The Issue The issue in this case is whether notice was accorded the patient, as contemplated by section 766.316, Florida Statutes (2012).
Findings Of Fact Ashley Lamendola first presented to Gulf Coast OB/GYN on the morning of December 16, 2011, for a prenatal visit. This visit constituted the beginning of her professional relationship with the physicians who were part of the Gulf Coast OB/GYN group, which included Dr. Calderon and Dr. Shamas.1/ Violet Lamendola, Ms. Lamendola’s mother, accompanied Ms. Lamendola to that visit. When she arrived at Gulf Coast OB/GYN, Ms. Lamendola was given information and forms to fill out by the receptionist. According to both Ms. Lamendola and her mother, the materials included a NICA brochure in Spanish and an acknowledgment of receipt of the NICA form. While reviewing the materials, Ms. Lamendola, who does not speak Spanish, noted that the NICA brochure given to her was in Spanish. She asked her mother to take the brochure back to the receptionist. When Ms. Lamendola’s mother asked the receptionist about the Spanish brochure, the receptionist told her that the office had run out of NICA brochures printed in English, but that she would obtain one from another office and give it to Ms. Lamendola at the end of her appointment. Ms. Lamendola was instructed to sign and did sign the acknowledgment form so that she could see the physician. The acknowledgment form advised that all physicians in the Gulf Coast OB/GYN, P.A., were participating physicians in the NICA program. Ms. Lamendola received a black-and-white facsimile copy of the NICA brochure on her way out of the office along with other materials relating to prenatal and infant care. The brochure, received by Ms. Lamendola from Gulf Coast OB/GYN, bears a facsimile transmission header dated December 16, 2011, at 9:47 a.m. The brochure prepared by NICA is a color brochure which contains the following text in white letters on a light-to-medium green background on the back of the brochure: Section 766.301-766.316, Florida Statutes, (“NICA Law”) provides rights and remedies for certain birth-related neurological injuries and is an exclusive remedy. This brochure is prepared in accordance with the mandate of Section 766.316, Florida Statutes. A copy of the complete statute is available free of charge to completely inform patients of their rights and limitations under the application provision of Florida law. Since 1989, numerous court cases have interpreted the NICA law, clarifying legislative intent. The above-quoted language is absent from the facsimile copy of the brochure that Ms. Lamendola received from Gulf Coast OB/GYN. Apparently because the letters in the original brochure were white, the letters did not transmit. It is noted that on the front of the brochure, white lettering that appears on the green background of the color brochure did not transmit on the copy that Ms. Lamendola received. The majority of the information contained in Ms. Lamendola’s facsimile copy of the brochure is contained in the color copy of the brochure. The facsimile copy informed Ms. Lamendola that the statutes provide an exclusive remedy and a copy of the statutes may be obtained from NICA. The facsimile outlined the rights and limitations provided in the statutes. The only things that are not contained in the original brochure are that a copy of the statutes is available free of charge, the preparation of the brochure was mandated by section 766.316, and court cases have interpreted the statutes. St. Petersburg General Hospital offers a tour of its obstetrical department to expectant mothers and their families. Ms. Lamendola’s mother called St. Petersburg General Hospital to register for a tour. The hospital employee who was scheduling the tour asked to speak to Ms. Lamendola to obtain pertinent biographical information. Ms. Lamendola provided the information to the hospital employee. The tour is an informational tour and attendance at the tour does not constitute pre-registration at St. Petersburg General Hospital for the delivery of a baby. Ms. Lamendola and her mother, along with 12 other couples, attended the tour on March 22, 2012. During the tour, Ms. Lamendola received a tour packet, which contained a document titled Preadmission and Financial Information. This document instructed Ms. Lamendola to fill out the pre-admission form and return it to the hospital. Ms. Lamendola filled out the pre- admission form, but did not return it to St. Petersburg General Hospital. Ms. Lamendola did not pre-register for admission to the hospital. On April 3, 2012, Ms. Lamendola presented to St. Petersburg General Hospital with complaints of vaginal bleeding. Ms. Lamendola was told by a hospital employee that she was already in the system and that additional information would not be necessary. Ms. Lamendola signed a “Consent to Treat” form and was treated in the labor and delivery unit of the hospital. A short time later, she was given informational materials relating to prenatal and infant care and released. She was not given a NICA brochure during the visit on April 3, 2012. It was the hospital’s policy to give a NICA brochure to a patient only when the patient was being admitted as an inpatient for delivery of her baby. Ms. Lamendola’s professional relationship with St. Petersburg General Hospital relating to her pregnancy began with her visit on April 3, 2012. At 20:19 on June 26, 2012, Ms. Lamendola presented to St. Petersburg General Hospital. She had been experiencing contractions for six hours prior to her arrival at the hospital. She had been placed on bed rest for gestational hypertension five days prior to coming to the hospital. When she arrived at the hospital, she had hypertension. Normally when a patient is 37 to 39 weeks gestation, her physician will bring the prenatal records to the hospital or the physician’s office will send the records to the hospital by facsimile transmission. When Ms. Lamendola arrived at St. Petersburg General Hospital, her prenatal records from her physicians’ office were not on file. Megan Muse, R.N., was on duty when Ms. Lamendola presented at St. Petersburg General Hospital. Because Ms. Lamendola’s records were not on file, Ms. Muse requested that Bayfront Hospital send Ms. Lamendola’s records to St. Petersburg General Hospital. The evidence did not establish how Ms. Muse knew that the prenatal records were at Bayfront Hospital. Ms. Lamendola’s prenatal records, consisting of 11 pages, were sent by facsimile transmission to St. Petersburg General Hospital beginning at 21:35 on June 26, 2012. Ms. Muse recorded in her notes that Ms. Lamendola’s prenatal records were received from Bayfront Hospital at 21:45 on June 26, 2012. Although Ms. Lamendola’s prenatal records may have been sent to Bayfront Hospital, it was never Ms. Lamendola’s intention to deliver her baby at Bayfront Hospital. She took the informational tour offered by St. Petersburg General Hospital and went to St. Petersburg General Hospital in April 2012 when she had a problem related to her pregnancy. At 20:33, Dr. Javate admitted Ms. Lamendola to St. Petersburg General Hospital for the delivery of her infant. Ms. Lamendola was examined by Emanuel Javate, M.D., at approximately 21:35. At 22:02, Ms. Lamendola signed the hospital’s Condition of Admission form. At 22:10 the hospital gave Ms. Lamendola the brochure prepared by NICA, and Ms. Lamendola signed the acknowledgment form, acknowledging that she had received the brochure. Ms. Lamendola gave birth to Hunter Lamendola (Hunter) on June 27, 2012, at St. Petersburg General Hospital, which is a licensed Florida Hospital. At birth, Hunter weighed in excess of 2,500 grams and was a single gestation. Ashley Lamendola received obstetrical care from Guillermo Calderon, M.D. Dr. Calderon was a “participating physician” as defined in section 766.302(7). Christina Shamas, M.D., provided obstetrical services in the course of labor, delivery, and resuscitation in the immediate post-delivery period. Dr. Shamas was a “participating physician” as defined in section 766.302(7).
The Issue Whether the Agency for Health Care Administration (AHCA or the Agency) should approve the application for certificate of need (CON) 7700 filed by Miami Beach Healthcare Group, LTD. d/b/a Miami Heart Institute (Miami Heart or MH).
Findings Of Fact The Agency is the state agency charged with the responsibility of reviewing and taking action on CON applications pursuant to Chapter 408, Florida Statutes. The applicant, Miami Heart, operates a hospital facility known as Miami Heart Institute which, at the time of hearing, was comprised of a north campus (consisting of 273 licensed beds) and a south campus (consisting of 258 beds) in Miami, Florida. The two campuses operate under a single license which consolidated the operation of the two facilities. The consolidation of the license was approved by CON 7399 which was issued by the Agency prior to the hearing of this case. The Petitioner, Mount Sinai, is an existing health care facility doing business in the same service district. On February 4, 1994, AHCA published a fixed need pool of zero adult inpatient psychiatric beds for the planning horizon applicable to this batching cycle. The fixed need pool was not challenged. On February 18, 1994, Miami Heart submitted its letter of intent for the first hospital batching cycle of 1994, and sought to add twenty adult general inpatient psychiatric beds at the Miami Heart Institute south campus. Such facility is located in the Agency's district 11 and is approximately two (2) miles from the north campus. Notice of that letter was published in the March 11, 1994, Florida Administrative Weekly. Miami Heart's letter of intent provided, in pertinent part: By this letter, Miami Beach Healthcare Group, Ltd., d/b/a Miami Heart Institute announces its intent to file a Certificate of Need Application on or before March 23, 1994 for approval to establish 20 hospital inpatient general psychiatric beds for adults at Miami Heart Institute. Thus, the applicant seeks approval for this project pursuant to Sections 408.036(1)(h), Florida Statutes. The proposed capital expenditure for this project shall not exceed $1,000,000 and will include new construction and the renovation of existing space. Miami Heart Institute is located in Local Health Council District 11. There are no subsdistricts for Hospital Inpatient General Psychiatric Beds for Adults in District 11. The applicable need formula for Hospital General Psychiatric Beds for Adults is contained within Rule 59C-1.040(4)(c), F.A.C. The Agency published a fixed need of "0" for Hospital General Psychiatric Beds for Adults in District 11 for this batching cycle. However, "not normal" circumstances exist within District which justify approval of this project. These circumstances are that Miami Beach Community Hospital, which is also owned by Miami Beach Healthcare Group, Ltd., and which has an approved Certificate of Need Application to consol- idate its license with that of the Miami Heart Institute, has pending a Certificate of Need Application to delicense up to 20 hospital inpatient general psychiatric beds for adults. The effect of the application, which is the subject of this Letter of Intent, will be to relocate 20 of the delicensed adult psychiatric beds to the Miami Heart Institute. Because of the "not normal" circumstances alleged in the Miami Heart letter of intent, the Agency extended a grace period to allow competing letters of intent to be filed. No additional letters of intent were submitted during the grace period. On March 23, 1994, Miami Heart timely submitted its CON application for the project at issue, CON no. 7700. Notice of the application was published in the April 8, 1994, Florida Administrative Weekly. Such application was deemed complete by the Agency and was considered to be a companion to the delicensure of the north campus beds. On July 22, 1994, the Agency published in the Florida Administrative Weekly its preliminary decision to approve CON no. 7700. In the same batch as the instant case, Cedars Healthcare Group (Cedars), also in district 11, applied to add adult psychiatric beds to Cedars Medical Center through the delicensure of an equal number of adult psychiatric beds at Victoria Pavilion. Cedars holds a single license for the operation of both Cedars Medical Center and Victoria Pavilion. As in this case, the Agency gave notice of its intent to grant the CON application. Although this "transfer" was initially challenged, it was subsequently dismissed. Although filed at the same time (and, therefore, theoretically within the same batch), the Cedars CON application and the Miami Heart CON application were not comparatively reviewed by the Agency. The Agency determined the applicants were merely seeking to relocate their own licensed beds. Based upon that determination, MH's application was evaluated in the context of the statutory criteria, the adult psychiatric beds and services rule (Rule 59C-1.040, Florida Administrative Code), the district 11 local health plan, and the 1993 state health plan. Ms. Dudek also considered the utilization data for district 11 facilities. Mount Sinai timely filed a petition challenging the proposed approval of CON 7700 and, for purposes of this proceeding only, the parties stipulated that MS has standing to raise the issues remaining in this cause. Mount Sinai's existing psychiatric unit utilization is presently at or near full capacity, and MS' existing unit would not provide an adequate, available, or accessible alternative to Miami Heart's proposal, unless additional bed capacity were available to MS in the future through approval of additional beds or changes in existing utilization. Miami Heart's proposal to establish twenty adult general inpatient psychiatric beds at its Miami Heart Institute south campus was made in connection with its application to delicense twenty adult general inpatient psychiatric beds at its north campus. The Agency advised MH to submit two CON applications: one for the delicensure (CON no. 7474) and one for the establishment of the twenty beds at the south campus (CON no. 7700). The application to delicense the north campus beds was expeditiously approved and has not been challenged. As to the application to establish the twenty beds at the south campus, the following statutory criteria are not at issue: Section 408.035(1)(c), (e), (f), (g), (h), (i), (j), (k), (m), (n), (o) and (2)(b) and (e), Florida Statutes. The parties have stipulated that Miami Heart meets, at least minimally, those criteria. During 1993, Miami Heart made the business decision to cease operations at its north campus and to seek the Agency's approval to relocate beds and services from that facility to other facilities owned by MH, including the south campus. Miami Heart does not intend to delicense the twenty beds at the north campus until the twenty beds are licensed at the south campus. The goal is merely to transfer the existing program with its services to the south campus. Miami Heart did not seek beds from a fixed need pool. Since approximately April, 1993, the Miami Heart north campus has operated with the twenty bed adult psychiatric unit and with a limited number of obstetrical beds. The approval of CON no. 7700 will not change the overall total number of adult general inpatient psychiatric beds within the district. The adult psychiatric program at MH experiences the highest utilization of any program in district 11, with an average length of stay that is consistent with other adult programs around the state. Miami Heart's existing psychiatric program was instituted in 1978. Since 1984, there has been little change in nursing and other staff. The program provides a full continuum of care, with outpatient programs, aftercare, and support programs. Nearly ninety-nine percent of the program's inpatient patient days are attributable to patients diagnosed with serious mental disorders. The Miami Heart program specializes in a biological approach to psychiatric cases in the diagnosis and treatment of affective disorders, including a variety of mood disorders and related conditions. The Miami Heart program is distinctive from other psychiatric programs in the district. If the MH program were discontinued, the patients would have limited alternatives for access to the same diagnostic and treatment services in the district. There are no statutes or rules promulgated which specifically address the transfer of psychiatric beds or services from one facility owned by a health care entity to another facility also owned by the same entity. In reviewing the instant CON application, the Agency determined it has the discretion to evaluate each transfer case based upon the review criteria and to consider the appropriate weight factors should be given. Factors which may affect the review include the change of location, the utilization of the existing services, the quality of the existing programs and services, the financial feasibility, architectural issues, and any other factor critical to the review process. In this case, the weight given to the numeric need criteria was not significant. The Agency determined that because the transfer would not result in a change to the overall bed inventory, the calculated fixed need pool did not apply to the instant application. In effect, because the calculation of numeric need was inapplicable, this case must be considered "not normal" pursuant to Rule 59C-1.040(4)(a), Florida Administrative Code. The Agency determined that other criteria were to be given greater consideration. Such factors were the reasonableness of the proposal, the ability to afford access, the applicant's ability to provide a quality program, and the project's financial feasibility. The Agency determined that, on balance, this application should be approved as the statutory and other review criteria were met. Although put on notice of the other CON applications, Mount Sinai did not file an application for psychiatric beds at the same time as Miami Heart or Cedars. Mount Sinai did not claim that the proposed delicensures and transfers made beds available for competitive review. The Agency has interpreted Rule 59C-1.040, Florida Administrative Code, to mean that it will not normally approve an application for beds or services unless the statutory and rule criteria are met, including the need determination criteria. There is no list of circumstances which are routinely considered "not normal" by the Agency. In this case, the proposed transfer of beds was, in itself, considered "not normal." The approval of Miami Heart's application would allow an existing program to continue. As a result, the overhead to maintain two campuses would be reduced. Further, the relocation would allow the program to continue to provide access, both geographically and financially, to the same patient service area. And, since the program has the highest utilization rate of any adult program in the district, its continuation would be beneficial to the area. The program has an established referral base for admissions to the facility. The transfer is reasonable for providing access to the medically under-served. The quality of care, while not in issue, would be expected to continue at its existing level or improve. The transfer would allow better access to ancillary hospital departments and consulting specialists who may be needed even though the primary diagnosis is psychiatric. The cost of the transfer when compared to the costs to be incurred if the transfer is not approved make the approval a benefit to the service area. If the program is not relocated, Medicaid access could change if the hospital is reclassified from a general facility to a specialty facility. The proposed cost for the project does not exceed one million dollars. If the north campus must be renovated, a greater capital expenditure would be expected. The expected impact on competition for other providers is limited due to the high utilization for all programs in the vicinity. The subject proposal is consistent with the district and state health care plans and the need for health care facilities and services. The services being transferred is an existing program which is highly utilized and which is not creating "new beds." As such, the proposal complies with Section 408.035(1)(a), Florida Statutes. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing services in the district will not be adversely affected by the approval of the subject application. The proposed transfer is consistent with, and appropriate, in light of these criteria. Therefore, the proposal complies with Section 408.035(1)(b), Florida Statutes. The subject application demonstrates a full continuum of care with safeguards to assure that alternatives to inpatient care are fully utilized when appropriate. Therefore, the availability and adequacy of other services, such as outpatient care, has been demonstrated and would deter unnecessary utilization. Thus, Miami Heart has shown its application complies with Section 408.035(1)(d), Florida Statutes. Miami Heart has also demonstrated that the probable impact of its proposal is in compliance with Section 408.035(1)(l), Florida Statutes. The proposed transfer will not adversely impact the costs of providing services, the competition on the supply of services, or the improvements or innovations in the financing and delivery of services which foster competition, promote quality assurance, and cost-effectiveness. Miami Heart has taken an innovative approach to promote quality assurance and cost effectiveness. Its purpose, to close a facility and relocate beds (removing unnecessary acute care beds in the process), represents a departure from the traditional approach to providing health care services. By approving Miami Heart's application, overhead costs associated with the unnecessary facility will be eliminated. There is no less costly, more efficient alternative which would allow the continuation of the services and program Miami Heart has established at the north campus than the approval of transfer to the south campus. The MH proposal is most practical and readily available solution which will allow the north campus to close and the beds and services to remain available and accessible. The renovation of the medical surgical space at the south campus to afford a location for the psychiatric unit is the most practical and readily available solution which will allow the north campus to close and the beds and services to remain available and accessible. In totality, the circumstances of this case make the approval of Miami Heart's application for CON no. 7700 the most reasonable and practical solution given the "not normal" conditions of this application.