving drugs can be administered. Due to the possible side effects of these drugs, cardiologists must often perform a cardiac cath to diagnose the ailment prior to administering the drugs. Consequently, patients who present themselves for treatment at Palms several hours after the onset of heart attack symptoms may be precluded from receiving these drugs in view of the lack of a cardiac cath lab or program at Palms. Mease Petitioner Mease Health Care, Inc., (Mease) owns and operates Mease Hospital Dunedin and Mease Hospital Countryside. Mease also operates clinics located in New Port Richey, Palm Harbor, Countryside and Dunedin, Florida. These clinics serve a combined 350,000 patients per year. Mease Hospital Dunedin is a 278 bed facility located in Dunedin, Florida. The Mease Dunedin Clinic houses approximately 60 physicians. Mease Countryside Hospital, opened in 1985, consists of 100 beds and is located approximately eight miles from Mease Hospital Dunedin. Approximately 30 physicians have offices at the Mease Countryside Clinic. Most physicians practicing in the clinics have hospital privileges only at the Mease facilities. Another 100 physicians on the staff of these two hospitals have practices in the surrounding area and admit patients to the Mease facilities. Physicians housed in the Mease Countryside and Dunedin Clinics provide a significant source of patient referrals for the two hospitals, since most physicians practicing in the two clinics have hospital privileges only at the Mease facilities. Ninety percent of patients hospitalized by physicians in the two clinics are hospitalized in Mease Dunedin or Mease Countryside hospital facilities. Mease currently operates a cardiac cath lab at its Mease Dunedin campus on an outpatient basis. This existing facility could be utilized by Mease for inpatient catheterization. The existing outpatient cath lab is outfitted with a Phillips Digital Cardiac Imaging System, the most medically advanced equipment of this type in Pinellas County. Mease's current outpatient cath lab meets all applicable standards for the operation of an inpatient cath lab and is adequately staffed to perform 600 cardiac caths per year. There is no difference in the physical layout of an inpatient cath lab versus an outpatient cath lab. Mease also provides diagnostic services such as echocardiography and nuclear cardiology. Growth in cardiology services experienced by Mease is consistent with the provision of these additional services. Morton Plant Morton F. Hospital, Inc., (Morton Plant) is a not-for-profit 740 bed general acute care hospital spread among twelve buildings on a 36 acre campus in Clearwater, Florida, approximately three or four miles from Mease. Morton Plant offers a wide range of health care services, including cardiac cath, open heart surgery, a cardiac rehabilitation program, post-cardiac surgery recovery areas and intensive coronary care units. HRS HRS is the state agency which is responsible for administering Sections 381.701 through 381.715, Florida Statutes, the "Health Facility and Services Development Act", under which applications for Certificates of Need (CON) are filed, reviewed, and either granted or denied by that department. Petitioners' Applications The applications of Mease and Palms, seeking a CON to implement inpatient cardiac cath services were filed with HRS on September 28, 1988. After initial review, HRS sent omissions letters to the applicants on October 13, 1988. Responses from Mease and Palms were made on November 11, 1988, and HRS denied both applications on January 12, 1989. Both Petitioners timely requested formal hearings regarding the denials. "Old Rule Versus New Rule" HRS has adopted procedures governing its review of applications, such as those of the petitioners, for CONs authorizing the establishment of inpatient cardiac catheterization programs. These procedures include HRS' numeric methodology for estimating need for cardiac cath labs or programs. This methodology has traditionally been found in Florida Administrative Code Rule 10- 5.011(1)(e). On April 22, 1988, HRS published a proposed "new" rule containing a new methodology for estimating cardiac cath program need. A key component of the new rule is the use of "admissions" to a cardiac cath program, as opposed to the old rule's use of "procedures", to determine numeric need for additional CONs. The new rule was timely challenged by two parties in proceedings before the Division Of Administrative Hearings. However, the matters in dispute between HRS and the challengers were resolved and the proceedings voluntarily dismissed. Subsequently, HRS filed the new rule as revised with the Secretary of State's office and published the new rule on July 29, 1988. The new revised rule was challenged within 21 days of publication pursuant to Section 120.54, Florida Statutes, by three new parties in Division Of Administrative Hearings Cases numbered 88-3970R, 88-4018R and 88-4019R. A Final Order eventually issued in those cases finding the rule challenges to have been timely brought pursuant to Section 120.54, Florida Statutes, and finding the revisions to be an invalid exercise of delegated legislative authority as a result of noncompliance by HRS with requirements of Section 120.54, Florida Statutes. Florida Medical Center v. DHRS, 11 FALR 3904 (Final Order issued June 29, 1989). The Final Order in Florida Medical Center has been appealed. The parties to this proceeding were permitted to present evidence of need for the respective applications under both the new and old versions of Rule 10- 5.011(1)(e) Florida Administrative Code, although all the parties were informed by order dated September 20, 1989, that the undersigned intended to apply those provisions of the administrative rule criteria in existence prior to the successful challenge to the proposed amendments treated in the Final Order issued in Florida Medical Center. Stipulations Palms and Mease stipulate that each other's application meets the quality of care criteria set forth in Section 381.705(1)(c), Florida Statutes. Morton Plant disputes only Mease's ability to insure quality of care through sufficient utilization. HRS stipulates that both applications meet quality of care criteria with the sole exception that neither applicant included a "written protocol" as noted on page II of the State Agency Action Report (SAAR). The parties stipulate that the requirement for a written protocol exists within the "new" version of the cardiac cath rule and not in the original version of the rule. The parties further stipulate that the terms "written protocol" and "transfer agreement" are not defined in either version of the cardiac cath rule. The parties stipulate that criteria contained in Section 381.705(1)(e), Florida Statutes, (relating to operation of joint, cooperative or shared health care resources) are not applicable to either of the applications in this case. HRS stipulates that criteria contained in Section 381.705(1)(f), Florida Statutes, (regarding the need within the service district of an applicant for special equipment and services not reasonably accessible within adjoining areas) are not applicable to either the Palms or Mease applications. Morton Plant contends these criteria are in issue with regard to Mease's application. All parties stipulate that criteria contained in Section 381.705(1)(g), Florida Statutes, (relating to need for research and educational facilities in conjunction with the applications) are not in issue. Criteria relating to manpower and resources contained in Section 381.705(1)(h), Florida Statutes, are not deemed applicable to the applications by HRS or the Petitioners. Morton Plant contends that these criteria are in issue with regard to the availability of necessary health manpower resources insofar as the Mease application is concerned. Petitioners agree that their applications meet immediate and long term financial feasibility requirements of Section 381.705(1)(i), Florida Statutes. HRS also joins in that agreement, provided costs associated with the cardiac cath lab director at the lab proposed by Palms does not affect the financial feasibility of Palms' project. Morton Plant contests the long term feasibility of Mease's project. All parties agree that criteria contained in Section 381.705(1)(m), Florida Statutes, relating to the costs and methods of proposed construction and equipment acquisition, are met by Palms' application and are not applicable to Mease's application. Criteria contained in Section 381.705(1)(n), Florida Statutes, relating to provision of services to Medicare and medically indigent patients, are met by the Petitioners according to HRS. The other parties contend these criteria are in issue. The parties agree that requirements of Section 381.705(2)(c) and (e), Florida Statutes, (relating to new construction alternatives and proposals for additional nursing bed capacity) are not applicable to the applications at issue in this case. The parties agree that the licensure and accreditation of the parties are not in issue and need not be proven. HRS stipulates that Palms' application and Mease's application satisfy all rule criteria under both the old and new versions of the cardiac cath rule with exception of those criteria relating to need (numeric and non-numeric), a written protocol or transfer agreement, and utilization standards set forth in the rule. Availability of existing services Palms Palms' patients requiring the services of a cardiac cath lab must be transferred by ambulance to other facilities where such service is available. Most of these transfers are made to All Children's Hospital (All Children's) in St. Petersburg, Florida, the nearest facility with cardiac cath services. Cath procedures are performed at that facility by cardiologists possessing staff privileges at Palms, as well as All Children's. On average, the transfer of a patient from Palms to All Children's takes an average of one and a half to two hours, although the actual automobile travel time is less than an hour. After a determination that a cardiac cath is needed, arrangements for the transfer involve negotiating an available time at All Children's and preparing the patient for transfer. Patient medical records are copied, consent forms signed, explanations given to patients and intravenous administration of fluids is begun. Because of their unstable condition, specialized nurses, capable of interpreting cardiac monitors and administering drugs associated with cardiac problems, must accompany these cardiac patients in the ambulance. All Children's ambulance is often not available for transfers from Palms. In those instances, Palms must provide an ambulance and nurse. If the need for such a transfer occurs in the middle of a nursing shift, Palms must pull a nurse from another unit in the hospital to accompany the patient. If plans for the transfer are known in advance of the beginning of a nursing shift, additional nursing staff is arranged for that shift. Some patients experience difficulties in the course of such a transfer. The number of intravenous applications (IVs) attached to a patient is limited during an ambulance transfer, consequently some patients must have some IVs removed. During transportation of the patient, IVs are often shaken loose, medications become unbalanced, other medical appliances become disconnected and some patients experience blood loss as well as a loss of blood pressure. Some patients have required blood transfusions upon arrival at the cardiac cath facilities. In view of the associated difficulties, some cardiovascular patients at Palms are simply too sick to undergo a transfer to another facility where cardiac cath services are available. If a cardiac cath lab or program existed at Palms, an estimated $68,000 in transportation charges would be saved in the first year alone. All Children's, a pediatric hospital, is the only hospital in the State of Florida that performs cardiac cath procedures on both adults and children in the same lab. Since All Children's is a tertiary, regional referral center, more than two thirds of the pediatric diagnostic cardiac caths are performed on nonresidents of the service district. Over 55 percent of all diagnostic cardiac caths at All Children's are performed on nonresidents of the district. Angioplasty is a therapeutic, as opposed to diagnostic, cardiac