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Agency for Health Care Administration enter a final order approving CON 7700 as recommended in the SAAR. DONE AND RECOMMENDED this 5th day of April, 1995, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH 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 5th day of April, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-4755 Note: Proposed findings of fact are to contain one essential fact per numbered paragraph. Proposed findings of fact paragraphs containing multiple sentences with more than one statement of fact are difficult to review. In reviewing for this case, where all sentences were accurate and supported by the recorded cited, the paragraph has been accepted. If the paragraph contained mixed statements where one sentence was an accurate statement of fact but the others were not, the paragraph has been rejected. Similarly, if one sentence was editorial comment, argument, or an unsupported statement to a statement of fact, the paragraph has been rejected. Proposed findings of fact should not include argument, editorial comments, or statements of fact mixed with such comments. Rulings on the proposed findings of fact submitted by Petitioner, Mount Sinai: Paragraphs 1 through 13 were cited as stipulated facts. Paragraph 14 is rejected as irrelevant. With regard to paragraph 15 it is accepted that Miami Heart made the business decision to move the psychiatric beds beds from the north campus to the south campus. Any inference created by the remainder of the paragraph is rejected as irrelevant. Paragraph 16 is rejected as irrelevant. Paragraph 17 is rejected as irrelevant. Paragraph 18 is accepted. Paragraph 19 is rejected as irrelevant. Paragraph 20 is rejected as contrary to the weight of the credible evidence. Paragraph 21 is rejected as contrary to the weight of the credible evidence. Paragraph 22 is accepted. Paragraph 23 is rejected as irrelevant. Paragraph 24 is accepted. Paragraph 25 is rejected as repetitive, or immaterial, unnecessary to the resolution of the issues. Paragraph 26 is rejected as irrelevant or contrary to the weight of the credible evidence. Paragraph 27 is rejected as comment or conclusion of law, not fact. Paragraph 28 is accepted but not relevant. Paragraphs 29 and 30 are accepted. Paragraphs 31 through 33 are rejected as argument, comment or irrelevant. Paragraph 34 is rejected as comment or conclusion of law, not fact. Paragraph 35 is rejected as comment or conclusion of law, not fact, or irrelevant as the FNP was not in dispute. Paragraph 36 is rejected as irrelevant. Paragraph 37 is rejected as repetitive, or comment. Paragraph 38 is rejected as repetitive, comment or conclusion of law, not fact, or irrelevant. Paragraph 39 is rejected as argument or contrary to the weight of credible evidence. Paragraph 40 is accepted. Paragraph 41, 42, and 43 are rejected as contrary to the weight of the credible evidence and/or argument. Paragraph 44 is rejected as argument and comment on the testimony. Paragraph 45 is rejected as argument, irrelevant, and/or not supported by the weight of the credible evidence. Paragraph 46 is rejected as argument. Paragraph 47 is rejected as comment or conclusion of law, not fact. Paragraph 48 is rejected as comment, argument or irrelevant. Paragraph 49 is rejected as comment on testimony. It is accepted that the proposed relocation or transfer of beds is a "not normal" circumstance. Paragraph 50 is rejected as argument or irrelevant. Paragraph 51 is rejected as argument or contrary to the weight of credible evidence. Paragraph 52 is rejected as argument or contrary to the weight of credible evidence. Paragraph 53 is rejected as argument, comment or recitation of testimony, or contrary to the weight of credible evidence. Paragraph 54 is rejected as irrelevant or contrary to the weight of credible evidence. Paragraph 55 is rejected as irrelevant, comment, or contrary to the weight of credible evidence. Paragraph 56 is rejected as irrelevant or argument. Paragraph 57 is rejected as irrelevant or argument. Paragraph 58 is rejected as contrary to the weight of credible evidence. Paragraph 59 is rejected as irrelevant. Paragraph 60 is rejected as contrary to the weight of credible evidence. Paragraph 61 is rejected as argument or contrary to the weight of credible evidence. Paragraph 62 is rejected as argument or contrary to the weight of credible evidence. Paragraph 63 is accepted. Paragraph 64 is rejected as irrelevant. Mount Sinai could have filed in this batch given the not normal circumstances disclosed in the Miami Heart notice. Paragraph 65 is rejected as irrelevant. Paragraph 66 is rejected as comment or irrelevant. Paragraph 67 is rejected as argument or contrary to the weight of credible evidence. Paragraph 68 is rejected as argument or irrelevant. Paragraph 69 is rejected as argument, comment or irrelevant. Paragraph 70 is rejected as argument or contrary to the weight of credible evidence. Rulings on the proposed findings of fact submitted by the Respondent, Agency: Paragraphs 1 through 6 are accepted. With the deletion of the words "cardiac catheterization" and the inclusion of the word "psychiatric beds" in place, paragraph 7 is accepted. Cardiac catheterization is rejected as irrelevant. Paragraph 8 is accepted. The second sentence of paragraph 9 is rejected as contrary to the weight of credible evidence or an error of law, otherwise, the paragraph is accepted. Paragraph 10 is accepted. Paragraphs 11 through 17 are accepted. Paragraph 18 is rejected as conclusion of law, not fact. Paragraphs 19 and 20 are accepted. The first two sentences of paragraph 21 are accepted; the remainder rejected as conclusion of law, not fact. Paragraph 22 is rejected as comment or argument. Paragraph 23 is accepted. Paragraph 24 is rejected as argument, speculation, or irrelevant. Paragraph 25 is accepted. Rulings on the proposed findings of fact submitted by the Respondent, Miami Heart: Paragraphs 1 through 13 are accepted. The first sentence of paragraph 14 is accepted; the remainder is rejected as contrary to law or irrelevant since MS did not file in the batch when it could have. Paragraph 15 is accepted. Paragraph 16 is accepted as the Agency's statement of its authority or policy in this case, not fact. Paragraphs 17 through 20 are accepted. Paragraph 21 is rejected as irrelevant. Paragraph 22 is rejected as irrelevant. Paragraphs 23 through 35 are accepted. Paragraph 36 is rejected as repetitive. Paragraphs 37 through 40 are accepted. Paragraph 41 is rejected as contrary to the weight of the credible evidence to the extent that it concludes the distance to be one mile; evidence deemed credible placed the distance at two miles. Paragraphs 42 through 47 are accepted. Paragraph 48 is rejected as comment. Paragraphs 49 through 57 are accepted. COPIES FURNISHED: Tom Wallace, Assistant Director Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Sam Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 R. Terry Rigsby Geoffrey D. Smith Wendy Delvecchio Blank, Rigsby & Meenan, P.A. 204 S. Monroe Street Tallahassee, Florida 32302 Lesley Mendelson Senior Attorney Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 Stephen Ecenia Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A. 215 South Monroe Street Suite 420 Tallahassee, Florida 32302-0551
Findings Of Fact The Application West Florida Regional Medical Center is a 400-bed acute care hospital in Pensacola, Escambia County, Florida. The hospital is located in a subdistrict which has the greatest population aged 65 and over who are living in poverty. That group constitutes the population qualified for Medicare. Some 17 percent of Escambia County's population falls into the medicare category. Prior to October, 1987, HRS had determined that there was a fixed pool need in the Escambia County area for 120 nursing home or extended care beds. Several hospitals in the Escambia County area applied for the 120 nursing home beds. Those beds were granted to Advocare (60 beds) and Baptist Manor (60 beds). The award of the 120 beds to Baptist Manor and Advocare is not being challenged in this action. West Florida, likewise, filed an application for an award of nursing home beds in the same batch as Advocare and Baptist Manor. However, Petitioner's application sought to convert 8 acute care beds to nursing home or extended care beds. West Florida's claim to these beds was not based on the 120 bed need established under the fixed need pool formula. West Florida's application was based on the unavailability of appropriately designated bed space for patients who no longer required acute care, but who continued to require a high skill level of care and/or medicare patients. The whole purpose behind West Florida's CON application stems from the fact that the federal Medicare system will not reimburse a hospital beyond the amount established for acute care needs as long as that bed space is designated as acute care. However, if the patient no longer requires acute care the patient may be re-designated to a skilled care category which includes nursing home or extended care beds. If the patient is appropriately reclassified to a skilled care category, the hospital can receive additional reimbursement from Medicare above its acute care reimbursement as long as a designated ECF bed is available for the patient. Designation or re-designation of beds in a facility requires a Certificate of Need. Petitioner's application for the 8 beds was denied. When the application at issue in this proceeding was filed Petitioner's 13-bed ECF unit had been approved but not yet opened. At the time the State Agency Action Report was written, the unit had just opened. Therefore, historical data on the 13 bed unit was not available at the time the application was filed. Reasons given for denying West Florida's application was that there was low occupancy at Baptist Hospital's ECF unit, that Sacred Heart Hospital had 10 approved ECF beds and that there was no historical utilization of West Florida 13 beds. At the hearing the HRS witness, Elizabeth Dudek stated that it was assumed that Baptist Hospital and Sacred Heart Hospital beds were available for West Florida patients. In 1985 West Florida applied for a CON to establish a 21-bed ECF unit. HRS granted West Florida 13 of those 21 beds. The 8 beds being sought by West Florida in CON 5319 are the remaining beds which were not granted to West Florida in its 1985 CON application. In order to support its 1985 CON application the hospital conducted a survey of its patient records to determine an estimate of the number of patients and patient days which were non acute but still occupied acute care beds. The hospital utilized its regularly kept records of Medicare patients whose length of stay or charges exceeded the Medicare averages by at least two standard deviations for reimbursement and records of Medicare patients whose charges exceed Medicare reimbursement by at least $5,000. These excess days or charges are known as cost outliers and, if the charge exceeds the Medicare reimbursement by $5000 or more, the excess charge is additionally known as a contractual adjustment. The survey conducted by the hospital consisted of the above records for the calendar year 1986. The hospital assumed that if the charges or length of stay for patients were excessive, then there was a probability that the patient was difficult to place. The above inference is reasonable since, under the Medicare system, a hospital's records are regularly reviewed by the Professional Review Organization to determine if appropriate care is rendered. If a patient does not meet criteria for acute care, but remains in the hospital, the hospital is required to document efforts to place the patient in a nursing home. Sanctions are imposed if a hospital misuses resources by keeping patients who did not need acute care in acute care bed spaces even if the amount of reimbursement is not at issue. The hospital, therefore goes to extraordinary lengths to place patients in nursing home facilities outside the hospital. Additionally, the inference is reasonable since the review of hospital records did not capture all non-acute patient days. Only Medicare records were used. Medicare only constitutes about half of all of West Florida's admissions. Therefore, it is likely that the number of excess patient days or charges was underestimated in 1986 for the 1985 CON application. The review of the hospital's records was completed in March, 1987, and showed that 485 patients experienced an average of 10.8 excess non-acute days at the hospital for a total of 5,259 patient days. The hospital was not receiving reimbursement from Medicare for those excess days. West Florida maintained that the above numbers demonstrated a "not normal need" for 21 additional ECF beds at West Florida. However as indicated earlier, HRS agreed to certify only 13 of those beds. The 13 beds were certified in 1987. The 13-bed unit opened in February, 1988. Since West Florida had planned for 21 beds, all renovations necessary to obtain the 8-bed certification were accomplished when the 13- bed unit was certified in 1987. Therefore, no capital expenditures will be required for the additional 8 beds under review here. The space and beds are already available. The same study was submitted with the application for the additional eight beds at issue in these proceedings. In the present application it was assumed that the average length of stay in the extended care unit would be 14 days. However, since the 13 bed unit opened, the average length of stay experienced by the 13-bed unit has been approximately 15 days and corroborates the data found in the earlier records survey. Such corroboration would indicate that the study's data and assumptions are still valid in reference to the problem placements. However, the 15- day figure reflects only those patients who were appropriately placed in West Florida's ECF unit. The 15-day figure does not shed any light on those patients who have not been appropriately placed and remain in acute care beds. That light comes from two additional factors: The problems West Florida experiences in placing sub-acute, high skill, medicare patients; and the fact that West Florida continues to have a waiting list for its 13 bed unit. Problem Placements Problem placements particularly occur with Medicare patients who require a high skill level of care but who no longer require an acute level of care. The problem is created by the fact that Medicare does not reimburse medical facilities based on the costs of a particular patients level of care. Generally, the higher the level of care a patient requires the more costs a facility will incur on behalf of that patient. The higher costs in and of themselves limit some facilities in the services that facility can or is willing to offer from a profitability standpoint. Medicare exacerbates the problem since its reimbursement does not cover the cost of care. The profitability of a facility is even more affected by the number of high skill Medicare patients resident at the facility. Therefore, availability of particular services at a facility and patient mix of Medicare to other private payors becomes important considerations on whether other facilities will accept West Florida' s patients. As indicated earlier, the hospital goes to extraordinary lengths to place non- acute patients in area nursing homes, including providing nurses and covering costs at area nursing homes. Discharge planning is thorough at West Florida and begins when the patient is admitted. Only area nursing homes are used as referrals. West Florida's has attempted to place patients at Bluff's and Bay Breeze nursing homes operated by Advocare. Patients have regularly been refused admission to those facilities due to acuity level or patient mix. West Florida also has attempted to place patients at Baptist Manor and Baptist Specialty Care operated by Baptist Hospital. Patients have also been refused admission to those facilities due to acuity level and patient mix. 16 The beds originally rented to Sacred Heart Hospital have been relinquished by that hospital and apparently will not come on line. Moreover the evidence showed that these screening practices would continue into the future in regard to the 120 beds granted to Advocare and Baptist Manor. The president of Advocare testified that his new facility would accept some acute patients. However, his policies on screening would not change. Moreover, Advocare's CON proposes an 85 percent medicaid level which will not allow for reimbursement of much skilled care. The staffing ratio and charges proposed by Advocare are not at levels at which more severe sub-acute care can be provided. Baptist Manor likewise screens for acuity and does not provide treatment for extensive decubitus ulcers, or new tracheostomies, or IV feeding or therapy seven days a week. Its policies would not change with the possible exception of ventilated patients, but then, only if additional funding can be obtained. There is no requirement imposed by HRS that these applicants accept the sub-acute-patients which West Florida is unable to place. These efforts have continued subsequent to the 13-bed unit's opening. However, the evidence showed that certain types of patients could not be placed in area nursing homes. The difficulty was with those who need central lines (subclavian) for hyperalimentation; whirlpool therapy such as a Hubbard tank; physical therapy dither twice a day or seven days a week; respiratory or ventilator care; frequent suctioning for a recent tracheostomy; skeletal traction; or a Clinitron bed, either due to severe dicubiti or a recent skin graft. The 13-bed unit was used only when a patient could not be placed outside the hospital. The skill or care level in the unit at West Florida is considerably higher than that found at a nursing home. This is reflected in the staffing level and cost of operating the unit. Finally, both Advocare and Baptist Manor involve new construction and will take approximately two years to open. West Florida's special need is current and will carry into the future. The Waiting List Because of such placement problems, West Florida currently has a waiting list of approximately five patients, who are no longer acute care but who cannot be placed in a community nursing home. The 13-bed unit has operated at full occupancy for the last several months and is the placement of last resort. The evidence showed that the patients on the waiting list are actually subacute patients awaiting an ECF bed. The historical screening for acuity and patient mix along with the waiting list demonstrates that currently at least five patients currently have needs which are unmet by other facilities even though those facilities may have empty beds. West Florida has therefore demonstrated a special unmet need for five ECF beds. Moreover, the appropriate designation and placement of patients as to care level is considered by HRS to be a desirable goal when considering CON applications because the level of care provided in an ECF unit is less intense than the level of care required in an acute care unit. Thus, theoretically, better skill level placement results in more efficient bed use which results in greater cost savings to the hospital. In this case, Petitioner offers a multi-disciplinary approach to care in its ECF unit. The approach concentrates on rehabilitation and independence which is more appropriate for patients at a sub-acute level of care. For the patients on the awaiting proper placement on the waiting list quality of care would be improved by the expansion of the ECF unit by five beds. Finally, there are no capital costs associated with the conversion of these five beds and no increase in licensed bed capacity. There are approximately five patients on any given day who could be better served in an ECF unit, but who are forced to remain in an acute care unit because no space is available for them. This misallocation of resources will cost nothing to correct.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services issue a CON to Petitioner for five ECF beds. DONE and ORDERED this 30th day of March, 1989, in Tallahassee, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of March, 1989. APPENDIX The facts contained in paragraph 1-29 of Petitioner's proposed Findings of Fact are adopted in substance, insofar as material. The facts contained in paragraph 1, 2, 3, 4, 5, 6, 8, 12, 15, 16, 20, 27, 28, 29, 31 and 33 of Respondent's Proposed Findings of Fact are subordinate. The first sentence of paragraph 7 of Respondent's Proposed Findings of Fact was not shown to be the evidence. Strict compliance with the local health plan was not shown to be an absolute requirement for CON certification. The remainder of paragraph 7 is subordinate. The facts contained in paragraph 9, 10, 11 and 30 of Respondent's Proposed Findings of Fact were not shown by the evidence. The first part of the first sentence of paragraph 13 of Respondent's Proposed Findings of Fact before the semicolon is adopted. The remainder of the sentence and paragraph is rejected. The first sentence of paragraph 14 of Respondent's Proposed Findings of Fact was not shown by the evidence. The remainder of the paragraph is subordinate. The facts contained in paragraph 17, 26 and 32 of Respondent's Proposed Findings of Fact are adopted in substance, insofar as material. The acts contained in paragraph 18 are rejected as supportive of the conclusion contained therein. The first (4) sentences of paragraph 19 are subordinate. The remainder of the paragraph was not shown by the evidence. The first (2) sentences of paragraph 21 are adopted. The remainder of the paragraph is rejected. The facts contained in paragraph 22 of Respondent's Proposed Findings of Fact are irrelevant. The first sentence of paragraph 23 is adopted. The remainder of paragraph 23 is subordinate. The first sentence of paragraph 24 is rejected. The second, third, and fourth sentences are subordinate. The remainder of the paragraph is rejected. The first sentence of paragraph 25 is subordinate. The remainder of the paragraph is rejected. COPIES FURNISHED: Lesley Mendelson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Tallahassee, Florida 32308 Donna H. Stinson, Esquire MOYLE, FLANIGAN, KATZ, FITZGERALD & SHEEHAN, P.A. The Perkins House - Suite 100 118 North Gadsden Street Tallahassee, Florida 32301 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
The Issue In its petition, Florida Psychiatric Centers (FPC) alleges that HRS seeks to grant a CON to Florida Residential Treatment Centers, Inc. (FRTC), based on the agency's unpromulgated policy that ". . . at least one residential treatment center should be approved in each of DHRS' eleven health planning districts in Florida, regardless of the need for such facilities." (Petition, page 2, paragraph 6.) FPC argues that the policy is a "rule" and is invalid as a rule because it has not been adopted pursuant to Section 120.54, F.S., and because it conflicts with Sections 381.493, F.S., and 381.494, regarding need criteria. Further, FPC argues the "rule" is arbitrary and violates due process because the agency predetermines need regardless of the availability of like and existing services. HRS and Intervenor, FRTC, argue that the policy is incipient and needs not be promulgated. Further, the policy does not obviate a determination of need. HRS and FRTC claim that FPC lacks standing to bring this action, as its facility is a hospital and not the same as an intensive residential treatment program. HRS admits that the alleged policy has not been promulgated under Section 120.54, F.S. The issues for determination in this proceeding are summarized as follows: Whether FPC has standing to bring this action; Whether HRS has a policy regarding CON approval of intensive residential treatment programs, and whether that policy is a "rule"; and If the policy is a rule, is it an invalid rule?
Findings Of Fact FPC is a partnership which has received CON #2654 to construct a 100- bed psychiatric hospital in the Plantation/Sunrise area of West Broward County. The facility is under construction and will include 80 short-term psychiatric beds (40 geriatric, 15 adolescent, and 25 adult beds) and 20 short-term substance abuse beds. FPC anticipates an average length of stay of approximately 28 days for adults and less than 60 days for adolescents. FRTC is owned by Charter Medical Corporation. It proposes to build and operate a 60-bed intensive residential treatment program for children and adolescents in Broward County. The proposed facility will treat children and adolescents in need of psychiatric services. Its anticipated average length of stay is approximately one year. If it is awarded a certificate of need, FRTC intends to obtain licensing by HRS pursuant to Chapter 395, F.S., and Chapter 10D-28 F.A.C. No other facility licensed as an intensive residential treatment program, as defined in subsection 395.002(8), F.S. (1987), is available in Broward County. On March 11, 1987, HRS issued CON #4851 to FRTC for its 60-bed facility. A challenge to that CON is pending in DOAH consolidated cases #87- 2046/87-2400/87-2401. FPC is a petitioner in the case, with Florida Medical Center and South Broward Hospital District. Section 395.002(8), F.S., defines "Intensive Residential Treatment Programs for Children and Adolescents as: . . . a specialty hospital accredited by the Joint Commission on Accreditation of Hospitals which provides 24-hour care and which has the primary functions of diagnosis and treatment of patients under the age of 18 having psychiatric disorders in order to restore such patients to an optimal level of functioning. When completed, FPC will be accredited by the Joint Commission on Accreditation of Hospitals; it will provide 24-hour care and will have the primary function of diagnosis and treatment of patients with psychiatric disorders and problems of substance abuse. Unlike the other psychiatric hospitals in Broward County, FPC will have a campus-like setting and separate buildings for the various services. FPC will not be a locked facility. With the exception of the length of stay, the services provided by FPC for its adolescent patients will be essentially the same as an intensive residential treatment program, as defined above. Until recently, HRS has had very few CON applications for intensive residential treatment programs. HRS has considered that these programs must undergo CON review only if they seek licensure as a specialty hospital. In considering need for intensive treatment programs, HRS does not consider unlicensed residential treatment programs to be like and existing services because HRS is not required to review unlicensed facilities; HRS would not have any way of knowing all the programs in operation and would have no control over the services offered. This policy is similar to the policy HRS employed in conducting CON review of ambulatory surgery centers. In those cases, HRS did not consider the outpatient surgery being performed in physicians' offices. Because the legislature has created a special definition of intensive residential treatment facility, and because the State Health Plan seeks a continuum of mental health services, HRS presumes there is a need for a reasonably sized intensive residential treatment facility in each planning district. This presumption can be rebutted with evidence in a given case, such as the fact that the district has few children with mental illnesses, or that such programs have been tried and failed, or that parents in the area prefer to send their children outside the district. Moreover, any applicant for a CON for an intensive residential treatment facility must evidence compliance with the myriad criteria in Section 381.705, F.S. (1987), and in Chapter 10-5, F.A.C. Although there is no specific bed need methodology adopted by HRS for intensive residential treatment facilities, other psychiatric services, such as long-term psychiatric care, are also evaluated without a numeric bed need methodology. HRS has applied its presumption of need policy in intensive residential treatment program CON reviews at least since 1983. One reason why the policy has not been adopted as a rule is that there have been so few applications in that category. In the experience of Elizabeth Dudek, Health Facilities and Services Consultant Supervisor, the first level supervisor for CON review, there were merely three applications of this type prior to a recent batch of three more applications. FPC's Petition to Determine Invalidity of Agency Rule(s) alleges that HRS' policy is ". . . at least one residential treatment center should be approved in each of DHRS' eleven health planning districts in Florida, regardless of the need for such facilities." (paragraph 6) FPC further alleges that HRS construes Chapter 395 as requiring it to ". . . automatically approve at least one residential treatment center in each DHRS health planning district regardless of whether the statutory criteria for need in Section 381.494(b), F.S. [renumbered and amended as Section 381.705, F.S., in 1987] would be met by the applicant." (paragraph #7) These allegations were not proven in this proceeding and are rejected in favor of the less rigid presumption of need policy described in findings of fact #7 and #8, above.
Conclusions THIS CAUSE comes before the AGENCY FOR HEALTH CARE ADMINISTRATION (the "Agency"”) concerning co-batched Certificate of Need ("CON") Application Nos. 10069 - 10072 seeking to establish a new hospice program in Orange County, District 7/B. ODYSSEY HEALTHCARE OF COLLIER COUNTY, INC. d/b/a ODYSSEY HEALTHCARE OF CENTRAL FLORIDA (hereinafter “Odyssey Healthcare”) filed CON Application No. 10071 in the Second Batching Cycle of 2009. The application was denied. Thereafter, Odyssey Healthcare timely filed a Petition for Formal Administrative Hearing with respect to its denial. The Petition was Filed August 27, 2010 3:01 PM Division of Administrative Hearings. forwarded by the Agency Clerk to the Division of Administrative Hearing (“DOAH"). On June 8, 2010, Odyssey Healthcare filed its voluntary dismissal of the DOAH Case No. 10-1681CON (Ex. 1). On June 9, 2010, an Order Severing DOAH Case No. 10-1681CON (Ex. 2) and an Order Closing file (Ex. 3) were issued by DOAH as a result of Odyssey Healthcare’s voluntary dismissal. It is therefore ORDERED and ADJUDGED: 1. The voluntary dismissal by Odyssey Healthcare is hereby acknowledged and accepted. 2. CON Application No. 10071 is hereby denied. 3. The above-styled case is hereby closed. DONE and ORDERED this 2) day of August, 2010, in Tallahassee, _y W. ARNOLD, Secretary AGENCY FOR HEALTH CARE ADMINISTRATION Florida. ae eeeneeeeeaeneneneenmmnenneneeennnaaneneieemnenenamemenenneE mat a
The Issue Whether there is a need for an additional 31 short-term psychiatric beds for Broward County?
Findings Of Fact I. General. History of Case. In June of 1984, the Petitioner filed an application with the Respondent for a certificate of need to add 31 short- term psychiatric beds to its existing facility. The certificate of need sought by the Petitioner was assigned certificate of need #3372 by the Respondent. The Respondent denied the Petitioner's application for certificate of need #3372. On October 25, 1984, the Petitioner filed a Petition for Formal Administrative Hearing with the Respondent challenging its proposed denial of the Petitioner's application. The Petition was filed with the Division of Administrative Hearings by the Respondent and was assigned case number 84-4037. Biscayne, Memorial and Charter were granted leave to intervene by Orders dated January 28, 1985, April 26, 1985 and July 9, 1985, respectively. The final hearing was held on November 19 and 21, 1985 in Ft. Lauderdale, Florida and February 24 and 25, 1986 in Tallahassee, Florida. The Petitioner's Proposal. The Petitioner originally sought to add 31 short-term psychiatric beds to its existing facility. If approved, the additional beds would have increased its current licensed beds from 334 to 365 beds. The Petitioner proposed to meet projected need for short-term psychiatric beds in Broward County for 1989. In its original application, the Petitioner proposed to provide services to children, adolescents, adults and the elderly. No distinct psychiatric units were proposed. The total cost of the original proposal was estimated to be $209,368.00. At the final hearing, the Petitioner proposed to relinquish 31 medical/surgical beds and to add 31 short-term psychiatric beds to meet projected need for short-term psychiatric beds in Broward County for 1989. The Petitioner will end up with a total of 334 licensed beds, the same number it now has, if its application is approved. The total cost of the proposal presented at the final hearing was $337,169.00, which is accurate and reasonable. The 31 proposed beds will be divided into a 15-bed dedicated adolescent unit and a 16-bed dedicated geropsychiatric unit. Adults will generally not be treated by the Petitioner. Involuntary admissions will be treated by the Petitioner, although there was some evidence to the contrary. The sixth floor of the Petitioner's existing facility will be converted into space for the new psychiatric units. The Petitioner changed the estimated staffing for its proposal between the time it filed its original application and the final hearing. The changes were not significant. During the 1985 legislative session, the Florida Legislature enacted Section 394.4785(1)(b), Florida Statutes (1985). This,, Section requires that most adolescents be separated from other patients for purposes of psychiatric treatment. Some of the modifications of the Petitioner's application which were made at the final hearing were made in order to conform with this Section. The changes in the Petitioner's proposal which were made between the time it filed its original application with the Respondent and the time of the final hearing are not substantial enough to require that the Petitioner's application, as modified, be remanded to the Respondent for further consideration. The Parties; Standing. The Petitioner is a 334-bed, for-profit, general acute-care hospital. The Petitioner is a full service hospital providing general medical services. The Petitioner has a medical staff of more than 400 physicians, including a department of psychiatry. The Petitioner is owned by National Medical Enterprises, one of the largest health care providers in the country. The Petitioner is located in Hollywood, Florida, which is located in the southern portion of Broward County, Florida. Broward County is the only County in the Respondent's service district 10. The Petitioner's primary service area consist of the southern portion of Broward County from State Road 84 in the North to the Broward-Dade County line in the South. Memorial is a not-for-profit general acute care hospital located in southern Broward County. Memorial holds License #1737, issued on June 1, 1985, which authorizes Memorial to operate 74 short-term psychiatric beds. This license is valid for the period June 1, 1985 to May 31, 1987. Memorial was also authorized to operate 74 short-term psychiatric beds in its license issued for the 2-year period prior to June 1, 1985. Memorial is located a short distance from where the Petitioner is located in southern Broward County. Memorial and the Petitioner share the same general primary service area. Most of the physicians on the staff at Memorial are also on the Petitioner's staff. Memorial is subsidized by tax revenues for providing indigent care for southern Broward County. About 17 percent of Memorial's revenue is attributable to bad debt and indigent care. If the Petitioner's application is approved it is likely that the Petitioner will take patients from Memorial. It is also likely that the patients taken from Memorial will be other than indigent patients. If the Petitioner were to achieve a 75 percent occupancy rate and 50 percent of its patients come from Memorial, Memorial would lose a little over $1,000,000.00 in terms of 1985 dollars. It is unlikely, however, that the Petitioner will achieve an occupancy rate of 75 percent and, more importantly, it is unlikely that 50 percent of the Petitioner's patients will come from Memorial. The loss of patients from Memorial which would be caused by approval of the Petitioner's application will, however, result in a financial loss to Memorial which may effect its ability to provide quality care. Additionally, the loss in paying patients could increase the percentage of indigent patients at Memorial and, because a portion of the cost of caring for indigents is covered by paying patients at Memorial, could result in a further loss in revenue and an increase in tax support. The public may have difficulty accepting a public hospital, such as Memorial, as a high-quality hospital if the public hospital is perceived to be a charity hospital. It is therefore important for a public hospital to attract a significant number of paying patients to its facility to avoid such an image. It is unlikely that the number of patients which may be lost to the Petitioner by Memorial is sufficient to cause the public to perceive that Memorial is a charity hospital. Biscayne is a 458-bed, general acute-care hospital located on U.S. 1 in northern Dade County, Florida, just south of the Broward County line. Biscayne's facility is located within about 5 miles of the Petitioner's facility. Biscayne is about a 5 to 10 minute drive from the Petitioner. Dade County is not in service district 10. It is in service district 11. Of the 458 licensed beds at Biscayne, 24 are licensed as short-term psychiatric beds and 24 are licensed as substance abuse beds. The rest are licensed as medical/surgical beds. Ten of the medical/surgical beds at Biscayne are used as a dedicated 10-bed eating disorder (anoxeria nervosa and bulimirexia) unit. These 10 beds are not licensed for such use. A separate support staff is used for the 10-bed eating disorder unit. Approximately 60 percent of Biscayne's medical staff of approximately 400 physicians are residents of Broward County. Most of these physicians are also on the medical staff of other hospitals, principally the Petitioner, Memorial and Parkway Regional Medical Center, which is located in northern Dade County. Most of its staff have their business offices in southern Broward County. Biscayne's service area includes southern Broward County and northern Dade County. Approximately 60 percent of Biscayne's patients are residents of southern Broward County. Biscayne markets its services in southern Broward County. Eighty percent of Biscayne's psychiatric patients are elderly. Many types of psychotic and psychiatric disorders are treated at Biscayne. Biscayne offers psycho-diagnostic services, crisis stabilization services, shock therapy services, individual therapy services and group therapy services. Biscayne has had difficulty in recruiting qualified staff for its psychiatric unit. Biscayne currently has 4 vacancies for registered nurses, 4 vacancies for mental health assistants and 1 vacancy for an occupational therapist in its psychiatric unit. Biscayne recruits nurses who are certified in mental health nursing. They have not always been successful in finding such nurses. Therefore, Biscayne provides educational programs to help train its nursing staff. These programs are necessary because of the unavailability of experienced nurses for its psychiatric unit. The Petitioner has projected that most of its patients for its proposed psychiatric units will come from southern Broward County, where Biscayne gets approximately 60 percent of its patients. The Petitioner plans to try to convince psychiatrists currently using existing providers, except Hollywood Pavilion, to refer their patients to the proposed psychiatric units. Since Biscayne and the Petitioner share some of the same physicians, it is likely that many of the patients cared-for by the Petitioner will come form Biscayne and other providers in southern Broward County, including Memorial. The loss of patients at Biscayne, if the Petitioner's proposal is approved, will result in a loss of revenue to Biscayne which may affect its ability to provide quality care. Charter was an applicant for a certificate of need to construct a free-standing psychiatric facility in Broward County. In its application Charter sought approval of long-term and short-term psychiatric beds. Charter's application was filed with the Respondent in August of 1983. It was filed for review by the Respondent in a batching cycle which preceded the batching cycle in which the Petitioner's application was filed. In December of 1983, the Respondent proposed to approve Charter's application and authorize a project consisting of 16 short-term adolescent psychiatric beds, 16 long-term adolescent psychiatric beds, 16 long-term substance abuse beds and 12 long-term children's psychiatric beds. The Respondent's proposed approval of Charter's application was challenged. Following an administrative hearing, it was recommended that Charter's application be denied. Final agency action had not been taken as of the commencement of the hearing in this case. Subsequent to the date on which the final hearing of this case commenced, the Respondent issued a Final Order denying Charter's certificate of need application. This Final Order is presently pending on appeal to the First District Court of Appeal. Charter does not have an existing facility offering services similar to those proposed by the Petitioner in Broward County or anywhere near the Petitioner's facility. When the Orders allowing Memorial, Biscayne and Charter to intervene were issued by Hearing Officer Sherrill, Mr. Sherrill determined that if the Intervenor's could prove the facts alleged in their Petition to Intervene they would have standing to participate in this case. Memorial and Biscayne have in fact proved the allegations contained in their Petitions to Intervene. Based upon all of the evidence, it is therefore concluded that Memorial and Biscayne have standing to participate in this proceeding. Both Memorial and Biscayne will probably lose patients to the Petitioner if its proposal is approved resulting in a loss of revenue. This loss could affect quality of care at Memorial and Biscayne. Also, it is possible that both would lose some of their specialized nursing personnel to ;the Petitioner to staff its proposed psychiatric units. Charter has failed to establish that it has standing to participate in this proceeding. The potential injury to Charter is too speculative. II. Rule 10-5.11(25), F.A.C. A. General. Whether a certificate of need for short-term psychiatric beds should be approved for Broward County is to be determined under the provisions of Section 381.494(6)(c), Florida Statutes (1985), and the Respondent's rules promulgated thereunder. In particular, Rule 10-5.11(25), F.A.C., governs this case. Under Rule 10-5.11(25)(c), F.A.C., a favorable determination will "not normally" be given on applications for short-term psychiatric care facilities unless bed need exists under Rule 10-5.11(25)(d), F.A.C. B. Rule 10-5.11(25)(d) , F.A.C. Pursuant to Rule 10-5.11(25)(d)3, F.A.C., bed need is determined 5 years into the future. In this case, the Petitioner filed its application with the Respondent in 1984, seeking approval of additional short-term psychiatric beds for 1989. The Petitioner did not change this position prior to or during the final hearing. Therefore, the planning horizon for purposes of this case is 1989. Under Rule 10-5.11(25)(d)3, F.A.C., bed need is determined by subtracting the number of "existing and approved" beds in the service district from the number of beds for the planning year based upon a ratio of .35 beds per 1,000 population projected for the planning year in the service district. The population projection is to be based on the latest mid-range projections published by the Bureau of Economic and Business Research at the University of Florida. Bed need is determined under the Respondent's rules on a district-wide basis unless the service district has been sub- divided by the Respondent. District 10 has not been subdivided by the Respondent. Therefore, bed need for purposes of this case under Rule 10-5.11(25)(d), F.A.C., is to be determined based upon the population projections for all of Broward County for 1989. The projected population for Broward County for 1989 is 1,228,334 people. Based upon the projected population for Broward County for 1989, there will be a need for 430 short-term psychiatric beds in Broward County in 1989. The evidence at the final hearing proved that there are currently 427 licensed short-term psychiatric beds in Broward County. During the portion of the final hearing held in November of 1985, evidence was offered that proved that there were also 16 approved short-term psychiatric beds for Broward County. These short-term beds were part of the application for the certificate of need sought by Charter. Subsequently, however, a Final Order was issued by the Respondent denying Charter's application. Therefore, the 16 short-term psychiatric beds sought by Charter do not constitute "existing and approved" short-term psychiatric beds in Broward County for purposes of this case. Subsequent to the conclusion of the final hearing in this case, the First District Court of Appeal reversed a Final Order of the Respondent denying an application for a certificate of need for a free-standing 