cath procedure. Such cardiac caths can only be performed at facilities providing open heart surgery services. All Children's is the only hospital in South Pinellas County able to perform angioplasty. All Children's has two cardiac cath labs. Both are heavily utilized. From July 1987 through June 1988, there were 1,268 cardiac admissions to the two labs. All Children's historic rate of 2.12 cardiac cath procedures per admission equates to 2,688 procedures performed on these patients. While this number of "procedures" is in excess of the minimum 600 "procedures" per lab standard applicable under the numeric need methodology used by HRS prior to publication of the proposed admission-based need determination formula, different definitions of the term "procedure" are ascribed to the term in accordance with the context of its usage. Under HRS' proposed admission-based need determination formula, there were 1,099 adult cardiac cath admissions to All Children's program from April 1987 through March 1988. This number of admissions is substantially in excess of the 300 admissions per program standard required for program operation under the proposed new rule policy. Currently 15 cardiologists normally use All Children's two labs on a regular basis. Three of these cardiologists deal with pediatric patients. A fourth pediatric cardiologist is being recruited by All Children's. This additional cardiologist will perform electrophysiology, a cardiac cath procedure involving use of multiple catheters. Electrophysiology studies are extremely time-consuming and this additional cardiologist's lab usage will contribute to present lab access difficulty. Presently, All Children's has a "block time" schedule for the different cardiologists on the active staff at the hospital. Each cardiologist has a scheduled block of time for usage of the cardiac cath labs. As a result, a cardiologist can not have a patient, admitted during the previous night, catheterized on a particular day unless that physician's block of time happens to fall on that day. This process effectively eliminates a majority of time during the week when a cardiologist may schedule catheterization for a patient. Pediatric cardiac caths require more lab time than adult cardiac caths and All Children's gives preference in scheduling caths to pediatric patients. Further, All Children's facilities are blocked all day on Mondays for pediatric patients. It is not unusual, in view of the preference given pediatric patients and emergency cath requirements, for adult cardiac cath patients to be "bumped" from the schedule after their arrival at All Children's. The length of hospitalization of adult cardiac cath patients therefore increases, along with a substantial increase in the patient's medical care costs. The decision of All Children's to block both of the hospital's labs for pediatric caths each Monday has resulted in the postponement of cardiac caths for Palms' patients until Monday night or Tuesday. The result is that weekend patients from Palms have a lengthened hospital stay, assuming the patients are stable and can endure the sometimes two or three days wait for a catheterization study. Palms' cardiologists also experience difficulty placing their patients after catheterization at All Children's. Since All Children's is a pediatric hospital, there are no adult beds with the exception of eight intensive care beds which are usually filled by open heart and other surgical patients. As a result of the lack of available beds at All Children's, alternatives are to transfer Palms' patients to Bayfront Medical Center, a facility adjoining All Children's, following catheterization, or return them by ambulance to Palms. This latter alternative is often followed since Bayfront Medical Center is frequently without available beds. Since a significant percentage of diagnostic cardiac cath patients must later undergo a therapeutic catheterization, Palms' patients, who are returned to Palms after diagnostic catheterization, must be transferred back to All Children's for additional cath work. In one instance, a Palms' inpatient was transferred a total of nine times. The difficulty of access to the cardiac cath labs at All Children's is particularly acute during the first quarter of each year when many elderly people come to the St. Petersburg area to enjoy the warmer climate. Significant health care risks to delaying diagnostic cardiac caths include instances at Palms where patients with unstable angina have suffered large myocardial infarctions before their transfer to another facility's cardiac cath lab. These risks are enhanced for Palms' cardiac inpatients, many of whom have multiple health problems. Palms' inpatients have a higher comorbidity index than all other hospitals in the service district. The approximately 30 primary care physicians on the active staff of Palms are not on the active staff of any other hospital. As a result, they are unable to follow their patients and continue treating their other ailments when those patients are transferred to another facility for cardiac catheterization work. If these primary care physicians could follow their patients, the quality of care would be improved. In addition to difficulty obtaining timely access to All Children's cath labs, the volume of work performed at the lab has resulted in cardiac cath technicians requesting, on at least one occasion, that a catheterization be stopped due to the fatigue of the technicians. Approval of additional inpatient diagnostic cath labs or programs in the area would reduce or eliminate the occasions of such stoppage in the future. Cardiac patients admitted to hospitals in the service district which do not have inpatient cardiac cath services wait, on the average, 1.5 days longer in the hospital before they receive catheterization than do those patients admitted to hospitals in the district providing such services. As a result, patients undergoing cardiac cath procedures and staying in a hospital without inpatient cardiac lab services average a stay which is 1.6 days longer than patients staying in a hospital with inpatient cath services. If Palms were able to provide inpatient cath services, an average additional charge of $1,800 per patient undergoing cardiac cath would be eliminated. This equates to a total savings of $200,000 to $300,000 in medical costs from the reduction of the average length of stay as the result of an inpatient program at Palms. Since hospitalized patients are at increased risk for developing nosocomial illness, diseases or infections contracted during a hospital stay, reducing the length of stay also lessens the patient's opportunity to develop such an illness. Approval of the Palms application, while temporarily lowering the number of diagnostic cardiac caths performed at All Children's, would eventually result in an increase in the number of cardiac caths performed at All Children's. This is particularly applicable to the increase in therapeutic caths that would occur at All Children's as the result of establishment of a diagnostic inpatient cardiac cath lab at Palms. The elderly and seasonal population which would be served by an inpatient cath lab at Palms would result in increased referrals from Palms to All Children's for therapeutic cath services. Two other hospitals in South Pinellas County operate inpatient diagnostic cardiac cath labs, St. Anthony's Hospital (St. Anthony's) and Humana Hospital Northside (Humana). Since neither hospital provides therapeutic cath services, a patient transferred there from Palms for the purpose of a diagnostic cath must later be transferred a second time to All Children's in the event therapeutic services are required. The diagnostic cardiac cath lab at St. Anthony's is owned and operated by the Rogers Heart Foundation, a private non- profit foundation. The emphasis at the Foundation on cardiac research has led to a very low use rate in its cath lab. Additionally, staff privileges are limited to those cardiologists willing to serve on rotation as an emergency room physician. As a result of the reluctance of cardiologists, who have limited their practice to cardiology, to meet the emergency room duty requirement, the staff of St. Anthony's is effectively a closed one. The cardiac cath equipment at St. Anthony's is out- dated and fails to produce quality images. Problems have been encountered by cardiologists with the quality of film developed by St. Anthony's cardiac cath lab. Consequently, the lack of growth and modernization of the St. Anthony's lab does not present a reasonable alternative to Palms' application. The alternative of Humana presents a shortage of intensive care and cardiac cath beds similar to that experience with All Children~s, especially during the winter months. Continued diagnostic catheterization of Palms patients at Humana will result in increased competition for an already insufficient number of beds. Humana is located even further from Palms than All Children's, worsening the current problems associated with transfer of Palms' patients to All Children's. Further, Humana, according to the rate of admissions to its cath lab in the second year of operation, will Substantially exceed the new proposed HRS policy of 300 admissions required to justify a program's operation. During 1988, Palms ranked fourth out of the 24 hospitals in the service district in the number of inpatients requiring diagnostic cardiac caths. If those hospitals operating cardiac cath labs are eliminated from the list, then Palms ranked first in the total number of inpatients requiring cath services at the remaining 17 hospitals. In 1988, Palms' 278 inpatients requiring diagnostic cardiac cath services was more than the 219 at St. Anthony's and the 174 for Humana's first year, even though those facilities had cath labs. Palms' total also exceeded the 201 patients requiring this service at both of the Mease hospital sites. The likelihood of discernable adverse impact on the cardiac cath programs at St. Anthony's and Humana as the result of establishing diagnostic cath services at Palms is small in view of the infrequent admission of Palms' patients to those programs. Serious problems will continue to be experienced by Palms' patients in obtaining inpatient diagnostic cardiac cath services if the Palms application is denied. In view of the demographics of the surrounding area and patient age composition at Palms, establishment of a diagnostic cardiac cath program in that hospital would result in an improvement of the standard of care received by inpatients there. The unique nature of All Children's primary mission as a pediatric hospital, and its inability to provide ready access to its cardiac cath labs by Palms' patients for the purpose of diagnostic cardiac cath services, coupled with other previously- noted access problems constitute exceptional and "not normal" circumstances sufficient to justify approval of a diagnostic cardiac cath lab at Palms without regard to numeric need requirements of either the "old" or "new" versions of Rule 10- 5.011(1)(e), Florida Administrative Code. Mease Accessibility to health services has two aspects; geographical accessibility and financial accessibility. The "old" rule policy of HRS has a two hour travel standard within which a cardiac cath lab must be available. The proposed rule has a one hour standard. Morton Plant is approximately three or four miles from the Mease Dunedin campus. Both hospitals provide services to the same population. The Mease Countryside Campus is approximately eight miles from the Mease Dunedin campus. The considerable testimony regarding the problem and inconvenience of transporting patients for cardiac cath presented by Palms is not appropriate to Mease. The cardiac cath labs at Morton Plant are not overcrowded, although alternatives to that possibility are being contemplated in the future through the addition of another cardiac cath lab. Based upon projections presented at the final hearing, an additional cath lab may be necessary by 1991. The present labs are not utilized on the weekends except for emergencies and difficulty in scheduling a diagnostic or therapeutic cath is rarely encountered. However, a scheduling suggestion was made by Morton Plant officials, requesting that cathing cardiologists not schedule elective cardiac caths on Mondays and Fridays. But, Morton Plant has not