10 -bed psychiatric facility, including 80 additional short-term psychiatric beds, for Broward County. Balsam v. Department of Health and Rehabilitative Services, So.2d (Fla. 1st DCA 1986). As indicated in Finding of Fact 23, Memorial is licensed to operate 74 short-term psychiatric beds. Memorial is in fact operating all 74 of these licensed beds. Memorial filed an application with the Respondent for certificate of need #1953 in October of 1981 in which Memorial indicated that it planned to reduce the number of short-term psychiatric beds it had available by 24 beds. Memorial's certificate of need application involved an expenditure of capital and did not specifically involve an application for a change in bed inventory at Memorial. Memorial also represented that it would reduce the number of its available short-term psychiatric beds by 24 in a bond prospectus it issued in September of 1983. The Respondent approved Memorial's certificate of need application. Despite Memorial's representations that it would reduce its short-term psychiatric bed inventory, the beds are still in use in Broward County. Memorial has no plans to close any beds and the Respondent does not plan to take any action against Memorial to require it to stop using 24 of its short-term psychiatric beds. Hollywood Pavilion is licensed to operate 46 short- term psychiatric beds in Broward County. In 1985, 475 patients were admitted to Hollywood Pavilion and its occupancy rate was 62.3 percent. In fact, Hollywood Pavilion had more admissions than Florida Medical Center had to its psychiatric unit. It therefore appears that other physicians find Hollywood Pavilion acceptable. Hollywood Pavilion is accredited by the Joint Commission on Accreditation of Hospitals. The Petitioner presented the testimony of a few physicians who questioned the quality of care at Hollywood Pavilion. These physicians indicated that they did not use Hollywood Pavilion. At least one of the physicians indicated, however, that he did refer patients to other physicians whom he knew admitted patients to Hollywood Pavilion despite his feeling that the quality of care at Hollywood Pavilion was poor. This action is inconsistent with that physician's opinion as to the lack of quality of care at Hollywood Pavilion. His opinion is therefore rejected. The other physicians' opinions are also rejected because very little evidence was offered in support of their opinions and because of the contrary evidence. Based upon a consideration of all of the evidence concerning the quality of care at Hollywood Pavilion, it is concluded that the Petitioner failed to prove that the 46 short-term psychiatric beds licensed for use and available for use at Hollywood Pavilion should not be counted as existing short- term psychiatric beds in Broward County. Coral Ridge Hospital is licensed to operate 74 short- term psychiatric beds in Broward County. The average length of stay at Coral Ridge Hospital during 1984 and 1985 was almost 80 days. The average length of stay at Coral Ridge Hospital has been in excess of 40 days since 1980 and in excess of 60 days since 1983. The average length of stay at Coral Ridge Hospital is in excess of the average length of stay for which short-term psychiatric beds are to be used under the Respondent's rules. Rule 10-5.11(25)(a), F.A.C., provides that short-term beds are those used for an average length of stay of 30 days or less for adults and 60 days or less for children and adolescents under 18 years of age. Rule 10-5.11(26)(a), F.A.C., provides that long-term beds are those used for an average length of stay of 90 days or more. The psychiatric beds at Coral Ridge Hospital, based upon an average length of stay for all of its beds, falls between the average length of stay for short-term beds and long-term beds. The occupancy rate at Coral Ridge Hospital for 1985 was between 40 percent and 50 percent. Therefore, it is possible that a few patients at Coral Ridge Hospital with a very long length of stay could cause the overall average length of stay of the facility to be as long as it is. Coral Ridge Hospital will probably take short-term psychiatric patients because of its low occupancy rate. Therefore, there are at least 29 to 37 short-term psychiatric beds available for use as short-term psychiatric beds at Coral Ridge Hospital. The Petitioner failed to prove how many of the licensed short-term psychiatric beds at Coral Ridge Hospital are not being used for, and are not available for use by, short-term psychiatric patients in Broward County. It cannot, therefore, be determined how many, if any, of the licensed short-term beds at Coral Ridge Hospital should not be treated as existing short-term psychiatric beds in Broward County. Based upon the foregoing, the 427 licensed short-term psychiatric beds in Broward County should be treated as "existing" beds for purposes of determining the need for short- term psychiatric beds under Rule 10-5.11(25)(d), F.A.C. There is a net need for short-term psychiatric beds in Broward County for 1989 of only 3 additional beds under Rule 10- 5.11(25)(d)3, F.A.C. If the 80 short-term psychiatric beds approved by the First District Court of Appeal in Balsam are taken into account, there will be a surplus of 77 short-term psychiatric beds in Broward County for 1989 under Rule 10- 5.11(25)(d)3, F.A.C. Based upon an application of Rule 10-5.11(25)(d)3, F.A.C., there is no need for the additional 31 short-term psychiatric beds sought by the Petitioner. Rule 10-5.11(25)(d)1, F.A.C., provides that a minimum of .15 beds per 1,000 population should be located in hospitals holding a general license to ensure access to needed services for persons with multiple health problems. Some patients who need psychiatric care also need other medical services which can better be obtained in an acute care hospital. This fact is taken into account by the requirement of Rule 10-5.11(25)(d)1, F.A.C. Based upon the projected population for Broward County in 1989, there should be a minimum of 184-short-term psychiatric beds in hospitals holding a general license in Broward County. There are currently 243 short-term psychiatric beds in hospitals holding a general license in Broward County. Therefore, the standard of Rule 10-5.11(25)(d)1, F.A.C., has been met without approval of the Petitioner's proposal. There is no need for additional short-term psychiatric beds in general hospitals in Broward County for 1989. Rule 10-5.11(25)(d)4, F.A.C., provides that applicants for short-term psychiatric beds must be able to project an occupancy rate of 70 percent for its adult psychiatric beds and 60 percent for its adolescent and children's psychiatric beds in the second year of operation. For the third year of operation, the applicant must be able to project an 80 percent adult occupancy rate and a 70 percent adolescent and children's occupancy rate. The beds sought by the Petitioner will be managed by a professional psychiatric management company: Psychiatric Management Services (hereinafter referred to as "PMS"). PMS is owned by Psychiatric Institutes of America, a subsidiary of National Medical Enterprises. Because of the lack of need for additional short-term psychiatric beds in Broward County, it is doubtful that the Petitioner can achieve its projected occupancy rates as required by Rule 10-5.11(25)(d)4, F.A.C. Rules 10-5.11(25)(d)5 and 6, F.A.C., require that certain occupancy rates normally must have been met in the preceding 12 months before additional short-term psychiatric beds will be approved. The facts do not prove whether the occupancy rates provided by Rule 10-5.11(25)(d)5, F.A.C., have been met because the statistics necessary to make such a determination are not available. The evidence failed to prove that the occupancy rates of Rule 10- 5.11(25)(d)6, F.A.C. have been met. The average occupancy rate for short-term psychiatric beds in Broward County for 1985 was between 64.8 percent and 68.4 percent. Occupancy rates in Broward County for short-term psychiatric beds have not reached 71 percent since 1982. These rates are well below the 75 percent occupancy rate provided for in Rule 10-5.11(25)(d)6, F.A.C. This finding is not refuted by the fact that Florida Medical Center added 59 beds in 1984 and the fact that occupancy rates at most general hospitals exceeded 75 percent in 1985. Based upon the average occupancy rate in Broward County for 1985, there were approximately 100 empty short-term psychiatric beds in Broward County on any day. Rule 10-5.11(25)(d)7, F.A.C. requires that short-term psychiatric services provided at an inpatient psychiatric hospital should have at least 15 designated beds in order to assure specialized staff and services at a reasonable cost. The Petitioner's proposal to add 31 short-term psychiatric beds meets this requirement of the rule. C. Rule 10-5.11(25)(e), F.A.C. Rule 1O-5.11(25)(e)1, F.A.C., requires that an applicant prove that its proposal is consistent with the needs in the community as set out in the Local Health Council plans, local Mental Health District Board plans, State Mental Health Plan and needs assessment data. The Petitioner has failed to meet this requirement. The Petitioner's proposal is inconsistent with the District 10 Local Health Plan, the Florida State Health Plan and State and Local Mental Health Plans. In particular, the Petitioner's proposal is inconsistent with the following: The District 10 Local Health Plan's recommendation that applications not be approved if approval would result in an excess number of beds under the Respondent's bed need methodology; The District 10 Local Health Plan's recommendation concerning occupancy standards for the district (75 percent during the past 12 months); The position of the Florida State Health Plan that inpatient psychiatric services are a setting of last resort; The recommendation of the District 10 Mental Health Plan that alternatives to hospitalization for psychiatric services should be encouraged; and The recommendation of the Florida State Mental Health Plan that less restrictive treatment alternatives should be encouraged. Rule 10-5.11(25)(e)3, F.A.C., requires that applicants indicate the amount of care to be provided to underserved groups. The Petitioner's representations concerning its plans to provide indigent care contained in its application are misleading, in that the Petitioner represented that it would not turn away indigents. At the final hearing, the Petitioner indicated that it will generally provide care to indigents only on an emergency basis. Patients who need indigent care on a non-emergency basis will be referred to Memorial. Also, once an indigent patient who needs emergency care has stabilized, that patient will be transferred to Memorial for care. The Petitioner accepts few Medicaid and indigent patients. During 1985, the Petitioner treated 21 Medicaid patients out of a total of 6,800 patients. Only 1.5 percent of its total revenue was for uncompensated care. During 1984, the Petitioner treated 22 Medicaid patients out of a total of 7,321 patients. Only 1.2 percent of its total gross revenue was for uncompensated care. Memorial is subsidized by tax revenues for providing indigent care, or southern Broward County. Because Memorial provides indigent care, indigent patients are usually referred to Memorial if they do not need emergency care or are transferred to Memorial after they stabilize if they do need emergency care. There are other hospitals in northern Broward County which provide similar indigent care. It is therefore common practice to refer patients to those hospitals. Rule 10-5.11(25)(e)5, F.A.C., provides that development of new short- term psychiatric beds should be through the conversion of underutilized beds in other hospital services. The Petitioner's proposal to convert 31 medical/surgical beds for use as short-term psychiatric beds meets this provision. Rule 10-5.11(25)(e)7, F.A.C., provides that short- term psychiatric services should be available within a maximum travel time of 45 minutes under average travel conditions for at least 90 percent of the service area's population. There is no geographic access problem in Broward County. At least 90 percent of the population of Broward County is within a maximum of 45 minutes driving time under average driving conditions to existing short-term psychiatric services in Broward County. The Petitioner's proposal will not significantly enhance geographic access in Broward County. III. Statutory Criteria. Need for Services. The Respondent has approved two certificates of need authorizing the addition of a total of 135 long-term psychiatric beds for Broward County. The addition of 135 long-term beds probably means that additional short-term beds in Broward County which have been used for patients requiring longer treatment will be available. If the additional long-term beds free up short-term beds, the occupancy rate of short-term psychiatric beds in Broward County would be even less than it has been during the past 12 months, if other things remain equal. Both Memorial and Florida Medical Center have been using short-term psychiatric beds for the care of long-term patients. Once the new long-term psychiatric beds are operational, more short-term psychiatric beds will be available in Broward County. Existing Providers. In addition to the short-term psychiatric beds available at Coral Ridge Hospital and Hollywood Pavilion, short- term psychiatric beds are available at the following existing facilities in the service district: Ft. Lauderdale Hospital: 64 beds Florida Medical Center: 74 beds Imperial Point: 47 beds Broward General Medical Center: 48 beds There is no geographic distribution problem in district 10. Generally, the Petitioner did not prove that existing short-term psychiatric beds in Broward County are not available, efficient, appropriate, accessible, adequate or providing quality of care. The Petitioner also did not prove that existing facilities are over-utilized. No new services are proposed by the Petitioner. The evidence did prove that there is usually a waiting list for short-term psychiatric beds at Memorial and that physicians have resorted to various devices to get their patients into short-term psychiatric beds at Memorial. Specialized adolescent psychiatric services are available in the service district at Ft. Lauderdale Hospital and at Florida Medical Center. Ft. Lauderdale Hospital has 24 short- term psychiatric beds dedicated to the treatment of adolescents. Florida Medical Center has 20 short-term psychiatric beds dedicated to the treatment of adolescents. Broward General Medical Center and Imperial Point also provide children/adolescent services. Treatment for eating disorders is provided and available at Imperial Point and Florida Medical Center. Florida Medical Center solicits patients from all parts of the service district. Geropsychiatric short-term psychiatric beds are available in the service district at Hollywood Pavilion, Imperial Point and Ft. Lauderdale Hospital. Florida Medical Center has a closed adult psychiatric unit and often treats persons over 60 years of age. It also has a 26-bed adult short-term psychiatric unit with 2 specialized treatment programs: one for eating disorders and the other for stress and pain management. The Petitioner has proposed to provide a dedicated geropsychiatric unit to meet the needs of geriatric patients which are different from those of adults generally. Although there are no such dedicated geropsychiatric units in the service district, the Petitioner failed to prove that geriatrics are not receiving adequate care from existing providers. Quality of Care. The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals. The Petitioner has established adequate quality control procedures, including educational programs and a quality assurance department. These quality control procedures will also be used to insure quality of care in the proposed psychiatric units. The psychiatric units will be managed by PMS. PMS specializes in the management of psychiatric units in acute care hospitals. PMS has programs for adolescents and geriatrics. These programs will be available for use in the proposed psychiatric units. PMS also has a large variety of programs, services and specialists available to establish and maintain quality of care at the Petitioner. The Petitioner will be able to provide quality of care. Alternatives. The Petitioner did not prove that available and adequate facilities which may serve as an alternative to the services it is proposing do not exist in Broward County. Economies of Scale. The Petitioner's parent corporation, National Medical Enterprises has purchasing contracts available for use by the Petitioner in purchasing items needed for the proposed psychiatric units. These contracts can result in a reduction of costs for the proposed project. Staff Resources. PMS will help in recruiting staff for the proposed psychiatric units. Recruiting will be done locally but the Petitioner also has the ability to recruit specialized staff on a broader geographic scale. There is a shortage of nursing personnel for psychiatric services in southern Broward County and northern Dade County. Since the Petitioner plans to recruit locally, this could cause existing providers to lose specialized nursing personnel to the Petitioner. If the Petitioner causes vacancies at existing facilities, this could adversely affect quality of care. Financial Feasibility. The total projected cost of the project ($337,169.00) can easily be provided by National Medical Enterprises, the parent corporation of the Petitioner. The Petitioner's financial projections are unrealistic to the extent of the projected utilization and revenue for the proposed psychiatric units. Based upon the projected need of only 3 short-term psychiatric beds (or possibly a surplus of 77 beds) for 1989, the Petitioner's projected utilization and revenue for its proposal is rejected. The Petitioner has proved immediate financial feasibility but has failed to prove the proposal is financially feasible in the long-term. Impact of Proposal. The Petitioner's proposal could adversely effect the costs of providing health services in Broward County. This is especially true in light of the lack of need for additional short-term psychiatric beds in Broward County. Because of the high quality of the services the Petitioner proposes to provide, competition in Broward County could be enhanced and ultimately benefit consumers, if there was a need for the proposed additional beds. If a hospital has an image of being a charity hospital serving the needs of underserved groups, the hospital can experience difficulty in attracting paying patients and have difficulty in getting consumers to accept the high quality of the services of the hospital. Although it is likely that the Petitioner will take paying patients away from Memorial, it is unlikely that the number of patients lost could substantially affect the public's image of Memorial. The effect the Petitioner's proposal will have on Memorial is limited by the fact that the Petitioner is only seeking 31 beds and they are only short-term psychiatric beds. Memorial provides a variety of services and psychiatric services are only a small part of those services. I. Construction. It the Petitioner's proposal is approved, 11,500 square feet on the sixth floor of the Petitioner's hospital will be renovated and converted for use for the two proposed psychiatric units. The renovations can be made quickly. There will be space for 16 beds in a geropsychiatric unit and 15 beds in an adolescent unit. There will be a separate lobby for the psychiatric units and the elevators to the lobby will be strictly controlled. The two units will be separated and adequate security precautions will be taken to keep the two units separate. The ceilings in both units will be modified to insure security. Nurse stations will be provided for both units. Visibility from the nurse stations will be fair. Space is provided for a dayroom for each unit and there will be a class room and four rooms for therapy. These spaces will barely be adequate to meet the various needs of patients. With adequate planning and coordination, patients' needs can be met. There is inadequate space in the proposed facility for physical activities for patients.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the certificate of need application filed by the Petitioner for certificate of need #3372 should be denied. DONE and ENTERED this 15th day of May, 1986, in Tallahassee, Florida. LARRY J. SARTIN 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 15th day of May, 1986. COPIES FURNISHED: Michael J. Glazer, Esquire AUSLEY, McMULLEN, McGEHEE, CAROTHERS & PROCTOR Post Office Box 391 Tallahassee, Florida 32302 Lesley Mendelson, Esquire Assistant General Counsel Department of Health and Rehabilitative Services Building One, Suite 407 1323 Winewood Boulevard Tallahassee, Florida 32301 James C. Hauser, Esquire MESSER, VICHERS, CAPARELLO, FRENCH & MADSEN Post Office Box 1876 Tallahassee, Florida 32302 Kenneth G. Oertel, Esquire Eleanor A. Joseph, Esquire OERTEL & HOFFMAN, P.A. Post Office Box 6507 Tallahassee, Florida 32313-6507 Cynthia S. Tunnicliff, Esquire CARLTON, FIELDS, WARD, EMMANUEL SMITH & CUTLER, P.A. Post Office Drawer 190 Tallahassee, Florida 32302 Mr. William Page, Jr. Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
The Issue The issue presented herein is whether or not a CON to construct a 60-bed short-term psychiatric hospital in District XI should be issued to Florida Medical Center (FMC).
Findings Of Fact FMC seeks a CON for a 60-bed free-standing psychiatric facility to be located in the Key Largo area of Monroe County in HRS District XI. FMC intends to provide 6.25 percent of its patient days at no charge to indigent patients. It further intends to provide another 6.25 percent of its patient days to HRS' clients and Baker Act patients at 50 percent of its projected charge, or $200 per day. (FMC Exhibit 2, Table 7). FMC proposes to build this facility at a cost of $6,060,000. Dr. Richard Matthews, Ph.D., has been executive director of the Guidance Clinic of the Upper Keys since 1973 and is a clinical psychologist. He is responsible for the overall administration and supervision of mental health, alcohol, drug abuse and out-patient services provided under contract with HRS. Dr. Matthews was qualified as an expert in clinical psychology and the mental health delivery health system in Monroe County. (FMC Exhibit 13). There are three guidance clinics in Monroe County, one each for the upper, lower and middle Keys. HRS contracts through each of these clinics to provide mental health care for its clients. There are no community mental health centers in Monroe County and the clinics are the sole means of delivering mental health care on behalf of HRS' clients within the county. Currently, the guidance clinic of the upper Keys places its in- patients in Harbor View Hospital in Dade County at a cost of $236 per day. Neither Harbor View nor any other hospital provides free days to any of the guidance clinics for in-patient psychiatric care. (FMC Exhibit 13, P. 9) Jackson Memorial Hospital does not accept indigent or charity psychiatric patients from Monroe County. There have been occasions where patients without resources have been unable to be hospitalized although hospitalization was indicated. The middle Keys has a crisis hospitalization unit with a limited number of beds. Patients needing hospitalization longer than three days must be transferred to Harbor View or some other facility in the District. The 15 beds at Depoo Hospital in Key West are not readily accessible to residents of the upper Keys. Residents needing psychiatric services usually go to hospitals in Dade County. Coral Reef Hospital, the nearest psychiatric facility to Petitioner's proposed facility, has in the past refused to negotiate a discounted rate with the guidance clinic. Dr. Matthews, on one occasion, sent a patient to Coral Reef who was refused treatment. Currently, no psychiatrist practices in Key Largo because there are no psychiatric beds to which a psychiatrist could admit patients. The discounted rate of $200 per day quoted by FMC is some $36 per day less than the guidance clinic currently pays to providers for referrals of its patients for psychiatric care. Additionally, the 6.25 percent of free care that Petitioner proposes is greater than the free care which the guidance clinic currently receives from any facility since no facility presently gives any free care to the clinic. The guidance clinic supports Petitioner's CON application and will contract with Petitioner who provides services for in-patients. Grant Center is a long-term 140-bed psychiatric hospital specializing in the treatment of children and adolescents. It is the nearest facility to Petitioner's proposed facility. Grant Center has agreed to refer adult patients to Petitioner. Grant Center treats 2-3 adults a month who need psychiatric care. (FMC Exhibit 14). There is one hospital providing psychiatric care in Dade County which was surveyed by the Health Care Finance Administration (HCFA) in March, 1988. Currently, a third party insurance carrier no longer utilizes Grant Center because of price. If a facility has prices which carriers consider too expensive, utilization will go down. (FMC Exhibit 14, P. 7). Grant Center currently contracts with HRS to provide its clients care at a rate of approximately $350 per day, a rate one half of Grant Center's normal rate. Jackson Memorial is the only Dade County hospital which will treat an indigent psychiatric patient. Grant Center intends to assist Petitioner with staffing or programmatic needs. It has 80-100 professional staff, most of whom live in close proximity to Key Largo. Robert L. Newman, C.P.A., is the chief financial officer at FMC. He testified, by deposition, as an expert in hospital accounting and finance. Newman analyzed the Hospital Cost Containment Board (HCCB) reports for each hospital in District XI which provides psychiatric care. There is no free standing psychiatric hospital in the District which reports any indigent or uncompensated care. Among area acute care hospitals which have psychiatric units, Miami Jackson rendered 38.89 percent indigent care, Miami Children's rendered 6.5 percent indigent care, and no other facility reported that it rendered more than 1.75 percent indigent care. (FMC see Exhibit 11, disposition exhibit 1). Jackson provides no free care to Monroe County residents and Miami Children's care is limited to treating children while Petitioner is seeking adult beds. Jayne Coraggio testified (by deposition) as an expert in psychiatric staffing and hiring. She is currently Petitioner's director of behavioral sciences. The ideal patient to staff ratio is 4 to 5 patients per day per professional staff member. During the evening shift, the ideal patient ratio per professional staff member is 7 to 8 patients. (FMC Exhibit 12, PP. 6-7). Petitioner's facility is adequately staffed based on the above ratios. FMC is considered overstaffed in the psychiatric unit by some of the other area hospitals since they do not staff as heavily as does Petitioner. Lower staffing ratios can affect quality of care since patients and their families would not receive as much therapy. Family therapy is important because the family needs to know about changes in the patient in order to make corrective adjustments. The family that is required to travel in excess of 45 minutes or more one way is less likely to be involved in family therapy. Islara Souto was the HRS primary reviewer who prepared the state agency action report (SAAR) for Petitioner's CON application. (FMC Exhibit 15). District 11 has subdivided into five subdistricts for psychiatric beds. Florida is deinstitutionalizing patients from its mental hospitals. To the extent that private psychiatric hospitals do not accept nonpaying patients, their existence will not solve the problem of caring for such patients. Souto acknowledged that the local health councils conversion policy discriminates against subdistrict 5 because there are so few acute care beds in the subdistrict. In fact, the conversion policy actually exacerbates the maldistribution of beds in the district. (FMC 15, page 26). The psychiatric facility nearest the proposed site (Coral Reef), had an occupancy of 90.3 percent. Souto utilized a document entitled Florida Primary Health Care Need Indicators, February 1, 1986, and determined that Monroe County has not been designated as a health manpower shortage area, nor a medically underserved area. This information is relied upon by health planners to determine the availability of health manpower in an area. This report refers both to physicians and R.N.'s. The average adult per diem for free-standing hospitals in District 11 range from $430 at Charter to just over $500 at Harbor View. Although districts have established subdistricts for psychiatric beds, no psychiatric bed subdistrict in any district has been promulgated by HRS as a rule. The access standard that is relevant to this proceeding is a 45-minute travel standard contained in Rule 10-5.011(1)(o)5.G. That standard states: G. Access Standard. Short-term inpatient hospital psychiatric services should be available within a maximum travel time of 45 minutes under average travel conditions for at least 90 percent of this service area's population. Here, the standard refers to the service area which is determined to be an area different than a service district. Applying the travel time standard on a service area basis makes the most sense since the subdistrict is established by the local health council and not the applicant. Analyzing this access standard on a sub-district level, 90% of the sub-districts population is not within 45 minutes of any facility anywhere in sub-district V since the sub-district is more than two hours long by ordinary travel and the population is split two-thirds in lower Dade County and one-third in Monroe County, the bulk of which is in Key West. (FMC Exhibit 17). Therefore, a facility located on either end of this sub-district is not readily accessible by the applicable travel standards to citizens at the other end of the sub-district. This access standard must however be measured and considered with the needs for psychiatric services of the kind Petitioner is proposing to provide. Petitioner has not presented any access surveys or assessments of the caliber relied upon by the Department in the past. Petitioner's facility which would be located in the Key Largo area will no doubt provide better geographic accessibility to residents of District XI who live in the Key Largo area. HRS has in the past used a sub-district analysis to determine geographic accessibility for psychiatric beds even though it has not promulgated a rule for sub-districts for psychiatric beds. See, for example, Psychiatric Hospital of Florida vs. Department of Health and Rehabilitative Services and Pasco Psychiatric Center, DOAH Case No. 85-0780. Likewise, the Department has approved the conversion of acute-care beds to psychiatric beds even though it found that there was a surplus of psychiatric beds in the district. (Petitioner's Exhibit 7). The Department has in the past used a geographic access analysis to approve psychiatric beds in District XI and has used the sub- district analysis or a time travel analysis in its review of Cedars, Coral Reef, Depoo (for psychiatric beds) and the Glenbiegh case (for long term substance abuse). The bed need calculations for the January, 1992 planning horizon shows a surplus of 180 short-term in-patient psychiatric beds. (HRS Exhibit 2). The occupancy level for short-term psychiatric beds in the district is below 70%. (HRS Exhibit 2, pages 11-12). Additionally, the occupancy standards of the local and state health plan, of which the department is required to review CON applications, have not been met in this instance. (HRS Exhibit 2, Pages 6-7). Petitioner has not submitted any documentation to HRS regarding special circumstances need. Petitioner's proposal at final hearing for a staff referral agreement with another local hospital was not contained in the CON application filed with HRS. (FMC Exhibit 14, pages 11-12). Although Petitioner has alluded to some unspecified access problem for residents in the Florida Keys, Petitioner has not documented a real access problem and certainly not a demonstration of inaccessibility under the rule access standard. (Florida Administrative Code Rule 10-5.011(1)(o)5.g.)(HRS Exhibit 2, pages 14-15). Although the proposed project would increase availability and access for underserved groups in the district, the percentage of total patient days for "indigents" is not substantial and certainly not to the point to warrant deviation from the usual access criteria. 2/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, IT IS RECOMMENDED THAT: Petitioner's application for a Certificate of Need to build a 60-bed free- standing psychiatric hospital in District XI be DENIED. DONE and ENTERED this 28th day of February, 1989 in Tallahassee, Florida. JAMES E. BRADWELL 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 28th day of January, 1989.