implemented any rule making the cath labs unavailable for elective procedures at those times. One of the Morton Plant labs has been in operation since 1985 and the equipment in that lab is scheduled to be replaced in the fall of 1990. This refurbishment should eliminate concerns regarding reliability of that lab's machinery, although all maintenance of the equipment in both labs is conducted at night to permit both labs to be functional during the day. Mease opened an outpatient cardiac cath lab in April, 1989. Mease expects to perform 160 to 175 outpatient diagnostic caths in the first year of operation. The lab is not presently profitable. However, transfer of inpatients to other facilities for purpose of inpatient caths does impact negatively on Mease. Mease loses approximately $133,000 per year as the result of inpatient transfers, exclusive of ambulance fees. These losses represent the difference between the medicare reimbursement to Mease and the charges that Mease must pay to the other facility for provisions of the inpatient cath services. From October 1, 1988 through September 30, 1989, between 250 and 260 Mease inpatients were transferred to other facilities to receive inpatient caths. Ambulance cost per patient varies depending upon the destination facility which is generally either Largo Medical Center in Largo, Florida, for a charge of $436 round trip or Morton Plant for a round trip charge of $378. An estimated one hour is needed to make the transfer of a patient from Mease to Morton Plant, although actual travel time to the nearby facility is obviously much less. The services of those Mease nurses who accompany each patient are unavailable to Mease for other services for approximately two hours. The transfer of any inpatient to another hospital constitutes less than optimal care and can compromise patient safety as illustrated by one instance of the transfer of a Mease patient who suffered a major heart attack en route to another facility and became a "cardiac cripple." However, such examples with regard to accessibility to other facilities by Mease patients are not sufficient to constitute exceptional or not normal circumstances for purpose of granting the Mease application. Need For The Proposed Projects Prior to publication of the new proposed rule, HRS recognized that multiple procedures may be performed on a single patient during one admission to a cardiac cath lab. However, in the course of application of the old rule methodology to determine need for additional cardiac cath CONs, HRs did not, as a matter of operational policy, ascribe that same meaning to the term "procedures" in formula computations made to determine numeric need for those labs. Typically, a patient undergoes more than one procedure in the course of a cardiac cath. To determine an actual number of procedures, in the generic sense of the word, performed by existing cardiac cath labs in the service district, Mease and Palms subpoenaed information from all those labs. As a result of that effort, Mease and Palms have shown that 7,507 cardiac cath procedures were performed in the service district during the period July 1987 through June 1988. Of this total, approximately 5,081 were diagnostic cardiac caths. Cardiac cath lab admissions for diagnostic and therapeutic cardiac caths during the July 1987 through June 1988 period totaled 4,057 patients in the service district, averaging 1.85 procedures per cath lab admission. Similarly, diagnostic cardiac caths averaged 1.47 procedures per admission. A Diagnosis Related Group (DRG) is a combination of variable diagnoses codes and procedure codes that are used by Medicare to assign a fixed level of reimbursement to the type of medical services rendered by a provider. The term ICD-9CM Code is an acronym for the Internal Classification of Diseases, 9th Revision, Clinical Modification. The ICD-9 coding system is a classification for morbidity and mortality statistics which are modified for use in the United States for statistical collection. There are five diagnosis codes which identity conditions treated and three procedure codes identifying the type of treatment provided. The federal government and the State of Florida's Health Care Cost Containment Board (HCCCB) require that Florida hospitals maintain and report ICD-9-CM Code information. The American Hospital Association, with input from the federal Health Care Financing Administration, the National Center for Health Statistics, and the American Medical Records Association, publishes standards and rules to ensure uniformity in the reporting of ICD-9 information. Further, the Peer Review Organization, as part of its contract with the Health Standards Quality Bureau, reviews the accuracy of ICD-9 coding by hospitals. Florida hospitals report ICD-9 information to the HCCCB by filling out a Uniform Hospital Discharge Data Sheet for each patient. The HCCCB requires Florida hospitals to report up to five diagnosis and three procedure codes. Different ICD-9 codes are assigned for different types of cardiac catheterization procedures. Hospitals are expected to Code each individual cardiac catheterization procedure performed on the patient in accordance with specific instructions published by the American Hospital Association. ICD-9 code information reported to the HCCCB by existing providers of cardiac cath services in the service district corroborates the findings derived by Petitioners from information obtained through subpoenas to those providers, and verifies there is generally some multiple of ICD-9 code procedures per patient in a single admission. While ICD-9 code information is the most reliable tool available for health care planning purposes, the counting of procedures by those codes is not an appropriate measuring tool or good indication of need for two reasons. First, certain procedures may be a component of each and every catheterization, such as pressure measurements and angiography. The same amount of time and resources per patient are utilized regardless of whether the event is recorded as one "admission" or two "procedures". Secondly, different hospitals do record or code the various procedures differently, thereby skewing the results of any attempt to average procedures district wide in order to develop a ratio of procedures to admissions. In this regard, it is noted that Mease and Morton Plant do not code angiography as a separate procedure, consequently they have a low ratio of procedures to admissions in comparison to Palms. In developing its proposed new rule policy, HRS considered methodical scenarios for converting prpcedures to admissions, including a conversion factor of 1.2 procedures per admission and a conversion factor of 1.9 procedures per admission. Neither of these conversion options are utilized in the proposed new rule. Further, the evidence presented at the final hearing fails to establish that HRS has in place any methodology for the conversion of cardiac cath lab procedures to admissions to cardiac cath programs. Petitioners contend that HRS relied in the past upon local health councils to gather the correct number of cardiac cath lab procedures performed by existing labs in a service district, and that hospitals with cardiac cath labs erroneously reported lab admissions to the District Five Local Health Council rather than the total number of procedures performed in the labs. Petitioners further contend that as a result of unwitting reliance upon the number of cardiac cath lab patient admissions instead of the number of procedures performed on patients admitted to those labs, HRS historically suppressed projections of cardiac cath lab need in the Service District Five when applying the "old" rule. The weight of the evidence presented at the final hearing supports a finding that actual need may be at some minor variance with that projected by HRS' need formula computation under the old rule. The extent that such need exceeds the projected amount, while not totally capable of discernment on the basis of the evidence presented, is probably in the neighborhood of 1.01 procedures per admission. It is found that HRS did not intentionally suppress need projections in the district and that the minor variance shown does not substantially affect numeric need determinations calculated under the old rule. As previously alluded to above, the term "procedure" in the rule methodology previously utilized by HRS historically meant the aggregate of what is performed on one admission to a cardiac cath lab. The old rule was based on federal guidelines providing that procedures were equal to an admission. At the time the old rule was written, the terms "cases", "cardiac catheterization", and "cardiac catherization procedures" were used interchangeably with the advent of DRGs for medicare reimbursement purposes, hospitals responded to local health councils' data collection requests by reporting "Procedures" used for reimbursement purposes. The resultant confusion spawned the motivation for HRS to propose the new rule methodology which uses the term "admission." HRS reviewed the applications at issue here pursuant to the proposed new rule and its "admissions" based numeric need methodology. That review, conducted on the basis of admissions, was consistent with the policy of HRS to interpret the term "procedure" to mean "admission." Further, in view of the equivalency accorded the those terms by HRS, the number of procedures for purposes of numeric need calculation under the "old" rule formula does not require inflation in order to apply the old rule's numeric need formula. HRS has candidly admitted that various providers reported the number of "admissions" rather than "procedures". The policy of HRS, although subject to a minor margin of error with the advent of DRGs, to count admissions as procedures is one that has been consistently and fairly applied without regard to whether the result led to the granting or denial of a particular application. From a health planning perspective, an admission or patient is the appropriate unit of measurement to determine future need for cardiac cath services. The goal of the CON program is to ensure an appropriate allocation of services while controlling capital expenditures. The Petitioners contend that cardiac catheterization admissions are not a good measure of resource consumption and that the type of catheterization, i.e., adult versus pediatric and therapeutic versus diagnostic, should be considered. To an extent, the position is well taken, but in the absence of an agency policy that measures numeric need in that fashion, the alternative proposed by the Petitioners is unpalatable. The Petitioners' overly broad proposal for consideration of "procedure" as a multiple of "admission" for purposes of need formula computation results in a proliferation of cardiac cath labs in derogation of the CON program goal previously mentioned. The use of 300 admissions as a minimum number required for a new lab under the proposed "new" rule is not a recognition by HRS of any applicable conversion factor of procedures to admissions. Instead, the number of 300 admissions is a standard that must be met after all existing providers have their present patient volume protected, as opposed to a simple minimal admission number required to maintain skill proficiency of medical personnel. Under the old rule, a volume of only 600 patients per lab is protected in contrast to the new rule's proposal to protect uncapped patient volume in existing cardiac programs. To that extent, the old rule does not place the same emphasis on utilization of existing labs or programs as does the new rule. HRS' SAAR on the Petitioners' applications confirmed a total of 4,712 admissions to cardiac cath labs in the service district from April, 1987 until March, 1988. If the number of admissions is equated to mean the number of procedures, in accordance with HRS rule policy applied to the formula previously used to determine numeric need, then the result of that computation under the "old" rule is no numeric need for additional cardiac cath labs in the service district. Likewise, computations under the proposed "new" rule need formula utilizing reported admissions during the base period also results in a finding of no numeric need for additional cath labs in the district. Out-migration While it is conceded by the parties that strict application of the numeric need methodology of the proposed "new" rule results in a finding of no need for additional cardiac cath labs, Petitioners contend that HRS is required to factor into that new need methodology the number of residents in the service district who go outside the district to obtain cardiac cath services. While subsection h of the "new" rule requires that HRS consider such data in the determination of need, there is no requirement that the number of such residents be included within the need determination formula. As established at the final hearing, out-migration serves to establish need for a facility, in the absence of numeric need, where it is shown that residents are leaving the service district due to unavailability of the services within the district. While residents are leaving the service district in this instance to obtain cardiac cath services, the evidence fails to establish that this action is due to service unavailability. Quality Of Care The parties stipulated that both applicants partially meet the statutory requirement requiring proof of the ability to render quality care and the previous record of the applicant to render quality of care. HRS contends both applicants failed to a provide a "written protocol" for the transfer of emergency patients to open heart surgery providers in compliance with requirements of the "new" rule. HRS concedes that both applications meet quality of care requirements, including those relating to a "transfer agreement" if reviewed under the "old" rule. HRS has not formally defined the term "written protocol", but no evidence exists that either applicant would fail to provide quality of care with regard to transfer of patients in the event such became necessary. The purpose of a written protocol is to assure HRS that proper quality of care procedures would be used in transferring open heart patients. HRS professes confidence in the ability of the applicants to perform this service and therefore this requirement is considered fulfilled in the event approval of the applications is determined pursuant to provisions of the "new" rule. Availability Of Resources Morton Plant's concerns regarding Mease's ability to render quality of care are restricted to whether Mease has provided for sufficiently trained staff to handle the projected volume of cases in the event that Mease's application is approved. Availability of appropriately trained professionals is also a Morton Plant concern. The projections of Mease for salaries, number of employees, expenses, training or acquisition of employees, and overtime costs are reasonable and meet requirememts relating to availability of resources. Consistency With State And Local Plans The state health plan in effect when these applications were filed contains a goal that an average of 600 cardiac cath procedures per lab be maintained within the district. HRS found this provision of the state health plan to be inapplicable since these applications were not reviewed in conjunction with requirements of the "old" rule. Regardless of this omission, neither application meets this goal in view of the traditional interpretation accorded the term "procedures" by HRS. With regard to the district plan, all counties within Service District Five have existing or approved cardiac catheterization providers. With the exception of the access difficulties noted with regard to Palms, services are well distributed. Neither applicant is a major referral hospital, although both have traditionally served all patients without regard to the ability of the patient to pay. Adequacy And Availability Of Other Services There are other existing providers of diagnostic inpatient cardiac cath services available in service district five, whose capacity is not fully utilized. Mease, whose Dunedin campus is located only three to four miles from Morton Plant, proposes to provide services to the same patient population. As previously noted, the concerns about the adequacy of equipment in one of the Morton Plant cath labs is in the process of being addressed through the installation of new equipment in the fall of 1990. Although there are existing providers available, the instances of access difficulty recited by witnesses for Palms are likely to be compounded as more patients undergo cardiac catheterization at those alternative facilities in the future. The demographics of Palms' elderly and multiple illness-laden inpatient population increase the complications likely to be experienced by those inpatients during transfer for purposes of diagnostic catheterization. Likewise, outpatient cath lab establishment would not be a realistic alternative for these patients, or a cost effective measure. While many inpatients would invariably have to be transferred later for therapeutic cath services, the rigors of such a journey would be avoided initially for all inpatients and a considerable number of inpatients thereafter. Impact On Existing Costs No testimony presented at final hearing supports a finding of an adverse impact on any existing provider in the event that Palms' application is approved. Of the three other full service hospitals in Palms' primary service area, only one has a cardiac cath program. Palms projects savings from the elimination of ambulance transfers and reductions in the length of stay for Palms' inpatients receiving diagnostic cardiac caths at approximately $157,000 in the first year of operation. Cost per cardiac cath patient for this service would be approximately $2,200 on average, an amount comparable to other providers in the Palms area. One thrust of Mease's argument, in terms of impact of its program upon the costs of inpatient cardiac cath, is directed to the losses which Mease experiences through the transfer of inpatients to Morton Plant. While increased utilization of Mease's present outpatient cardiac cath lab by its inpatients would decrease or eliminate the present loss of income experienced by the hospital, the burden of that cost benefit to Mease falls upon Morton Plant. The number of inpatients projected by Mease would be derived primarily from individuals who would otherwise receive cardiac cath services at Morton Plant. Approximately 30 percent of the total procedures performed at Morton Plant would be lost if the Mease application is approved. Such a loss would not be detrimental to the Morton Plant program, other than to require Morton Plant to postpone future contemplated increases in the number of cardiac cath labs in the present program. Approval of the Mease application would increase competition to some degree among other providers of diagnostic cath services to inpatients in Mease's primary service area. As previously noted, the impact of competition would be primarily upon Morton Plant, whose cardiac cath facilities, while nearing capacity limits, are not over utilized at the present time. Mease estimates that an average cath charge to inpatients would be $1,500 if its CON is approved. The loss of revenue to Morton Plant will average $1,606 for each inpatient cath lost to another facility, or $511,000 if Mease's application is approved. This amount closely approximates the positive revenue impact of $563,785 estimated by Mease in the event of CON approval. Financial Feasibility All parties, except HRS, stipulated that Palms' application was financially feasible. HRS' position was that Palms' application met this criterion, provided costs of Palms' cardiac cath lab director did not affect financial feasibility. Palms presented evidence at the final hearing amplifying the information in its application and establishing that the cost of the lab director will not affect financial feasibility of the project. The directorship will be a voluntary, non-paying position rotated among the cardiologists with privileges to perform catheterizations. Palms' proposal is financially feasible. HRS stipulated that Mease's project is financially feasible. Morton Plant disputes the long term financial feasibility of Mease's project. Mease maintains that its provision of inpatient cath service will have no cost because the equipment has already been purchased and is being used to do outpatient caths. However, Mease also has an expense item on its inpatient pro forma for depreciation of that same equipment and maintains that the cost for providing the cath service will decrease as costs will be spread over more patients with the advent of inpatient cath services. The more reasonable assumption is that the cost of the equipment is a cost associated with the present CON application, particularly since Mease admits to the motivation of implementing outpatient service in an attempt to enhance the probability of obtaining an inpatient lab. Notwithstanding this cost discrepancy, Mease's application is financially feasible. Medicaid And Medically Indigent HRS has stipulated that the Petitioners' past and proposed provision of health care services to Medicaid patients and the medically indigent is not at issue. However, the parties contend that the matter is in issue between them. As a not-for-profit hospital, part of Mease's mission is to provide needed medical care, independently of the patient's ability to pay. Mease would apply this same philosophy to patients needing services in its inpatient cath lab. Mease provides its fair share of medicaid and charity services relative to the community in which it is located. Palms has made a commitment to serve all patients regardless of ability to pay. Palms does not have any policies which would discourage Medicaid patients. Comparative Review There is insufficient numeric need under either the new or old rule formula to approve either of the Petitioners' applications on that basis. However, Palms presented considerable evidence of exceptional and not normal circumstances justifying approval of its application. In particular, the overcrowding at All Children's, inpatient transfer problems, the severity of the scheduling difficulties at All Children's and other access problems provide an adequate basis for approval of the Palms application. Palms generates more inpatients requiring inpatient diagnostic cath services than does Mease. Notably, 4.76 percent of the total service district diagnostic cath inpatients originate from Palms as opposed to 3.37 percent for Mease. The average age of Palms' inpatients is higher than that of Mease's inpatients. Palms' inpatients have a higher comorbidity index than both Mease and the service district as a whole. Palms has had, historically, more inpatients in the 45-64 age cohort and the over age 65 cohort undergo cardiac cath than has Mease. Mease provides more Medicaid care than Palms, but Palms does not provide obstetrics and pediatric services, two areas of care traditionally high in Medicaid utilization. If the comparison is limited to Medicaid utilization for cardiology services, Palms ranks higher than Mease. Capital costs of Mease's construction of an outpatient lab capable of provision of inpatient services is not included in its application, although depreciation and amortization of the lab and equipment is included. Mease's outpatient lab was constructed in an effort to improve its application for a CON to provide inpatient services, therefore exclusion of that cost results in an unfair comparison of capital expenditure between the two applications. Discounting Mease's claim that its provision of inpatient cath service will have no cost because the equipment has already been purchased and is being used to do outpatient caths, the application of Palms is superior to that of Mease.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered approving the application of Palms for an inpatient cardiac catheterization lab or program Certificate of Need, and denying the application of Mease. DONE AND ENTERED this 22nd day of March, 1990, in Tallahassee, Leon County, Florida. DON W. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Fl 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of March, 1990. APPENDIX The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties. Mease's Proposed Findings. 1.-3. Adopted in substance. 4. Rejected as to cost, not supported by weight of the evidence. 5.-15. Adopted in substance. 16. Rejected, conclusion of law. 17.-20. Rejected, cumulative. 21.-25. Rejected, unnecessary. 26.