Findings Of Fact Based on the admissions and stipulations of the parties, on the exhibits received in evidence, and on the testimony of the witnesses at the hearing, the following facts are found. Admitted facts The Charter facility will have a total of 60 beds and was preliminarily approved by DHRS for the following units: (a) 16 short-term adolescent psychiatric beds; (b) 16 long-term adolescent psychiatric beds; (c) 12 long-term child psychiatric beds; and (d) 16 long-term adolescent substance abuse beds. DHRS preliminarily approved a total project cost of $7,376,843 on December 2, 1983. As part of its decision, DHRS imposed as a condition and Charter agrees to dedicate 5 percent of its patient days and revenue to Baker Act patients. The Bureau of Economic and Business Research ("BEBR") population projections for Broward County for 1988 is 1,252,660. Management personnel and funds for capital and operating expenditures are reasonably available to Charter for its proposed facility. The Charter facility will be geographically accessible to all residents of Broward County. Findings related to the application process Charter filed its application on August 15, 1983, and it was assigned to Mr. Straughn for review. On August 29, 1983, Mr. Straughn sent an "omissions" letter to Charter requesting additional information. On October 13, 1983, Charter sent a response to the "omissions" letter providing Mr. Straughn with additional information about the application. Charter's application was deemed complete on October 15, 1983. Based on information available to DHRS at that time it was impossible for DHRS to review the project because DHRS did not know what kind of beds Charter was asking for. Prior to the public hearing on November 8, 1983, Mr. Straughn was totally confused as to whether Charter wanted short-term or long-term beds. He called Mr. Holbrook at Charter and asked for clarification. By letter dated November 8, 1983, which was undoubtedly first presented to the DHRS at the public hearing held on that date, Charter explained exactly what kinds of beds it was seeking. Prior to November 8, 1983, it was not clear what kinds of beds Charter was seeking. And although the matter is still somewhat ambiguous and not completely free from doubt, careful review of the original application tends to indicate that the original application was for all short-term beds. Findings regarding the general nature of Charter's proposed facility and programs Charter is mostly interested in providing treatment to "salvageable adolescents and children." Charter is not interested in treating chronic patients. Chronically ill patients require a longer period of treatment than other patients. If Charter is not treating chronically ill patients, its treatment periods will be on the short end of the treatment spectrum. The proposed Charter programs do not contain any program which would be appropriate for the treatment of severe sociopathic patients. Although Charter contends that its 12-bed child psychiatric unit will be a long-term unit, the program it describes for the child psychiatric unit is clearly a short-term program. Charter contends that one of its proposed 16-bed adolescent units would have an average length of stay of 25 days and that the other 16-bed adolescent unit would have an average length of stay of more than 90 days. Other evidence discussed below indicates that Charter's expectations of average lengths of stay in excess of 90 days are unwarranted given the nature of the programs proposed by Charter and the experience of existing providers in Broward County and Charter's facility in Ft. Myers, Florida. The programs described in the Charter application are identical to the programs described in the earlier North Beach application. The North Beach application was for a short-term facility. There is nothing in the treatment programs described in the Charter proposal that makes them long-term programs. The proposed Charter treatment programs are identical to existing programs at Florida Medical Center and Fort Lauderdale Hospital. The diagnostic and evaluation portion of the Charter programs is no different from what is currently being done at Florida Medical Center and Fort Lauderdale Hospital. In reality, diagnosis and treatment occur simultaneously. From the day a patient is admitted he is being treated as well as diagnosed. There is no advantage in segregating patients who are being evaluated and patients who are being treated. The programs proposed by Charter are very typical of the programs used by most child and adolescent psychiatric hospitals in the United States. A condition placed on the certificate of need that Charter is seeking is that at least 5 percent of the projected patient days and projected revenues will be comprised of Baker Act patients. Long-term child and adolescent psychiatric patients are generally chronic patients. It is a contradiction in terms for Charter to say on one hand that it is a long-term facility and to then say it will not treat chronic patients. The step system is a treatment program typically used in short-term psychiatric facilities. It does not work with chronic child and adolescent patients that require long-term treatment. The Charter proposal envisions extensive cooperation and coordination with other forms of existing health care resources, particularly in discharge planning and follow-up. Given the nature of the types of patients Charter proposes to treat (acute patients) and the experience of existing providers in Broward County and in Charter's Ft. Myers facility in treating similar patients, the most reasonable expectation is that the average length of stay of patients at Charter's facility would be substantially less than the 90 days or more it projects. The most reasonable expectation is that the average length of stay of child and adolescent patients at Charter's proposed facility would be 60 days, or less. Findings regarding Charter's ability to provide quality of care Charter Medical is committed to providing a high quality of care at its facilities. It operates other psychiatric hospitals in Florida and does not appear to have experienced any quality of care problems in those facilities. Nevertheless, Charter only proposes to use 29 FTE's for its 60-bed facility in Broward County, which is a lower ratio of staff to patients than the current practice at some existing facilities. Also, Charter proposes to use some LPN's on its staff, while current practice at some existing facilities is to use only registered nurses. Findings regarding Charter's occupancy experience with other new psychiatric hospitals It has been Charter's past experience with opening new psychiatric hospitals, that the reasonable expectation for average occupancy during the first year of operation is in the neighborhood of 30 percent to 45 percent. This is true even when the facility has strong community and physician support. Of ten psychiatric hospitals opened by Charter during the past three years, most had occupancy rates during their first year of operation in the range of 30 percent to 45 percent. One was less, around 20 percent. Its best was around 60 percent, which was in Charter's home city. Charter's experience with bad debt during the first year of operation is in the range of 6 percent to 8 percent. Findings regarding one of Charter's other Florida psychiatric hospitals Charter Glade Hospital in Ft. Myers, Florida, is a psychiatric hospital with 104 beds. It offers the following programs: --adolescent programs --adolescent addictive disease program --adult addictive disease/chemical dependency program --general adult psychiatric program The average occupancy rate at Charter Glades Hospital during its first year of operation was 49 percent. A consideration which contributed to this occupancy rate is the fact that Charter Glades has no nearby competition offering psychiatric services. The average length of stay for adolescent patients at Charter Glades Hospital is between 45 and 55 days. Charter Oakdale uses the step or level system in its treatment programs for adolescents. It is a very typical form of adolescent psychiatric treatment and is essentially the same form of treatment presently used in the existing adolescent psychiatric programs in Broward County. It is also essentially the same form of treatment that is proposed for Charter's Broward County facility. Findings regarding the District and State Plans and DHRS information The applicable District Plan does not address the need for long-term psychiatric or substance abuse beds in District X. The District Plan recommends, in essence, that with regard to short-term psychiatric and substance abuse services, any new facilities should not exceed the bed need methodology set forth in Rule 10-5.11(25), Florida Administrative Code. The District Plan recommends that both psychiatric and substance abuse facilities should provide specialty services by population, age, and socioeconomic characterization. The District Plan also recommends that all psychiatric facilities should provide for a continuum of care. The District Plan recommends that inpatient psychiatric facilities have a minimum of 20 beds. The District Plan recommends a smooth transition between inpatient and outpatient services. The State Health Plan is too old and out of date to be a useful tool in the evaluation of applications for certificates of need. The District Plan does not indicate how many of the existing beds are dedicated to child or adolescent patients. Therefore, it is difficult for the DHRS to apply the separate 75 percent occupancy standard for adults and the 70 percent occupancy standard for children and adolescents. According to the best information available to the DHRS, during 1983 the combined (child, adolescent, and adult) occupancy rate in Broward County was approximately 68 percent, which is below both rule standards. (The evidence in this case indicates that the occupancy rates are somewhat lower, as noted hereinafter). The basis for the DHRS proposal to approve the short- term beds notwithstanding the fact that the occupancy standards were below those provided in the applicable rules was described as follows by Mr. Porter: However, in view of the proposal in its entirety, to include the long-term child and adolescent beds which are being proposed in this facility, and the absence of any such beds, a demonstration of need for those beds in this district, that is an overriding factor to specifically that criteria where occupancy of existing short-term beds does not exceed the standard quoted in the rule. There is no specific rule formula or methodology for determining need for long-term psychiatric or substance abuse services. The reasoning behind the DHRS proposal to approve the long-term beds included in this proposal was explained as follows by Mr. Porter: I think in combination of the fact that there were no similar and like services in this particular district, certainly through supporting documentation in the application as well as some statements which were made in the District X mental health plan, and an indication of the number of patients who were also seeking care at Grant Center Hospital. A combination of all those factors led the Department to conclude that there was, in fact, a need for long-term psychiatric and substance abuse services for children and adolescents in District X. The Bureau of Economic and Business Research ("BEBR") population projections for Broward County for 1989 is 1,264,869. Findings regarding the same or similar services in Broward County There are seven existing facilities in District X which provide inpatient psychiatric services, The DHRS regards all seven of these facilities as "short-term" psychiatric facilities, but the evidence indicates otherwise. The seven existing facilities are: Broward General Medical Center Florida Medical Center Imperial Point Memorial Hospital Coral Ridge Fort Lauderdale Mental Health Institute Broward Pavilion The DHRS Certificate of Need Review Section does not have a reliable inventory of psychiatric beds in Broward County or South Florida in general. The DHRS does not have any clear information on the number of existing psychiatric beds that are adult beds and the number that are child or adolescent beds. General hospitals do not report occupancy by service. Accordingly, the DHRS does not have available any occupancy rates for the most recent 12-month period for psychiatric beds in general hospitals in Broward County. Pursuant to the best information available to the DHRS, the occupancy of the freestanding specialty psychiatric facilities in Broward County was as follows for the most recently documented 12-month period: Coral Ridge Psychiatric 74 beds 60.0 percent Ft. Lauderdale Hospital 58 beds 40.4 percent Hollywood Pavilion 46 beds 58.1 percent TOTALS 178 beds 51.1 percent The following hospitals in Broward County offer specialized inpatient units for adolescents: Fort Lauderdale Hospital, South Florida State Hospital, Community Hospital of South Broward and Coral Ridge Hospital. South Florida State Hospital also has a specialty inpatient unit for children. Fort Lauderdale Hospital and Community Hospital of South Broward offer specialized inpatient substance abuse programs for adolescents. The following hospitals all treat adolescents, but do not have specialized units for adolescents: Broward General Hollywood Pavilion Hollywood Memorial Imperial Point Florida Medical Center has 74 approved psychiatric beds and has 54 or 59 presently in operation. There are plans to construct more physical space to move up to full authorization. They will use existing beds to increase their psychiatric beds to the full authorized number of psychiatric beds. Florida Medical Center has a closed adolescent unit of 20 beds and a closed adult unit of approximately 25 beds. It also has a small geriatric unit. Florida Medical Center does not have beds specifically designated for patients under age 11, although, on rare occasions, it treats patients under age 11. Florida Medical Center has very high quality programs for adolescent psychiatric patients. These programs are in substance no different from the programs described in Charter's application. All psychiatric hospitals treating acute patients have behavior modification programs based on rewards and punishments. Florida Medical Center offers all of the proposed Charter programs in a short-term psychiatric program. The diagnostic and evaluation program described in the Charter application is not considered a separate program at Florida Medical Center. It is a standard process of every psychiatric admission to pursue diagnosis and evaluation. One can often reach a diagnosis in 30 days, but not always. All psychiatric hospitals use a diagnostic and evaluation system, but they do not designate diagnosis and evaluation as a separate program. The average length of stay at Florida Medical Center's adolescent psychiatric unit is 64 days. The average length of stay at that unit if one takes out all patients who stay less than 30 days is 78.3 days. Nine of Florida Medical Center's 36 adolescent psychiatric patients have stayed longer than 90 days. Florida Medical Center has provided treatment of six months duration to a few of its adolescent psychiatric patients. As of the date of the hearing the total census of the Florida Medical Center psychiatric beds (adult and adolescent) was slightly less than 30 patients. As of the date of the hearing, Florida Medical Center had 8 adolescent psychiatric patients out of a capacity for 20. There has never been a waiting list for the adolescent psychiatric beds at Florida Medical Center. With regard to staffing, Florida Medical Center has 21 FTE's for its 20-bed adolescent psychiatric unit. It uses all registered nurses in its adolescent unit and has no LPN's. In the 12 month period preceding the hearing, the number of total patient days for all types of patients at Florida Medical Center has dropped 20 percent. The DRG system of reimbursement is causing a drop in patient days, which can be expected to result in excess bed capacity. The DRG system of reimbursement is not applicable to child and adolescent psychiatric services. The anticipated impact of DRG's on the delivery of psychiatric services is that DRG's will result in an excess of med/surg beds which will cause hospitals with those excess beds to try to convert them to something else, including psychiatric beds. Fort Lauderdale Hospital is a specialty psychiatric hospital and is licensed for 100 beds. It has the following programs: 18 beds -- intensive adult care (very short-term) 23 beds -- adolescent psychiatry 20 beds -- adolescent substance abuse 18 beds -- adult psychiatry (open) 16 beds -- adult substance abuse Presently Fort Lauderdale Hospital has only 95 beds set up. It could set up the other five within less than half a day if it had patients for them. For the period December 1, 1982, through November 30, 1983, the average length of stay in the Fort Lauderdale Hospital adolescent psychiatric unit was 54 days. For the period December 1, 1983, through July 30, 1984, the average length of stay in the Fort Lauderdale Hospital adolescent psychiatric unit was 48.6 days. For the period December 1, 1982, through November 30, 1983, the average length of stay in the Fort Lauderdale Hospital adolescent substance abuse unit was 44.7 days. For the period December 1, 1983, through July 30, 1984, the average length of stay in the Fort Lauderdale Hospital adolescent substance abuse unit was 45.1 days. For the 12 months ending November 30, 1983, the average length of stay for adolescent psychiatric patients who stayed 30 days or less was 13.28 days. For the 12 months ending November 30, 1983, the average length of stay for adolescent patients who stayed 31 days or longer was 74.17 days. Fort Lauderdale Hospital has some patients who stay longer than 90 days. The average daily census for the Fort Lauderdale Hospital adolescent psychiatric unit is 12.5 patients (out of 23 available beds). The average daily census for the Fort Lauderdale Hospital adolescent substance abuse unit is 10.8 patients (out of 20 available beds). Fort Lauderdale Hospital offers all of the programs described in the Charter proposal. There is nothing unusual about those programs. Fort Lauderdale Hospital is very concerned about quality of care and provides high quality of care. Fort Lauderdale Hospital is involved in numerous community activities. It has community outreach programs and community educational programs. Fort Lauderdale Hospital has been trying continuously to have the public school system provide additional hours of school at the hospital, but the school system has failed to do so. Fort Lauderdale Hospital has an open medical staff. It has about 18 psychiatrists on the staff. If it had a closed medical staff limited to 4 or 5 psychiatrists it is reasonable to expect that psychiatric admissions would be reduced by 50 percent or more. Coral Ridge Hospital is licensed for 86 psychiatric beds. It is a long-term psychiatric treatment facility. Ninety- nine percent of the patients at Coral Ridge Hospital are chronic patients. At one time Coral Ridge Hospital was a short-term facility treating primarily acute patients, but it began turning into a long-term facility in 1977-78, and is now exclusively long-term. Coral Ridge Hospital has a 12-bed unit for children and adolescents. It also has a 24-bed substance abuse unit in which it can also place adolescents. The average length of stay of patients at Coral Ridge Hospital is well in excess of six months, perhaps as much as a year. Some patients at Coral Ridge Hospital stay as long as 18 months. As of the time of the hearing, there were three patients in the 12-bed child and adolescent unit at Coral Ridge Hospital. During the previous year Coral Ridge Hospital had had as many as 8 or 10 child and adolescent patients. As of the time of the hearing Coral Ridge Hospital had 44 beds filled out of a total of 86. Its average census during the previous 12 months was around 55 patients, or about 64 percent occupancy. Charges for room and board at Coral Ridge Hospital are about $195 per day. Total charges, which includes room and board, physician and therapy fees, tests, etc., range from about $6,000 to about $10,000 per month. Coral Ridge Hospital provides between 15 percent and 20 percent free services. Broward General Medical Center is a 744-bed acute care short-term hospital located in Ft. Lauderdale, Florida. It has a psychiatric unit in which it treats patients 14 years of age and older. South Florida State Hospital in Broward County has a 50-bed children's unit and a 50-bed adolescent's unit. All of the services proposed by Charter are presently available in Broward County. There are an adequate number of existing beds available in the private sector for long-term psychiatric treatment in Broward County or close to Broward County. There is an existing good distribution of long-term inpatient psychiatric services along the southeast coast of Florida. Findings regarding the same or similar services in adjacent districts Grant Center Hospital is a 100-bed child and adolescent inpatient psychiatric hospital in Dade County which specializes in providing long-term care. Grant Center is within a two hour travel time from Broward County. A true long-term adolescent psychiatric program such as they have at Grant Center -- envisions stays of a minimum of six months, often closer to a year, and sometimes lasting as long as two years. The average length of stay at Grant Center is 290 days. The ages of patients at Grant Center range from 5 years old to 19 years old. Children up to 6 years of age make up a insignificant portion of Grant Center's patient population. Dade County is the primary service area for Grant Center. However, 12 percent of Grant Center patients come from Broward County and 6 percent of its patients come from Palm Beach County. During 1984 the occupancy level at Grant Center averaged 98 percent. The usual waiting list at Grant Center has been 5 to 12 patients. Grant Center has been granted a certificate of need to add 60 beds for long-term child and adolescent psychiatric services. Those 60 beds are under construction and will be on line by the end of 1985. The approved cost of those 60 beds was $1.7 million. The 60 new beds at Grant Center will occupy about 28,000 square feet. Every patient that comes to Grant Center receives intensive diagnosis and evaluation such as is proposed by Charter, but Grant Center does not call that a separate program. During 1984, 18 percent of Grant Center revenues were written off as either bad debt, free care, or charity cases. Highland Park is a 72-bed facility located in the center of Miami, Florida. Highland Park is owned by the same group that owns Grant Center. Highland Park has a 16-bed child and adolescent unit. It is common for children and adolescents to stay at Highland Park for over 90 days. Highland Park is within two hours travel time from Broward County. In 1983 there were 20 psychiatric beds at Biscayne Hospital with an occupancy rate of 63.9 percent. Biscayne Hospital is in north Dade County, within two hours travel time from Broward County. In 1983 there were 56 psychiatric beds at North Miami Hospital with an occupancy rate of 60.9 percent. North Miami Hospital is in north Dade County, within two hours travel time from Broward County. On February 28, 1984, a certificate