-31. Adopted in substance, but qualified in some instances. Rejected, unnecessary. Adopted in substance. Rejected, unnecessary. Rejected, misrepresentative of HRS policy interpretation of "procedures" in the context of rule application. Rejected, not supported by the weight of the evidence. 37.-38. Adopted in substance. 39. Adopted. 40.-41. Rejected, not supported by weight of the evidence. 42.-43. Rejected, unnecessary. 44.-45. Rejected, not supported by weight of the evidence. Adopted. Rejected, not supported by weight of the evidence. 48.-51. Rejected, cumulative. 52.-58. Adopted by reference. Rejected, relevancy. Rejected as recitation of testimony, alternatively ultimate conclusion not supported by weight of the evidence. Adopted by reference. Rejected, relevancy. 63.-65. Adopted. Rejected, speculative. Adopted by reference. Rejected, not supported by weight of the evidence. Rejected, cumulative. 70.-72. Adopted in substance. Rejected, cumulative. Adopted in substance. 76. Rejected on basis of creditability. 77.-78. Adopted. 79.-81. Adopted in substance. 82.-84. Rejected, cumulative. 85.-86. Rejected, not supported by weight of the evidence. 87.-88. Adopted by reference. 89. Rejected, cumulative and speculative. 90.-91. Adopted in substance. 92. Rejected, not supported by weight of the evidence. 93.-94. Adopted in substance. 95.-97. Rejected, not supported by weight of the evidence. 98.-99. Adopted by reference. 100. Rejected, unnecessary. 101.-103. Adopted in substance. 104.-110. Rejected, not supported by weight of the evidence. 111. Adopted in substance. 112.-114. Rejected, not supported by weight of the evidence. 115.-116. Rejected on basis of creditability. 117.-122. Adopted by reference. Rejected, not supported by weight of the evidence. Adopted in substance. Rejected on basis of creditability. 126.-128. Rejected, cumulative. 129. Rejected, not supported by weight of the evidence. 130.-131. Adopted in substance. 132.-138. Adopted by reference, although cumulative. 139.-141. Rejected, relevancy. 142. Rejected, not supported by weight of the evidence. 143. Rejected, relevancy. 144. Adopted with modifications. 145. Rejected, not supported by weight of the evidence. Palms' Proposed Findings. 1.-10. Adopted in substance. 11. Rejected, unnecessary. 12.-25. Adopted in substance. 26. Rejected, unnecessary. 27.-41. Adopted in substance. 42. Rejected, not supported by the evidence. 43.-45. Adopted in substance. 46. Rejected, unnecessary. 47.-57. Adopted in substance, though not verbatim. 58. Rejected, conjecture unsupported by weight of the evidence. 59.-63. Adopted in substance. 64. Rejected, unnecessary. 65.-71. Adopted in substance. 72.-75. Rejected, unnecessary. 76. Adopted as to first sentence. Rejected as to second sentence as unsupported legal conclusion. 77.-79. Adopted in substance. Rejected, not supported by weight of the evidence. Adopted for recitation of factual background in recommended order. However, the term "procedure" refers to ICD-9 procedures and not to "procedures" as that term has been defined by agency policy for need formula calculation. Proposed finding's conclusion of additional lab numeric need is rejected as not supported by weight of the evidence. 82.-88. Adopted in substance, though not verbatim. 89.-92. Rejected, unnecessary. 93.-94. Rejected, unsupported by weight of the evidence. 95.-101. Rejected, unnecessary. 102. Rejected, not supported by weight of the evidence. 103.-105. Rejected as legal argument and conclusions unsupported by weight of the evidence to advance the theory that ICD- 9 procedures should govern over the agency's policy definition of procedures under the old rule, and that such other definition should control the determination of number of admissions used to calculate numeric need under the new rule. Rejected, unnecessary. First sentence adopted in substance, remainder of this proposed finding is rejected as argumentative legal conclusion not supported by weight of the evidence to the extent that subsection h data must be included in numeric need formula calculations. Rejected as to ultimate conclusion of this proposed finding as unsupported by weight of the evidence. 109.-114. Adopted in substance. 115.-117. Adopted by reference. 118.-119. Rejected, not supported by weight of the evidence. 120.-125. Adopted in substance. 126. Rejected, unnecessary. 127.-130. Adopted in substance. 131. Rejected, not supported by weight of the evidence. 132.-137. Adopted in substance, though not verbatim. Morton Plant's Proposed Findings. 1.-5. Adopted in substance. Adopted in substance with exception of last sentence which is not supported by weight of the evidence. Adopted by reference. Rejected as to ultimate conclusion as unsupported by the weight of the evidence. 9.-11. Adopted in substance. 12.-15. Adopted in substance. 16.-18. Rejected, unnecessary. First sentence reject, unsupported by evidence as to Palms. Adopted by reference as to remainder of this proposed finding. Adopted in substance. Rejected, unnecessary. Adopted in substance. Rejected, unnecessary. Rejected, except as to last sentence which is adopted in substance. Adopted by reference. 26-28. Adopted in substance. 29. Adopted in substance with exception of next to last sentence of this proposed finding which is rejected as unsupported by weight of the evidence. 30.-34. Adopted in substance. First sentence rejected as unsupported by the weight of the evidence. Remainder of this proposed finding is rejected as unnecessary. Rejected as unnecessary. 37.-38. Adopted in substance. 39.-40. Rejected, unnecessary. Ultimate conclusion of this proposed finding regarding accessibility of cardiac cath services to Mease inpatients is adopted in substance. This proposed finding is apparently directed only to the Mease application in view of the usage of the singular in the reference to denial of the "application" and as such the remainder is rejected as unnecessary. Adopted in substance. All aspects of this proposed finding are not supported by the weight of the evidence. Therefore, as a multiple proposed finding not susceptible to division, it is rejected for that reason. Adopted in substance. Rejected, not supported by the weight of the evidence. Rejected, not supported by the weight of the evidence. 47.-48. Rejected as unnecessary with exception of last sentence of proposed finding number 48 which is rejected as unsupported by the weight of the evidence. 49.-50. Rejected, not supported by the weight of the evidence. 51. Adopted in substance. 52.-56. Rejected, legal argument. 57. Adopted in substance. HRS' proposed findings. Adopted in substance, as to patients requiring angioplasty. Rejected, unnecessary. Rejected, not supported by weight of the evidence. Adopted in substance. Rejected, unnecessary. Adopted in substance. 7.-10. Adopted in substance. 11. Rejected, unnecessary. 12.-13. Adopted by reference. Rejected as unnecessary. First sentence adopted in substance, remainder rejected as speculative, not supported by weight of the evidence. Rejected, not supported by weight of the evidence. Adopted by reference. Adopted in substance. 19.-21. Adopted in substance. 22.-23. Rejected, unnecessary. 24.-25. Adopted in substance with exception of last sentence of proposed finding number 25 which is not supported by the weight of the evidence. 26.-27. Rejected, unnecessary. 28. Adopted by reference. 29.-30. Adopted in substance. Adopted in substance. Last sentence rejected as unsupported by the weight of the evidence. Adopted by reference. 34.-35. Adopted. Rejected, not supported by weight of the evidence. Adopted in substance. Not supported by the weight of the evidence. 39.-45. Adopted in substance. Rejected, unnecessary. Adopted in substance except as to last sentence which is rejected as unnecessary. Adopted. 49.-53. Rejected as unnecessary. 54. Adopted. 55.-56. Rejected, unnecessary. 57.-58. Adopted in substance. 59. Rejected, unnecessary. 60.-61. Adopted in substance. 62. Rejected, unnecessary. 63.-67. Adopted in substance. 68.-72. Rejected, unnecessary. 73.-77. Adopted in substance. 78.-79. Rejected as unnecessary. 80.-81. Rejected as legal conclusions. 82. Rejected as unnecessary. 83.-87. Rejected, legal conclusions and argument. 88.-89. Adopted in substance. 90.-92. Rejected, unnecessary. Adopted in substance. Rejected, unnecessary. Adopted in substance. 96.-98. Adopted by reference. 99. Rejected, unnecessary. 100.-101. Adopted in substance. Rejected, recitation of testimony. Rejected as to Palms, not supported by weight of the evidence. As to Mease, existing inpatient providers provide an alternative. 104.-105. Rejected, not supported by the weight of the evidence. 106. Rejected as cumulative. 107.-108. Rejected as unnecessary. Adopted by reference. Rejected, legal argument. Adopted in substance. Adopted by reference. 113.-114. Adopted in substance with modification. 115. Adopted in substance. COPIES FURNISHED: Edgar Lee Elzie, Jr., Esq. 215 South Monroe Street, Suite 804 Tallahassee, FL 32301 C. Gary Williams, Esq. Stephen C. Emmanuel, Esq. 227 South Calhoun St. P.O. Box 391 Tallahassee, FL 32302 Ken Hoffman, Esq. W. David Watkins, Esq. P.O. Box 6507 Tallahassee, FL 32314-6507 Cynthia S. Tunnicliff, Esq. Loula Fuller, Esq. P.O. Drawer 190 Tallahassee, FL 32302 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Sam Power Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Miller, Esq. General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 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 The Petitioner, Medical Center Hospital, is a 208 bed not-for-profit hospital located in Charlotte County, Florida. Its primary service area is Charlotte County. It has secondary service areas including DeSoto County and the peripheral areas of Lee and Sarasota Counties, which adjoin Charlotte County. It has filed an application for a Certificate of Need authorizing it to establish a cardiac catheterization (cardiac cath) lab at its facility in Punta Gorda, Florida. After review by HRS staff personnel, the Department initially elected to deny the Certificate of Need application. HRS District 8 includes Collier, DeSoto, Lee, Sarasota, Hendry and Charlotte Counties. Charlotte County is in the approximate geographic center of that district and is the third most populous county in the district. There are 622 acute care beds in Charlotte County divided among three acute care hospitals. There are no cath labs in Charlotte County and in all of District 8, there are only three: (1) Memorial of Sarasota in Sarasota County, (2) Lee Memorial in Lee County and (3) Ft. Myers Community Hospital in Lee County. Charlotte County has a significant population of elderly citizens. This elderly portion of the population is that portion composed of persons of the age of 60 years or older. The population growth of the county and the surrounding areas has been very rapid and continues to be. Charlotte County has historically grown at a rate faster than that of the State of Florida. The county has the largest percentage of elderly persons of any county population in the United States, with approximately 34 percent of its citizens being in the elderly category. Statistically, this elderly age group has the highest degree of damage to coronary arteries and major vessels of the heart. The population of persons over 45 years of age is the broader age group of candidates for cardiac catheterization, comprising approximately 55 percent of the total population of the county. Approximately 40 percent of Petitioner's hospital patient volume, based upon its total admissions, consists of cardiac patients. This percentage is actually higher when computed in terms of patient days of care. Significantly, Medicare eligible patients, the more elderly patients, constitute the predominant number of Petitioner's hospital admissions. The 1981 and 1982 Medicare patient days were 67.16 percent of the Petitioner's total patient days. Patients in the primary and secondary service areas of the Petitioner's hospital, as well as the other two acute care hospitals in Charlotte County, who require cardiac cath services must now be referred out of that county. This referral process, with attendant delays in providing sometimes critical emergency care to patients, disruption of their living routines and those of their families attending them, causes a significant adverse impact on patients in terms of costs, personal health risks, stress and overall adverse effects on the quality of patient care. The economic costs of this referral process are significantly higher than if a cardiac cath facility were located in Charlotte County, especially in terms of the duplicated services and duplicated expenses involved in care for such cardiac patients since many of the aspects of care provided by the Petitioner as the initial admitting facility are duplicated when the patient arrives at the referral facility. A referral for cardiac cath to another physician and hospital involves transfer of the patient, if the patient is already an inpatient at the Petitioner's facility or one of the other two Charlotte County hospitals. The cost of an ambulance or helicopter transfer is significant and must be borne by the patient or the patient's reimbursement provider. The patient must be admitted to the referral facility as an inpatient. This leads to an additional facility charge, not to mention additionalmental and physical stress, on the patient. In turn, another physician at the referral facility must admit the patient to that second facility. He, in turn, will charge a fee. Further, additional laboratory tests and procedures are performed at the referral facility as part of the standard patient "work-up." These include all manner of blood examinations and tests and analyses, chest x-rays, EKG's and the like. Fees are charged for all of these tests and procedures which, in the case of an inpatient requiring cardiac cath, would have already been performed at Use referring facility. Added to this duplication of costs is the stress occasioned the cardiac patient by simply having to go to another hospital at a distance from his home, to a new doctor, to have that new doctor with whom he is unfamiliar, perform a procedure that the patient is apprehensive about. Additional real-life, practical problems involving equipment breakdown can result in additional inpatient time and expense at can result in additional impatient time and expense at the referral facility, since, in the present scenario, that is the only facility in the area with a cardiac cath lab and appropriate equipment. The transporting of a high risk patient, who should not be subjected to the transfer process due to the stress an risk it poses, but must be because the cath procedure cannot be legally performed by the referring facility (Petitioner), presents a clinically significant and often unacceptable risk of death for such patients. Without the cardiac cath lab capability at Petitioner's facility, optimal care to cardiac patients cannot be provided by the physicians and facilities attempting to treat such patients in the Charlotte County area. The minimum service volume requirement (as delineated in the cardiac cath rule at paragraph (i)(4)) requires that a minimum of 300 cardiac cath procedures be performed annually in a cardiac cath lab within three years following the initiation of those services. The number of cardiac cath procedures generated from the Charlotte County area is and has been significantly high for a long period of time. Dr. Rosenfield established that from his practice alone in Charlotte County, 175 to 160 cases have been referred for cardiac cath services since January, 1983. Based on the practices of other cardiologists and physicians in the area, Dr. Rosenfield was able to establish that 400 to 500 cardiac cath procedures a year could be performed in Petitioner's lab, if authorized. In addition to the actual patients referred out of the area, for instance to Lee County, for cardiac cath services, are those patients who refuse referrals. In these instances, patients, although recommended to undergo a cath procedure, refuse to because they are afraid or otherwise unwilling to go to an unfamiliar hospital outside of their county or to an unknown physician. Dr. Rosenfield had approximately 50 to 100 cases in his practice, in 1984, he would have referred to a cardiac cath facility in Lee County or other areas, but his patients refused to accept that arrangement. In short, it was established that the Petitioner can meet the minimum service volume requirement embodied in the so-called "cardiac cath rule." The frequency of cardiac caths being performed in District 8 facilities is increasing in an unbroken trend. Catheterizations are typically performed earlier in a patient's illness and hospital stay than in former times in order to earlier and better diagnose the patient's condition. This results in a higher quality of care for the cardiac patient and lessening of the overall cost of that patient's care both by reducing the number of hospital days and avoidance of unnecessary, sometimes duplicative diagnostic tests. There is a clear national and District 8 trend in cardiac medical practice which consists of performing more therapeutic cardiac caths as a useful tool of preventive cardiac medicine. Actual recent historical utilization and demand for cardiac cath service in District 8 has not been consistent with the prediction embodied in the calculations provided for in Rule 10-5.11(15)(1), Florida Administrative Code. That rule seeks to predict future cardiac cath procedures required in a future year (here 1986) by multiplying the 1981 actual cardiac cath use rate by the 1986 projected population in the District. The resultant figure is then divided by 600 to yield the number of cardiac caths needed as determined by the rule methodology. In the instant situation however, that abstract mathematical calculation projects that 1,833 procedures would be performed in 1986, yielding "need" for three cardiac cath labs. However, in District 8, in 1983, the actual cardiac cath procedures performed, without consideration of the six months of cardiac cath procedures performed by the Lee Memorial Lab in 1983 (annualized), were actually 2,089 procedures, significantly in excess of the need calculation the rule demonstrates for the year 1986, three years later. Utilizing the Department's rule-based mathematical calculation of need, it would be 1990 before enough procedures are projected to warrant a fourth cardiac cath lab in the District. In 1990, 2,128 procedures would be projected by the rule. Actual 1983 procedures, again only including six months of operation of the Lee Memorial Lab without annualizing that six month's experience, fall only 39 procedures short of what the formula shows to be the 1990 "need." If Lee Memorial's 1983 procedures were annualized, the resultant number of District 8 procedures in 1983 is 2,255, more than the Respondent's projected 1990 "need." Thus, the situation established for District 8 in Charlotte County is clearly a "not normal" factual situation, in that the Department's rule methodology shows for 1986, the "horizon" year at issue, and indeed even for 1990, that less procedures will be "needed" than the Petitioner established have already been performed in a single year, i.e. 1983. Thus, due in part to the high percentage of elderly patients who have more frequent need of cardiac cath procedures in the Charlotte County and District 8 population, the need calculation provided for in the above rule clearly does not mesh with nor address what the actual need is already. It is also significant to note that the actual numbers of cardiac cath procedures performed in District 8 cath labs in 1981, as compared to the numbers of unverified procedures reported to HRS, clearly result in a showing of a need for a fourth cath lab consistent with the need determination formula. Six- hundred thirty-three cardiac cath procedures were performed in 1981 at the Ft. Myers Community Hospital and Memorial Hospital of Sarasota. These procedures were "right heart" cath procedures which were included within complete Catheterizations or other Catheterizations procedures, which were counted as one procedure for reporting to HRS, but which in actuality involve separate procedures and billing. The addition of 633 procedures to the 1,482 procedures reported to and employed by HRS in its calculations herein results in a total of 2,115 actual 1981 procedures. Thus, the revised 1981 use rate results in a total of 2,511 projected procedures, for a 1986 horizon year need of 4.2 cath labs. The 1984 real utilization rate reveals in turn, as projected through the year end of 1984, an immediate need in District 8. This is predicated on the Department's acknowledged policy of granting one cath lab for each 600 procedures. If the 2,274 procedures actually experienced in 1984 in District 8 is divided by 600 there results a need of 3.79, or four, cath labs for 1984 based upon the 1984 actual utilization rates. It is also noteworthy that if 1983 actual use rates are utilized, the resulting computation reveals the need for four cath labs for the year 1986. The additional basis upon which the Respondent, HRS opposes the grant of the application is the feared inability of the Petitioner to meet the requirement of Rule 10-5.11(15)(i)5.a. which requires that cardiac cath labs in a facility not performing open heart surgery must submit with their CON applications a written referral agreement with a facility providing open heart surgery within 30 minutes travel time by emergency vehicle under average travel conditions. The Petitioner's application however, (Exhibit 5 in evidence) shows that indeed written referral agreements for open heart surgery between the Petitioner and Memorial Hospital of Sarasota and Ft. Myers Community Hospital have been executed. Ft. Myers Community Hospital is accessible from the Petitioner's location in 20 to 25 minutes travel time by an emergency vehicle, with normal driving time of 30 to 35 minutes. In the context of financial feasibility and control or economy in health care costs to the public, it is established that the Petitioner presently has space available in its existing facility and substantially all of the equipment necessary to perform cardiac catheterization procedures. The cost of its proposed lab will be a maximum of $87,000. That cost includes purchase of new equipment and modifications to the existing examination table.1 It is significant that the cost of this project is substantially less than that which existing health care providers may spend without undergoing certificate of need review, as long as they do not seek to offer a new service. The cost of the project is minimal in relation to the benefits to be derived by patients of the health care service area by institution of the additional cardiac cath service represented by this application. In a similar vein, no issue has been raised concerning the financial feasibility of the Petitioners installation and operation of the proposed cardiac cath lab service.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record and the candor and demeanor of the witnesses, as well as the pleadings and arguments of the parties, it is, therefore RECOMMENDED: That a Certificate of Need authorizing the installation and operation of a cardiac catheterization laboratory for its facility at Punta Gorda, Charlotte County, Florida be issued to Adventist Health Systems/Sunbelt, d/b/a Medical Center Hospital. DONE and ENTERED this 9th day of May, 1985 in Tallahassee, Florida. P. MICHAEL RUFF 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 9th day of May, 1985. COPIES FURNISHED: William B. Wiley, Esquire 666 Lewis State Bank Building Tallahassee, Florida 32301 Gary L. Wilkins, Esquire 590 Harbor Blvd., Northwest Suite 204 Port Charlotte, Florida 33952 John M. Carson, Esquire Department of Health and Rehabilitative Services 1317 Winewood Blvd. Building 2, Room 407 Tallahassee, Florida 32301 E. G. Boone, Esquire and Robert T. Klingbeil, Esquire Post Office Box 1596 Venice, Florida 34284 David H. Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
The Issue Whether the Petitioner University Community Hospital's certificate of need application to establish a cardiac catheterization laboratory and open heart program in Tampa, Florida, should be approved.