of need was granted for 60 long- term adolescent psychiatric beds in Boca Raton. Boca Raton is within a two hour drive of Broward County. Psychiatric Institute of Delray was granted a certificate of need to add 15 long-term child and adolescent psychiatric beds. This is within a two hour drive of Broward County. National Medical Enterprises was granted a certificate of need to add 25 child and adolescent psychiatric beds. These beds are within a two hour drive from Broward County. Findings regarding other health care facilities and services In North Dade, South Palm Beach, and Broward County there are about 500 beds offering residential psychotherapeutic services for adolescents. Findings regarding manpower and accessibility Charter can reasonably expect to be able to secure the necessary health manpower to staff its facility at the proposed FTE level. With regard to geographic accessibility, the proposed Charter facility will be accessible to more than 90 percent of the residents of Broward County. With regard to financial accessibility, the $64,000 that Charter projects for charity care equates to three indigent patients for 60 days each per year. Findings regarding financial feasibility of the proposal Although Charter does not yet have a commitment for its proposed revenue bonds, given the financial assets of the parent company and its history of obtaining financing for other similar projects it would appear that the project is immediately financially feasible in the sense that Charter has or can obtain the financial wherewithal to pay for the cost of building the facility. The long-term financial feasibility of the project is quite another matter. For many of the reasons set forth below the long-term financial feasibility of the proposed facility looks rather bleak. Charter's pro formas and other projections for the future were prepared in large part by Mr. Follmer, but Mr. Follmer appears to have made a lot of unwarranted assumptions and guesses in the formulation of his estimates and projections. Mr. Follmer expressed confidence in the availability of private insurance to pay for a substantial amount of the services provided by the proposed facility, but Mr. Follmer has never seen a composite report showing the average psychiatric insurance coverage for adolescent patients in Broward County. In fact no more than 10 percent of the adolescent patients seen at Fort Lauderdale Hospital have private insurance coverage in excess of 90 days. Mr. Follmer projects that Charter will have occupancy at a rate of 55 percent during its first year of operation, 65 percent during its second year of operation, and 80 percent during its third year of operation. For reasons which are set forth at the end of these findings of fact, it must be concluded that these projections are totally unrealistic and without reliable factual foundation. Based on a number of factors, including specifically Charter's first year experiences with its other psychiatric hospitals, the recent experience of existing psychiatric hospitals in and near Broward County the fact that Charter will have closed medical staff, the fact that its medical staff is not presently operating in Broward County and has no established following of patients, and the fact that Charter has no agreements for the referral of psychiatric patients from general hospitals, an optimistic projection for its occupancy rate during the first year of operation would be in the range of 35 percent to 40 percent, and there is no reason to expect it would achieve better than 50 percent to 55 percent occupancy during its second year of operation. The estimate of 80 percent occupancy during the third year of operation is sheer speculation for which there is no competent substantial evidence and which is totally contraindicated by the experience of existing providers of the same or similar services. The foregoing regarding the occupancy that can realistically be expected by Charter takes into consideration only the adolescent aspect of Charter's proposed facility. When the 12-bed children's unit is taken into consideration, the reasonable occupancy expectations become bleaker yet. It is very uncommon to admit a child under 12 years of age for inpatient psychiatric hospital treatment. Families tend to resist recommendations that children under 12 be hospitalized in a psychiatric hospital. There is no measurable demand or need for long-term child psychiatric beds in Broward County. On the rare occasions when a child under 12 is hospitalized in a psychiatric hospital, most such hospitalizations are for very short periods, often only for a few days. Further, if a child under 12 must be hospitalized for psychiatric reasons it is usually better to hospitalize them in a psychiatric wing of a general hospital, due in large part to parental resistance to hospitalizing children under 12 in a psychiatric specialty hospital. Finally, South Florida State Hospital, which is an excellent facility, already has beds for children under 12. Another indicator that Charter's occupancy levels will be much lower than originally projected is that Charter's projected patient charges of $355 per day are substantially higher than the patient charges at some existing facilities providing similar services. These higher charges will have a negative impact on Charter's ability to compete effectively with existing providers of the same of similar services. Mr. Follmer's pro forma assumptions for the first year include the following: --6 percent for bad debt. --1.5 percent for indigent care. --2.5 percent contract adjustment for Baker Act. For the second year pro forma, Mr. Follmer assumes 5 percent for bad debt. These assumptions are totally unrealistic when compared to the experiences of existing providers in and near Broward County. The bad debt experience for the psychiatric unit at Florida Medical Center during the 18 months immediately preceding the hearing was approximately 16 percent of gross revenues. Coral Ridge Hospital provides between 15 percent and 20 percent free services. During 1984, 18 percent of Grant Center revenues were written off as either bed debt, free care, or charity cases. In light of these experiences, it is unrealistic for Charter to project 7.5 percent as its expected loss of revenue due to bad debts and indigent care. A much more reasonable (and still conservative) estimate would be in the range of 10 percent to 12 percent for bad debt and indigent care during its first few years of operation. Another negative impact on the revenue projections has to do with Baker Act patients. The proforma assumes that 5 percent of patient days will be made up of Baker Act patients and that the hospital will get paid approximately 50 percent of its usual charges -- thus the 2.5 percent "contract adjustment" for Baker Act patients in the pro forma. For the reasons which follow, the 2.5 percent "contract adjustment" should be a 5 percent "contract adjustment." Charter does not have any contracts for receiving any Baker Act funds ford its proposed Broward County facility. Baker Act funds are presently not available in Broward County for private psychiatric hospitals, and Mr. Follmer has no idea what the availability of Baker Act funds for Broward County will be in the future. Without any Baker Act funds there would be a loss in both of the first two years of operation per the pro forma. The Charter Glade facility had an agreement to take Baker Act patients, but never got any because the funding ran out. Findings regarding impact on existing providers If Charter's proposed facility is built, it will most likely reduce the patient census at Fort Lauderdale Hospital. A reduced census at Fort Lauderdale Hospital could require reductions in staff and programs, which would impair quality of care and could also threaten accreditation of the hospital. Florida Medical Center's existing facility is less than three miles from Charter's proposed location. It is reasonable to expect that Charter's facility would divert adolescent patients from Florida Medical Center's psychiatric unit with results similar to those described in the preceding paragraph. If Charter's proposed facility is built it is reasonable to expect that it would have a similar negative impact on other existing Broward County hospitals offering adolescent psychiatric services. Findings regarding costs and methods of construction All of Charter's proposed construction costs are reasonable estimates of the actual cost of construction. The costs proposed in this case are substantially the same as the costs which were incurred to construct Charter's Ft. Myers facility. The proposed cost of construction and site preparation of Charter's Broward County facility comes to $97 per square foot. The proposed construction cost of just the building comes to $81 per square foot. The equipment list in the Charter proposal and the amounts listed for the various items of equipment are reasonable for the type of facility Charter proposes for Broward County. Charter uses a prototype design for its psychiatric hospitals. About 8 or 9 of the prototype hospitals have been built. The Charter prototype design is the same design that is used by Charter for short-term hospitals. Charter's proposed floor plan looks like a plan for an acute care (short-term) facility. Findings regarding DHRS policies The geographic access standard for long-term psychiatric beds is that at least 90 percent of the population in the service district should be within a two hour one-way drive of existing services. In applying that travel standard the DHRS looks at services available in other districts within the two hour travel radius. The travel time standard for long-term psychiatric beds would be meaningless if applied literally because, given the size of the DHRS Districts, it would virtually always be met and would become, in essence, a nonstandard. The DHRS construction of the travel standard for long-term psychiatric beds is to consider the availability of services within a two-hour travel radius of the proposed facility. In other words, need for long-term psychiatric services in the district in which a new facility is proposed is determined in part by the availability of the same or similar services within a two-hour travel radius, regardless of whether that radius extends into other districts. A certificate of need for long-term psychiatric beds will not normally be granted if there are available underutilized beds within the two-hour travel radius, even if the available beds are in the next district. The DHRS has applied this interpretation of the travel time standard in other cases involving applications for long-term psychiatric beds. The reason DHRS crosses district boundaries in looking at need for long-term psychiatric beds is that long-term psychiatric care is a "regional" type of service. The DHRS also crosses district boundaries when looking at need for other "regional" types of services such as cardiac catherization and open heart surgery. In reviewing applications for certificates of need, the DHRS does not base its determination on a single statute or rule criterion. It uses a balancing process and considers all of the criteria in an effort to arrive at a reasonable judgment. The DHRS considers other evidence of need in addition to any indications of need found by strict application of the formulas. It is the policy at the DHRS not to do health planning on the basis of national statistics. This is because Florida's population differs in composition from the average of the national population. Florida has a large elderly population. It also has large population growth. The Florida population is less stable and more dynamic than the national population. DHRS tries to use local measures or statewide measures. Strong community support is not one of the statutory criteria for determining need for a health care facility. In determining bed need for psychiatric hospitals it is the policy of the DHRS not to consider the differences in medical opinion with regard to which of several approaches to the treatment of psychiatric patients may be the best form of medical treatment for psychiatric patients who require hospitalization. Findings required by subparagraph 1 of Sec. 381.494(6)(d), Fla. Stat. A less costly, more efficient, and more appropriate alternative would be to postpone the construction of any facilities such as those proposed by this applicant until such time as existing facilities offering the same or similar services have much higher occupancy rates. Findings required by subparagraph 2 of Sec. 381.494(6)(d), Fla. Stat. Existing inpatient facilities providing similar services are not being used in an efficient manner because they all are experiencing low utilization rates. Approval of Charter's proposed facility would cause use of existing facilities to become more inefficient. Findings required by subparagraph 3 of Sec. 381.494(6)(d), Fla. Stat. The best alternative to new construction at this time is no construction at this time, due to the underutilization of existing same or similar facilities. The best alternative in the future would appear to be to prefer conversion of underutilized med/surg beds if DRG-generated occupancy trends for those beds continue to cause those beds to be underutilized. Findings required by subparagraph 4 of Sec. 381.494(6)(d), Fla. Stat. Patients will not experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service. Existing facilities providing the sane or similar inpatient care are underutilized and have more than adequate unused capacity. Rejected proposed findings of fact I have rejected substantially all of Charter's proposed findings based on the testimony of the "community support" witnesses. This rejection is based largely on the fact that those findings are irrelevant to any determination of a need for the facilities proposed by Charter. Further, with but few exceptions, the "community support" witnesses appeared to be distinctly uninformed about either the details of the Charter proposal or details regarding the current availability of inpatient psychiatric services for children and adolescents in Broward County. Finally, most of the testimony of these witnesses relating to need for the proposed facility was contrary to the greater weight of the evidence. Included within the appellation "community support" witnesses are: Marie Reynolds, Toni Siskin, Barbara Myrick, James Deleo, Sally Cresswell, Marjorie Miller, Susan Buza, Barbara Mitchell, Anne McKenzie, and Sharon Solomon. I have rejected substantially all of Charter's proposed findings based on the opinion testimony of Mr. Fred Follmer. Mr. Folmer's estimates and projections are totally lacking in credibility. As became most evident during the devastating cross-examination, Mr. Follmer did not have information he needed to make his projections, he ignored or overlooked information he did have, he relied on information about matters which are not analogous to the subject proposal, and some of his explanations of the basis for his projections are simply illogical. With regard to the issue of whether existing inpatient psychiatric programs for children and adolescents are similar to or different from the programs proposed by Charter, I have for the most part discounted the testimony of the Charter witnesses about the "uniqueness" of the Charter programs and have tended to credit the testimony of witnesses who are personally involved in the delivery of inpatient psychiatric services to children and adolescents in Broward County. This is due in large part to the fact that Charter's witnesses did not do a very extensive job of describing the nature of the programs it proposes to offer through Dr. Schwartz' group, and particularly did not come forward with any convincing evidence of the "uniqueness" of the proposed programs. I am persuaded by the testimony on behalf of the Petitioners and Intervenor that the proposed programs are not unique. I have not made any findings based on the testimony about Charter Barclay Hospital in Chicago because that testimony is lacking in relevancy in view of the testimony in the record about Charter Glade Hospital in Ft. Myers, Florida. To the extent of any differences in Charter's experiences operating a Chicago hospital and a Ft. Myers hospital, the latter is much more relevant to any expectations or projections regarding a Broward County hospital. For the following reasons, I have not made any findings regarding the need for Charter's proposed services based on the testimony of Dr. Luke. First, Dr. Luke's conclusions are irrelevant because they purport to measure need for services having an average length of stay of 120 days based on statistics regarding numbers of admissions lasting 91 days or more. The persuasive evidence is to the effect that the most likely average length of stay at Charter's proposed facility would be similar to the average length of stay of existing facilities treating acute adolescent patients -- a length of stay substantially less than 91 or 120 days. Second, Dr. Luke's conclusions were based on a number of assumptions which were either not shown to be valid or which were shown to be contrary to the persuasive evidence. Dr. Luke assumed an unrealistic average length of stay. Dr. Luke disregarded the manner in which the DHRS interprets and applies the travel-time standard in the applicable rule. Dr. Luke assumed the OGME admission rates are valid predictors for Broward County, but I am not convinced that they are, particularly in light of the DHRS policy of attempting to use local or statewide indicators rather than national indicators Dr. Luke assumed incorrectly that there are no long-term psychiatric beds in Broward County. Finally, Dr. Luke assumed incorrectly that the Charter proposal would provide a treatment program which is not presently available in Broward County. A major portion of the need analysis expert testimony in opposition to Dr. Luke was that of Mr. Konrad. While there are some areas of Mr. Konrad's testimony that are a bit problematic, I am persuaded on the whole that Mr. Konrad's opinions are better founded than those of Dr. Luke and have resolved most differences in their opinions in favor of the testimony of Mr. Konrad. As a final matter in this regard, it should be noted that there was an enormous amount of testimony which was the foundation for an enormous number of proposed findings that are "subordinate, cumulative, immaterial or unnecessary." I have rejected all of those proposed findings because they are Immaterial and irrelevant to the disposition of the issues in this case.
Recommendation For all of the foregoing reasons it is recommended that the Department of Health and Rehabilitative Services enter a final order denying in its entirety Charter's application for a certificate of need for a 60-bed psychiatric hospital. DONE AND ORDERED this 16th day of August, 1985, at Tallahassee Florida. MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of August, 1985. COPIES FURNISHED: Mr. David Pingree Secretary Department of HRS 1323 Winewood Blvd. Tallahassee, Florida 32301 John Gilroy, Esquire Department of HRS 1321 Winewood Blvd. Building 1, Room 407 Tallahassee, Florida 32301 Kenneth G. Oertel, Esquire Oertel and Hoffman Suite C 2700 Blair Stone Road Tallahassee, Florida 32301 Eric B. Tilton, Esquire Post Office Box 5286 Tallahassee, Florida 32314 Morgan L. Staines 2204 East Fourth Street Santa Ana, California 92705 Cynthia S. Tunnicliff, Esquire CARLTON, FIELDS, WARD, EMMANUEL, SMITH & CUTLER, P.A. O. Drawer 190 Tallahassee, Florida 32302 Glen A. Reed, Esquire Richard L. Shackelford, Esquire BONDURANT, MILLER, HISHON & STEPHENSON 2200 First Atlanta Tower Atlanta, Georgia 30383 =================================================================
The Issue Whether the Certificate of Need (CON) applications filed by Central Florida Regional Hospital, Inc. d/b/a Central Florida Regional Hospital (Central Florida) (CON Application No. 9805) and Oviedo HMA, Inc. (Oviedo HMA) (CON Application No. 9807P) for a new, 60-bed acute care hospital in Seminole County, Agency for Health Care Administration (Agency or AHCA) acute care subdistrict 7-4, satisfy, on balance, the applicable statutory and rule review criteria sufficiently to warrant approval; and, if so, which of the two applications best meets the applicable statutory and rule review criteria for approval.