Findings Of Fact On August 11, 1982, the Petitioner University Community Hospital, a non-profit hospital, (hereafter Petitioner or UCH) filed an application for a certificate of need (hereafter CON) to expend some $934,000 to establish cardiac catheterization and open heart surgical services at its 404 bed facility located at 3100 East Fletcher Avenue, on the north side of Tampa, approximately 9 miles from the Intervenor Tampa General Hospital (hereafter TGH or Tampa General). Petitioner's CON application was reviewed by the Respondent Department of Health and Rehabilitative Services (hereafter Respondent or Department) under Rule 10-5.11, Florida Administrative Code, and compared with other facilities in the Health Systems Agency, Region IV, which consisted of Pasco, Pinellas, Manatee and Hillsborough Counties. On November 30, 1982, the Department denied the Petitioner's application. The basis for the Department's denial as reflected in the State Agency Action Report, was that two hospitals in Health Services Area IV, Medical Center and Morton Plant, were below the 350 open heart procedures threshold required by Rule 10-5.11(16), Florida Administrative Code. Since Petitioner was not entitled to a CON for open heart surgery, it was not entitled to a CON for cardiac catheterization because Rule 10-5.11(15), Florida Administrative Code, which was in existence when Petitioner's application was reviewed, required that an applicant for cardiac catheterization must be able to offer open heart surgery. Following the Department's denial of Petitioner's application and prior to the final hearing, the Legislature abolished the Health Systems Agency Regions and provided instead that health planning be based on HRS Districts. Intervenor TGH, a 611 bed public hospital located on Davis Island in downtown Tampa, in the same service area as the Petitioner, and presently offering cardiac catheterization and open heart surgical services, intervened in this proceeding on the side of the Department. The Need for Cardiac Catheterization Services In the Service District Prior to the final hearing, the Department admitted to the need for an additional cardiac catheterization laboratory in Hillsborough and Manatee counties. See Petitioner's Exhibit 17. There are presently three adult cardiac catheterization labs in Hillsborough-Manatee, two at TGH and one at St. Joseph's Hospital. In the five- county area, Lakeland Regional has an approved and existing program for a total of four programs. Applying the methodology set forth in Rule 10-5.11(15), Florida Administrative Code, the Petitioner has established that a need exists for at least one additional cardiac catheterization lab regardless of whether the service district is defined to include two or five counties. As projected and calculated by Thomas Porter, a Department witness who utilized the rule methodology, five catheterization labs are need in the five-county area by the year 1985. However, based on historical data, the need formulated pursuant to the rule is probably understated. Porter's testimony was confirmed by Dr. Warren Dacus, a hospital planning consultant, who after obtaining population and projection figures from the Department and the University of Florida, Bureau of Business and Economic Research, concluded that a need existed for one additional catheterization lab in 1985 in Hillsborough and Manatee Counties. On June 16, 1983, the Department approved a CON application filed by Tampa Heart Institute (hereafter THI) which authorized the establishment of three cardiac catheterization labs. The Department's proposed agency action to award a CON to THI was challenged by the Intervenor Tampa General and St. Joseph's Hospital and is presently the subject of a pending administrative proceeding. The CON granted to THI was based on the Department's assumption that most, if not all, of its patients would come from Latin America. THI's CON application presented a unique set of circumstances which fell outside the methodology normally considered during CON reviews. Since the CON proposed to be granted to THI was administratively challenged and was based on the assumption that patients would be drawn from outside any defined service district, it is logically inconsistent and legally inappropriate to consider THI's three cardiac catheterization labs in the instant proceeding. If the CON is granted to the Petitioner, there will be sufficient utilization of the cardiac catheterization laboratory to insure quality of services as required by Rule 10-5.11(15)(i), Florida Administrative Code. Based on previous referrals to other hospitals and historical data obtained from other hospitals in the district, the Petitioner can expect to perform in excess of 300 cardiac catheterization procedures annually for the next three years following initiation of the service. The Need for an Open Heart Surgical Program in the Service District In the Hillsborough-Manatee Service District, two open heart programs presently exist, one program is located at St. Joseph's Hospital, the other is at Tampa General. The formula found at Rule 10-5.11(16), Florida Administrative Code, provides that the number of open heart procedures projected to be done in a future year is determined by multiplying the number of procedures per 100,000 population performed in the service area in 1981 by the projected population in the service area in the future year. No additional programs will normally be approved if such program will reduce the volume of an existing program below 350 surgery cases. In the service distract represented by the two-county area, there is a need for four open heart surgical programs by 1985. Using the methodology found at Rule 10-5.11(16), Florida Administrative Code, the two-county area requires the capacity to perform 1,433 open heart surgeries in 1985, which establishes a need for four programs. Although the addition of an open heart program at UCH would draw certain patients from both St. Joseph's and Tampa General, the number of open heart surgeries performed at St. Joseph's and Tampa General would not fall below 350 per year if UCH were granted a CON. In the five-county area which includes Hillsborough, Manatee, Polk, Highlands and Hardee counties, 1,587 open heart surgical procedures are projected for 1984 and 1,623 for 1985. Applying the rule methodology a need exists for five open heart programs in 1984 and 1985. Three programs, Tampa General, St. Joseph's and Lakeland Memorial Medical Center, presently exist or are approved in the five-county area. The petitioner has demonstrated a sufficient projected volume of open heart surgeries to assure quality of service under Rule 10-5.11(16)(e)(4), Florida Administrative Code. UCH can expect to perform in excess of 200 adult open heart surgical procedures during its first year of operation and within three years after initiation of the service. Moreover, UCH's surgery program will be capable of providing 500 open heart operations per year. In 1981, Lakeland Memorial performed 81 open heart surgical procedures which is significantly below the 350 procedures required by the rule. UCH's proposed program would have little if any effect on the open heart program at Lakeland Memorial, or its ability to meet minimum service levels now or in the foreseeable future. The 350 procedures per year threshold is required to ensure that cardiac surgery teams and staff remain proficient so that patient care is not jeopardized. If, due to the low number of procedures performed at Lakeland Memorial, patient care is being jeopardized, the purpose of the rule is not served by denying a CON to the Petitioner on such a basis since the grant or denial of the instant CON would have no effect on Lakeland Memorial's ability to meet the threshold. UCH's non-invasive coronary procedures including echocardiograms, stress testing and halter monitoring have been utilized by patients to a noteworthy degree. The levels of utilization for these non-invasive tests at UGH in comparison to Tampa General and St. Joseph's are as follows for the period July, 1980 to June, 1981: echocardiogram, UCH 1021, Tampa General 1,175, St. Joseph's 539; stress testing, UCH 598, Tampa General 490, St. Joseph's 371; halter monitoring, UCH 618, Tampa General 328, and St. Joseph's 290. A direct relationship exists between the volume of non-invasive coronary procedures and invasive catheterization procedures that can be expected to be performed at UCH. Approximately 30 percent of the patients at UCH are referred to other hospitals for invasive procedures following non-invasive testing. Transferring patients between hospitals for invasive procedures after non-invasive testing lessens the quality of patient care and increases the probability of duplication of testing, thus increasing health care costs. The Adequacy of she Petitioner's Proposed Facility UCH's proposed facilities for open heart and cardiac catheterization services are adequate for their intended purposes. The proposed plans and equipment lists for the cardiac catheterization lab and open heart surgical program are acceptable from a medical and planning perspective, and are similar to other facilities offering such services. UCH has or if the CON is approved will have, the necessary staff and equipment to meet the requirements of Rules 10-5.11(15)(g) and 10-5.11(16)(c), Florida Administrative Code. The Petitioner will provide the training programs set forth at Rule 10-5.11 (15)(i)(3), Florida Administrative Code. The catheterization lab will maintain the hours of operation specified in Rule 10-5 11 (15)(h)(2), Florida Administrative Code, and the open heart surgery program will operate in accordance with the requirements of Rule 10- 5.11(16)(d)(2) and (3), Florida Administrative Code. The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals as required by Rules 10-5.11 (15)(i)(1) and 10-5.11 (16)(e)(1), Florida Administrative Code. The Petitioner has a written plan projecting case loads, and projecting space, support, equipment and supply needs as required by Rule 10- 5.11(16)(e)(5), Florida Administrative Code. The Financial Feasibility of the Petitioner's Proposed Cardiac Program UCH's proposed open heart surgery program and cardiac catheterization lab are financially feasible. Funds for the project are available and no long term debt exists since the projects are to be funded out of cash. Projected net income from the service is in the 5 percent range which is conservative for a not-for-profit hospital which requires a degree of profitability to ensure that sufficient revenue is generated to meet expenses. The projected costs for the proposed cardiac catheterization lab are reasonable. The proposed renovation of the lab is part of a general large scale renovation for which UCH has secured a binding contract for the amount specified in the application. The equipment and personnel budget for the lab is also reasonable. Based upon a comparison of the proposed charges at UCH with the projected 1984 charges at Tampa General, UCH offers the least costly alternative for providing cardiac catheterization and open heart surgery services. For example, at Tampa General, the projected charge for cardiac surgery, exclusive of charges for room and ancillary services, is $1,711 compared to $1,244.81 at UCH. For cardiac catheterization, the projected 1984 charge at Tampa General is $1,338 as compared to $1,093.75 at UCH. The Petitioner's charges and proposed charges for cardiac catheterization, open heart surgery and other hospital services are comparable to other similar hospitals in the service district, and accordingly, the Petitioner has established that the requirements of Rules 10-5.11(15)(j) and 10- 5.11(16)(f)(2), Florida Administrative Code have been met. Petitioner's Proposed Cardiac Program and its Effect on Tampa General The Hillsborough County Hospital Authority, a public agency which was created by special act of the Legislature, see Chapters 67-1498 and 80-510, Laws of Florida, is required by law to treat indigent patients who are in need of immediate or emergency medical treatment. Hillsborough County is required to reimburse the Hospital Board of Trustees for the full cost 2/ of any hospital or related services provided patients properly certified as indigent. Tampa General has experienced severe monetary problems as a result of its role as provider of free medical care to indigent residents of Hillsborough County. Unfunded patients have averaged 80-100 admissions per week at a cost of $280,000-$350,000 per week to the hospital. Approximately 30 percent of the claims that the hospital files with Hillsborough County for reimbursement of indigent expenses are rejected. As a result, Tampa General has been forced to subsidize its cost of providing indigent care through added charges passed on to paying patients. Since the Hospital Authority has no taxing power, Tampa General is dependent upon funds provided by the County. Among public hospitals in Florida's major urban areas, Tampa General receives the least amount of financial assistance from local government. Tampa General has budgeted $24 million worth of free care for 1984 and this amount is projected to increase through 1988. The amount of free care provided to indigents at Tampa General is approximately 16 percent of gross revenues. Tampa General utilizes the profits it derives from the operation of its cardiac programs to subsidize the considerable amount of free care that it provides to indigent residents of Hillsborough County. In 1981, Tampa General embarked on an ambitious expansion program in order to attract additional paying patients and to remain competitive with other private hospitals in the community. In order to finance this project, the Authority issued bonds in the amount of $160,260,000. In deciding to issue these bonds, the Authority considered the revenues generated by the hospital's cardiac programs which constitute 17-18 percent of total net revenues and the relative lack of competition from other coronary programs in the Hillsborough area. In the absence of adequate funding by the State and/or County, Tampa General's cardiac program is an essential element in the hospital's plan to continue to provide free care to indigents. The subsidization or contribution margin of the cardiac program helps offset the bad debt of indigent costs which are not being reimbursed by local government. The amount of subsidization or contribution margin for each cardiac procedure performed at Tampa General in 1984 was $3,721 and is projected to increase to nearly $5,700 in 1988. However, notwithstanding the monies projected by Tampa General which it expects to be contributed by its cardiac program, it is likely that third- party payers will follow the federal government in adopting a prospective payment system based on diagnosis related groups of illnesses which will limit the amount of revenues which can be collected from private pay patients. Assuming that this occurs, the amount of subsidization derived from cardiac programs at Tampa General will be significantly decreased regardless of the outcome of the instant proceeding. The evidence regarding the effect of UCH's proposed cardiac program on Tampa General's existing program is unclear. Unquestionably, some of the patients which would have gone to Tampa General for cardiac care will go to UCH if its program is established. However, since cardiac catheterizations are increasing in volume and a direct relationship exists between cardiac catheterizations and open heart surgery, it can be concluded that while Tampa General's rate of growth would decrease, it is unclear whether its present volume would decrease significantly below existing levels. No evidence was presented that Tampa General's cardiac catheterization and open heart programs would decline below the thresholds established by rule if UCH's application were granted. The financial problems facing Tampa General are clearly serious. The hospital has taken drastic steps to attempt to control costs including eliminating staff positions and severely restricting indigent access to health care. Tampa General's problems existed prior to UCH's application for a CON and will likely continue regardless of whether the Petitioner's CON is approved. The long-term solution of Tampa General's financial problems should not be dependent upon whether UCH prevails in this proceeding. If Tampa General is to fulfill its mission as a public hospital, it must be assured of reliable and consistent course of funding for all of its operations. In enacting Chapter 80-510, Laws of Florida, the Legislature intended that the cost of indigent hospital care in Hillsborough County be borne by all of the citizens of the County, and not primarily by paying patients who by circumstance or otherwise, find themselves at Tampa General. Tampa General's reliance on its cardiac programs to finance its long- term debt and offset its indigent care losses is dependent on the existence of two factors: first, Tampa General must maintain what is essentially a monopoly on the services to be guaranteed a supply of paying cardiac patients and second, it must have the ability to pass on to its paying cardiac patients the amount needed to subsidize its other operations. Tampa General, however, no longer maintains a monopoly on cardiac programs in the Hillsborough area as evidenced by the certificate of need awarded to St. Joseph's. Moreover, the Department has stated its intention to authorize another open heart program and three catheterization labs at Tampa Heart Institute. The prospective reimbursement system implemented by the federal government which is expected to be followed by private insurers will further limit Tampa General's ability to generate excess revenues from private-pay coronary patients. The result of the inability of Tampa General to secure a long-term solution to its problems of unreimbursed indigent care is reflected in the institution of a policy limiting indigent admissions to the most serious cases. Due to this new policy limiting admissions at Tampa General to emergencies, Tampa General's and UCH's policies regarding coronary care for indigents are essentially the same. The Petitioner's Compliance with Section 381.494(6)(c), Florida Statutes It was uncontroverted that UCH's proposed cardiac services are consistent with the state health plan. Since the Department has not yet promulgated as a rule the health systems' plan for the District, the parties agree that the question of the Petitioner's compliance with the local plan is not an issue in this case. See Section 381.494(6)(c)(1), Florida Statutes. The proposed cardiac program has been approved by UCH's Board of Directors, and is an appropriate progression considering the size of UCH and the mix of cardiologists and patients at the facility. See Rule 10-5.11(2), Florida Administrative Code. The Petitioner has carried its burden by demonstrating a need for cardiac catheterization and open heart surgical services regardless of whether the service district is defined as a two or five-county area. See Section 381.494 (6)(c)(2), Florida Statutes. Utilizing a two-county area including Hillsborough and Manatee counties, the projected population in 1985 is 890,000. The 1981 use rate was 276.4 cardiac catheterization procedures per 100,000 population. Multiplying the 1981 use rate by the projected population, 2,640 catheterization procedures are projected for 1985. Dividing 2,460 by the threshold number 600, results in a need for 4.1 catheterization labs in Hillsborough and Manatee counties in 1985. Presently, three existing and approved catheterization laboratories exist in Hillsborough and Manatee counties, one at St. Joseph's and two at Tampa General. A need, therefore, exists for an additional catheterization laboratory in the two-county area. 3/ In the five-county area which includes Hillsborough, Manatee, Polk, Hardee and Highlands counties, the projected population for 1985 is 1,330,400. The 1981 use rate was 207 procedures per 100,000 population. A total of 2,693 and 2,754 procedures are projected for 1984 and 1985, respectively. Dividing 2,754 by 600 demonstrates a need in 1985 for five laboratories while four presently exist or are approved in the five-county area, one at St. Joseph's, two at Tampa General and one at Lakeland Memorial. Petitioner has therefore demonstrated a need for an additional cardiac catheterization services in the five-county area. In considering the need for open heart surgery services in the two- county area and utilizing the projected population of 890,000 and a use rate of 160.99, the projected number of open heart procedures in 1985 is 1,433. When 1,433 is divided by 350, a need exists for four open heart surgery programs in Hillsborough and Manatee counties in 1985. Since there are only two existing and approved programs in the two-county area, the Petitioner has demonstrated a need for two additional open heart surgical programs by 1985. In the five-county area, the projected 1985 population is 1,330,400. The 1981 use rate was 122 procedures per 100,000 population. Multiplying the projected population by the use rate results in 1,623 open heart procedures projected in 1985. When 1,623 is divided by 350, a need is established for five open heart surgical programs by 1985. Since only three existing or approved programs are in place, the Petitioner has demonstrated a need for two additional open heart programs in the five-county area by 1985. The Petitioner presently performs a significant number of non-invasive cardiac procedures. It was uncontroverted that UCH provides quality of care to its patients. If the Petitioner's application is approved, it can be assumed that present acceptable quality of care standards will be met in the operation of the program. See Section 381.494(6)(c)(3), Florida Statutes. The proposed project is financially feasible, and UCH has the ability to attract sufficient nurses and support staff to operate both programs. See Section 381.494(6)(c)(8) and (9), Florida Statutes. The Petitioner has argued throughout this proceeding that the initiation of cardiac service at its facility will foster competition thereby reducing health care costs in Hillsborough County. If price competition in fact existed under the present system of health care delivery, lower costs would be expected. However, with rare exception, health care consumers do not select hospitals nor do they pay their own hospital bills. Rather, third-party payers, including the federal government and private insurance companies, are responsible for reimbursing hospitals for patient costs and physicians generally determine which hospital is utilized by a patient. In an understandable effort to control health care costs, the federal government and the state have enacted a complex regulatory scheme for health care providers which limits competition and places the burden on providers of establishing that a need exists in a given area for a proposed service. To a significant extent, this scheme protects the financial interests of existing providers. This process can have an unfortunate side-effect of limiting the choices available to health care consumers and eventually could result in a diminished quality of health care. 4/ While the presence of additional hospitals in an area does not necessarily result in lower health care costs, it does create potential competition for patients through physician referrals. Hospitals have an incentive to provide quality care including state of the art equipment and competent staff, to ensure that they attract their share of patients. As a result, the preferences of physicians and health care consumers should have a greater impact in an area where health care services exist at more than one facility. The difficulty encountered in CON proceedings is attempting to balance the legitimate needs of health care consumers with the state's efforts to control costs by discouraging the duplication of unnecessary services. The Petitioner has demonstrated that its proposal is cost-effective, and should foster innovation and improvement in the delivery of health services in the service area as required by Section 381.494(6)(c)(12), Florida Statutes. The assertion by Tampa General that the expansion of its facility represents a less costly alternative is too speculative to be considered in this proceeding. While TGH is in the process of a $300,000 conversion of a pediatric catheterization lab to an adult lab, this fact was apparently either unknown or not considered by the Department at the time of the final hearing since HRS witnesses stated that Tampa General has only two adult labs.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Health and Rehabilitative Services enter a Final Order granting a CON to Petitioner University Community Hospital to establish a cardiac catheterization laboratory and open heart surgical program in Tampa, Florida. DONE and ENTERED this 5th day of March, 1984, in Tallahassee, Florida. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of March, 1984.
The Issue The 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