Findings Of Fact The Parties The Agency AHCA is the state agency authorized to evaluate and render final determinations on CON applications pursuant to Section 408.034(1), Florida Statutes.2 Oviedo HMA Oviedo HMA, Inc. is a start-up subsidiary of Health Management Associates, Inc. (HMA), a national for-profit hospital chain, headquartered in Naples, Florida. Oviedo HMA was formed for the sole purpose of constructing, owning, and operating a hospital in the Oviedo area. HMA traditionally develops hospitals in non-urban markets. It describes itself as a "turnaround specialist for non-urban hospitals," that "acquires and then revitalizes hospitals in growing communities with [population of] 30,000 to 400,000 that have a clear demographic need." HMA focuses on smaller-type hospitals ranging in bed size from 50 to 200 beds. HMA's ownership of hospitals has grown from 16 in 1993 to 59 hospitals in 2005. HMA owns and operates approximately 16 hospitals in Florida, all of which have come under HMA's ownership and operation by acquisition. HMA has not yet opened and constructed a new acute care hospital in Florida. HMA is building a new hospital in Collier County and has recently completed a replacement hospital in Brooksville, Florida. HMA anticipates acquiring an 80 percent interest in St. Cloud Hospital (owned by ORHS) in the greater Orlando area, with ORHS retaining a 20 percent interest. This transaction had not closed as of the final hearing. HMA owned and operated hospitals nationwide are accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and provide high quality of care to their patients. HMA has experienced financial growth in recent years; growing from approximately $250 million in net revenue in 1993 to over $3.6 billion in 2005, and growing from approximately $12 million in net income in 1993 to approximately $350 million in 2005. Its financial strength among for-profit hospitals is strong. For HMA, company-wide, over 15.4 percent of gross revenues were attributable to Medicaid in fiscal year (FY) 2005, with an additional 4.5 percent in charity care. In Florida, 9.7 percent of gross revenues of HMA were attributable to Medicaid (over $324 million) in 2005, with an additional 4.4 percent in charity care (over $147 million). In the SAAR, AHCA conditioned its approval of Oviedo HMA's project with the condition that Oviedo HMA provide "[a] minimum of 7.1 percent of the total annual patient days in the 60-bed facility . . . to Medicaid patients" and "[a] minimum of 2.9 percent of the 60-bed facility's gross revenues . . . to charity patients." OV 99 at 52. AHCA should impose these conditions if the project is approved. Oviedo HMA has committed to provide obstetrical services. In order to perfect its CON application, Oviedo HMA is relying heavily on Orlando Regional Healthcare System, Inc. (ORHS), a Florida not-for-profit corporation that owns and operates health care facilities in Orange, Seminole, Lake, and Osceola Counties. HMA would not pursue the project without a collaborative clinical and financial arrangement with ORHS. Following the filing of Oviedo HMA's letter of intent, on October 20, 2004, representatives of HMA, Inc. and ORHS, Inc., signed a letter of intent "relating to the possible formation of a joint venture or other business relationship" for the construction of a new hospital in Oviedo." Thereafter, HMA and ORHS agreed in principle that if the CON application were approved and the hospital project proceeded forward, 20 percent of the stock of Oviedo HMA will be owned by ORHS or one of its affiliates. (Stated otherwise, ORHS will contribute 20 percent of the project cost.) Losses and profits will be shared in accordance with percentages of stock ownership. Any written agreement between Oviedo HMA and ORHS is expected to be modeled after the ORHS/HMA St. Cloud Hospital agreement. See Finding of Fact 6. It is anticipated that any such agreement will contain, in part, buy-out and non-compete provisions.3 The entity that files a CON application must be the same entity that licenses and operates the CON approved project, here a hospital. OV 69 at 9-10.4 According to Mr. Gregg, "as of the [legislative] changes of 2004, if a change of ownership occurs, then that new owner acquires the certificates [sic] of need that were [sic] associated with the provider being purchased." Id. at 10. See generally § 408.036(2)(a), Fla. Stat.; Ch. 2004-383, § 6, Laws of Fla. The proposed stock purchase by ORHS does not affect the corporate status of Oviedo HMA, Inc., the applicant/entity.5 The situation would be different if the applicant/entity changed. The persuasive evidence indicates that Oviedo HMA, Inc. will own and operate the new hospital. ORHS has sufficient funds and is committed to expend between $15 and $20 million toward the Oviedo HMA hospital project, but is not willing to finance the entire cost of the project. This is one reason why ORHS did not pursue a CON application for a similar project as it had done in a prior batching cycle. The ORHS hospitals/health care facilities provide high quality of care to their patients. ORHS uses an enterprise-wide health information system which is complemented by other systems. ORHS physicians can access patient clinical information at an ORHS facility or remotely. PACS is a picture, archiving, and communications system. PACS provides the user with the ability to view images digitally, e.g., X-rays can be transmitted electronically and can be viewed remotely. With the design and structural cabling system in place, the PACS system can be used by the Oviedo HMA hospital and OHRS. The anticipated collaboration between the entity systems will afford the ability to tie the computer systems together. This system is available among collaborative hospitals and by credentialed staff who are given access to the system.6 Generally, physicians who do not have privileges at an ORHS facility would not be able to access the information unless given permission, which is not done on a standard basis. Hospital facilities with a "business relationship" with ORHS facilities can access the information. However, federal confidentiality requirements must be followed. Unaffiliated hospitals, such as CFRH, could be provided access to the information. See Endnote 6. Central Florida Central Florida Regional Hospital, Inc. (Central Florida), a for-profit corporation, is an applicant in this proceeding and will own the new hospital proposed in its CON application. If approved, the new hospital will have a separate management team charged with running the day-to-day operations of the new hospital. Central Florida is an indirect wholly-owned subsidiary of HCA Inc. (Health Corporation of America), a national for- profit corporation with hospitals distributed throughout the United States, including the State of Florida, and abroad. HCA's health care services include physician practices, ambulatory surgical centers, community hospitals, and large tertiary referral centers. Central Florida owns and operates Central Florida Regional Hospital (CFRH), a general acute care hospital with 226 licensed beds, consisting of 208 acute care beds and 18 skilled nursing unit beds (a separate unit within the hospital). CFRH is located at 1401 West Seminole Boulevard, Sanford, Florida, and is accredited by the JCAHO. Osceola Regional Medical Center, in Osceola County, Florida, is also an HCA facility in District 7. Central Florida will transfer (and delicense) 60 acute care licensed beds from CFRH to effectuate the CON application. CFRH asserts that it can maintain an appropriate census with the remaining bed complement. If the reduced bed complement is insufficient in number, CFRH can add new acute care beds without obtaining a CON. Ch. 2004-383, § 6, Laws of Fla., amending Section 408.036(1)(a) and (d), Florida Statutes (2003). CFRH's geographic service area is predominantly north Seminole County and west Volusia County. CFRH provides inpatient and outpatient services, including obstetrics, and has the only adult open-heart surgery and interventional cardiology program in Seminole County. CFRH's OB department averages 80 to 100 OB deliveries a month. CFRH does not operate a Level 2 or Level 3 Neonatal Intensive Care Unit (NICU). Orlando Regional Medical Center and Florida Hospital operate these units. CFRH has a history of providing health care services to Medicaid patient and indigent patients. CFRH expects to implement otolaryngology services, as well as a neurosurgery program that will include state-of-the- art "cyberknife" technology, a surgical tool that can also be used in cancer and tumor treatment in areas of the body other than the brain. (CFRH has not offered neurosurgery for some time, but signed a contract with a neurosurgeon that starts March 1, 2006, and is recruiting for a second neurosurgeon.) The hospital will be offering a 64-slice CAT scanner, which is a state-of-the-art imaging system. It is used for ruling out the necessity of a cardiac intervention procedure. CFRH has two OB/GYN physicians in Oviedo who are employed by the hospital. One works part-time. CFRH is recruiting for additional OB physicians for CFRH. CFRH has a reputation for providing high quality of care to its patients. This includes but is not limited to CFRH's cardiovascular and interventional programs. (For calendar year 2004, there were 300 open heart surgery discharges from CFRH. In 2004, CFRH ranked 40 out of 73 Florida hospitals with interventional cardiology programs in the number of open heart surgery discharges.) CFRH uses an electronic medical administration record (eMAR) system, which increases patient safety. Each patient's arm band is coded and can be scanned for, in part, drug compatibility. Nurses are alerted if there are any abnormalities. This particular system is unique to HCA hospitals. CFRH also uses a PACS system to transmit images to other facilities. Central Florida enjoys an excellent reputation as a corporate citizen in the Sanford community and Seminole County generally. Central Florida makes annual monetary contributions to a number of local organizations, including, for example, Seminole Community College for the purpose of expanding their nursing program. ORHS and Florida Hospital also contribute to this project. On September 7, 2004, the City of Oviedo issued a letter of support of Central Florida's application "for a 60 bed satellite facility in Oviedo, Florida."7 On November, 15, 2005, The Greater Oviedo Chamber of Commerce passed a resolution favoring Central Florida's application over Oviedo HMA's application. Until Central Florida filed its CON application, Central Florida had not begun to aggressively consider a greater presence in the Oviedo area. Central Florida expects to recruit in the area (and build a medical office) if its CON application is approved. CFRH has approximately 164 doctors on staff with active privileges (or active provisional) and requires its physicians to be board certified in order to be a part of the medical staff, unless the physician provides a specialty service for a limited period of time. CFRH will support the new hospital and provide any necessary training. CFRH expects to be the referral hospital for the new hospital, as opposed to a Florida Hospital or ORHS facility. Health Services in Orange and Seminole Counties Within District 7 Agency health planning service District 7 consists of Brevard, Orange, Osceola, and Seminole Counties. § 408.032(5), Fla. Stat. For acute care beds, each of the four counties is treated as a separate "subdistrict" by AHCA. Fla. Admin. Code R. 59C-2.100(3)(g). Both applications were filed to construct a new, acute care hospital in Seminole County, subdistrict 7-4. Specifically, each application proposes a new, 60-bed hospital in Oviedo, in Seminole County. At present, Seminole County has three acute care hospitals: CFRH is located in Sanford, near the Volusia County line in north Seminole County; Florida Hospital-Altamonte, located in Altamonte Springs, in south Seminole County to the west of Oviedo; and ORHS South Seminole Hospital, also located in south Seminole County to the west of Oviedo. For the period January, 2003, through December, 2003, CFRH reported 55.82 percent occupancy in its 208 acute care beds. By comparison, Florida Hospital-Altamonte reported 72.40 percent occupancy in its 258 acute care beds and ORHS South Seminole Hospital reported 53.80 percent occupancy in its 126 acute care beds. See CF 12 at Table 1-20. Florida Hospital-Altamonte and ORHS South Seminole Hospital are each a part of large hospital organizations that collectively dominate the market for hospital services in Seminole County and District 7. Both applicants propose to address the maldistribution of existing licensed acute care beds in Seminole County, with the greater need for acute care beds in south Seminole County. There are approximately 2,470 acute care beds in Orange County and approximately 600 acute care beds in Seminole County. Adventist Health System/Sunbelt, Inc., owns and operates seven general acute care hospitals under the "Florida Hospital" name in the greater Orlando area: Florida Hospital- Altamonte (258 acute care beds) in Seminole County; Florida Hospital-Orlando (702 acute care beds), Florida Hospital-East Orlando (144 acute care beds), Winter Park Memorial Hospital,8 and Florida Hospital-Apopka (50 acute care beds) in Orange County; and Florida Hospital-Celebration and Florida Hospital- Kissimmee in Osceola County. See Orlando Regional Healthcare System, Inc. vs. Agency for Health Care Administration, Case Nos. 02-0448CON and 02-0449CON, 24 FALR 714, 720 (DOAH November 18, 2002; AHCA December 31, 2002). In 2001, Florida Hospital and ORHS filed competing CON applications to build a 60-bed hospital in Oviedo, and each was preliminarily denied by AHCA. Both organizations challenged AHCA's determination, and, following an administrative hearing, AHCA awarded the CON to Florida Hospital. See Orlando Regional Healthcare System, Inc., supra. However, Florida Hospital never implemented its proposal, and the CON lapsed. ORHS is a large tertiary health care system in the greater Orlando area comprised of several health care facilities and one additional facility which will be opening this year, the Winnie Palmer Hospital for Women and Babies (Winnie Palmer), a 273-bed facility. It is anticipated that obstetrical and women services and infant care will relocate from the Arnold Palmer Hospital for Children and Women (Arnold Palmer) to Winnie Palmer in May 2006. ORHS and Florida Hospital offer outstanding cardiovascular services. (For calendar year 2004, Florida Hospital-Orlando and Orlando Regional Medical Center had 1,759 and 898 open heart surgery discharges, respectively, and rank one and four, respectively, among open heart surgery providers statewide.) ORHS owns and operates several general acute care hospitals in the greater Orlando area. South Seminole Hospital in Longwood, Seminole County, is a 206-bed hospital with approximately 126 acute care beds, and 80 psychiatric beds in a detached facility. Several ORHS facilities are located in Orange County. Orlando Regional Medical Center (ORMC), located in downtown Orlando, is a 600-bed general acute care hospital that provides tertiary care services and serves as a teaching hospital. ORMC is the only Level 1 trauma center in the greater Orlando area. M.D. Anderson Cancer Center is physically attached to ORMC and functions as the medical-surgical and radiation/oncology program for ORMC. Arnold Palmer is a 275-bed specialty hospital that provides subspecialty pediatric care, neonatology, and obstetrics. A $50 million construction project is underway. Lucerne Hospital is a 275-bed general acute care hospital, a few miles away from ORMC. Sand Lake Hospital is a 150-bed general acute care hospital (located near Disney). ORHS previously owned St. Cloud Hospital in Osceola County, but sold an 80 percent interest in St. Cloud to HMA in November, 2005. See Findings of Fact 6 and 13. South Lake Hospital is a smaller, 100-bed general acute care hospital located in Lake County, Florida, that is digitally linked to ORMC. ORHS owns a 50 percent interest in and manages this hospital. The South Lake Hospital District owns the remaining interest. ORHS has approximately 40 physicians who practice or have offices within the Oviedo market. CFRH has one full-time physician practicing within the area. See Finding of Fact 30. Approximately 1,700 physicians have privileges at ORHS facilities. If the Oviedo HMA project is approved, ORHS expects to regain tertiary care referrals now lost to the Florida Hospital system. Florida Hospital and ORHS healthcare facilities dominate the market for hospital services in Orange and Seminole Counties. The Oviedo area: demographics, utilization of existing providers, and applicant service area and occupancy projections The City of Oviedo is located in south Seminole County, east of Longwood (where South Seminole Hospital is located) and Altamonte Springs (where Florida Hospital-Altamonte is located), and approximately 10 to 15 miles from downtown Orlando. The City of Oviedo is included within zip codes 32765 and 32766, although there are other adjacent zip codes to the northeast 32732 (Geneva) and to the west 32708 (Winter Springs). See CF 80. The Oviedo area is growing. In 2004, the total population for the four zip codes was 106,789 and projected to increase 12.6 percent (to 120,227) by 2009. (The population is projected to increase 9.3 percent statewide and 11.2 percent in Seminole County by 2009.) The population in zip code 32765 was 49,985 in 2004, projected to grow to 57,742 in 2009, or 15.9 percent. In zip code 32766, the population was 9,068 in 2004, projected to grow to 11,302 in 2009, or 24.6 percent. Population in the Winter Springs and Geneva areas are projected to increase 7.1 percent and 8.5 percent, respectively, by 2009. The Oviedo area is described as "a young, family oriented suburb of Orlando" or more generally as a suburban community. The parties have stipulated to the need for a new, 60- bed acute care hospital in Oviedo. Oviedo HMA proposes to serve a four zip code area, i.e., zip codes 32765, 32766, 32708, and 32732 and projected that 95 percent of its utilization will come from within these zip codes. OV 27. Oviedo HMA projects occupancy levels to be 57.9 and 75 percent for Years 1 and 2, respectively. (Central Florida's expert opined that Oviedo HMA's occupancy levels for Years 1 and 2 would be 54 and 60 percent, respectively. CF 25-15.) Oviedo HMA's projected occupancy levels for Year 2 may be optimistic for a start-up hospital, but nevertheless appear achievable, in part, in light of the collaborative arrangement. Oviedo HMA excluded from its market area, zip code 32773 because of its proximity to CFRH and zip code 32792 because of its proximity to Florida Hospital-Winter Park Memorial Hospital in Orange County. The southernmost zip codes, 32817, 32826, and 32820 (east of zip code 32792) were excluded because of current patient travel patterns. At present, the Oviedo area is served almost exclusively by either Florida Hospital or ORHS. Oviedo area residents are out-migrating to Orange County for obstetrical and emergency room services. (For calendar year 2003, approximately 44 percent of Seminole County residents received acute care services outside of Seminole County.) Florida Hospital and ORHS serve the majority of the out-migrating residents. In 2004, for the four zip codes of Oviedo HMA's proposed service area (32765, 32766, 32708, and 32732), Florida Hospital facilities had a combined 61.7 percent non-tertiary market share, and ORHS facilities had a combined 30.9 percent non-tertiary market share. Winter Park Memorial Hospital provided the most non-tertiary discharges (1,771 or 20.7 percent), followed by Florida Hospital-Orlando (1,647 or 19.2 percent), Florida Hospital-Altamonte (1,335 or 15.6 percent), and South Seminole Hospital (1,183 or 13.8 percent). CFRH accounted for 309 or 3.6 percent of the discharges. CF 25-6 and 25-9. In 2004, Florida Hospital facilities had a combined 18,701 or 54.1 percent of the "non-tertiary" discharges of patients residing in Seminole County, and ORHS facilities had a combined 9,473 or 27.4 percent of such discharges. By comparison, CFRH had 5,131 or 14.8 percent of such discharges. CFRH 25-2 and 25-3. Central Florida proposes to serve a ten zip code service area. Central Florida's primary service area consists of four zip codes in Seminole County, 32765 (Oviedo), 32766 (Oviedo), 32708 (Winter Springs), 32773, just south of CFRH and northeast of ORHS South Seminole Hospital, and zip code 32792 in Orange County. (Other cases from Seminole County are also included.) OV 23 and 26; CF 12, Table 1-15, at 1-25. Central Florida's secondary service area consists of two Seminole County zip codes 32707, south of zip code 32708 and just east of Florida Hospital-Altamonte, and zip code 32732 (Geneva and in the northeastern portion of Seminole County, and Orange County (bordering Seminole County to the north) zip codes 32817, 32826, and 32820, running west to east from zip code 32792. (Other cases from Orange County are also included.) Id. In five zip codes (out of ten) of Central Florida's proposed primary service area (32708, 32765, 32766, 32773, and 32792, which includes Winter Park Memorial Hospital on the western edge), see OV 27 and CF 12 at 1-28, in 2004, Florida Hospital facilities had a combined 63.9 percent non-tertiary market share and ORHS facilities had a combined 25.0 percent non-tertiary market share. Winter Park provided the most non- tertiary discharges (4,037 or 26.7 percent), followed by Florida Hospital-Orlando (2,961 or 19.6 percent), Florida Hospital- Altamonte (1,938 or 12.8 percent), and ORHS South Seminole Hospital (1,619 or 10.7 percent). CFRH's market share was 9.2 percent or 1,389 discharges. CF 25-7, 25-8, and 25-11. For Years 1 (2008) and 2 (2009), Central Florida projects that it will receive approximately 83 percent of its total cases from its primary service area, including cases from other Seminole County zip codes, of which approximately 75 percent are expected from the five zip codes, and approximately 17 percent from its secondary service area. CF 12 at Table 1- 15. Central Florida's projected occupancy levels for Years 1 and 2 were approximately 60 and 63 percent, respectively, and approximately 75 percent by Year 5 (2012). CF 12, Tables 1-15 and 1-16 at 1-25, 1-26, and 1-28; CF 42. Central Florida also provided adjusted numbers (downward) for Years 1 and 2 to account for the start-up phases of opening the new hospital, which yielded projected occupancy levels of approximately 45 and 55 percent, respectively. Central Florida's revenue projections were based on these adjusted occupancy levels. Central Florida also projected 66.4 percent occupancy for Year 3. Id. See also CF 12, Schedules 5 and 7A and CF 42. (Oviedo HMA's expert projected 61 percent occupancy for Year 5 for Central Florida.) Central Florida's projected occupancy levels for Year 5 appear reasonable. If Oviedo HMA's CON application is approved, the market share for Oviedo HMA's primary service area for the new Oviedo HMA hospital, in conjunction with ORHS facilities for 2009 (Year 2), is projected to be approximately 50 to 54 percent, with Florida Hospital facilities market share reduced to approximately 41 to 45 percent.9 For 2009 (Year 2), if Central Florida's CON application is approved and the five zip codes are used to determine market share, the market shares for Florida Hospital, ORHS, CFRH, Central Florida/Oviedo, and other facilities are projected to be 55.5 percent, 21.4 percent, 6.6 percent, 13.5 percent, and 3.0 percent, respectively. CF 25-13. The Proposals and applicants' commitment Central Florida's proposal Central Florida proposes to build a new, 60-bed hospital in Oviedo (on a purchased site) through the transfer (and delicensure) of 60 acute care beds from its existing hospital. The proposed hospital is modeled after and is an enlarged version of West Marion Community Hospital, a licensed and operational HCA facility in Ocala, Florida. The proposed hospital is made up of 173,335 gross square feet, with a projected construction cost of $36,400,350 or $210 per gross square foot. The total project cost is $93,630,559. The licensed bed complement includes 48 general medical-surgical beds and 12 Intensive Care Unit (ICU) beds. An obstetrics unit comprised of six labor-delivery-recovery (LDR) rooms will be located on the second floor (LDRs are not licensed beds). The twelve medical-surgical beds adjacent to the LDR rooms are "swing" beds that may be used for either general medical-surgical patients or as post-partum beds, as the need may require. All patient rooms in Central Florida's proposed hospital will be private rooms. In addition to general medical services and obstetrics, the services to be provided by the hospital will include emergency services, imaging, diagnostic cardiac catheterization, mammography, radiology, ultrasound, nuclear medicine, bone density imaging, surgery (including general and orthopedic surgery), and endoscopy. The design accommodates horizontal expansion of departments on the first floor by using "soft space," and the addition of 12 beds on both the second and third floors. The hospital can also be expanded vertically. A medical office building is planned to be phased in during construction. As a condition of its CON, Central Florida agreed to provide 7.8 percent of total patient days to Medicaid patients and 1.74 percent of total patient days to charity patients. Central Florida intends to provide OB services, but not as a condition of approval. Central Florida's proposal has the support of its parent organization, HCA Inc. The project involves a capital expenditure of greater than $10 million and is subject to formal approval by HCA following the award of the CON. However, Chuck Hall, President of HCA's North Florida Division, stated that HCA's senior management understands the Central Florida proposal, and Central Florida can be confident of approval. Oviedo HMA contends that Central Florida did not address in its CON application the impacts (loss of cases or cannibalization) to CFRH if Central Florida's CON application is approved. There is evidence that the loss of 60 beds could require CFRH to add back beds or run in excess of capacity and that the loss of cases, such as OB cases, could have an impact on CFRH. During the hearing, Central Florida persuasively proved that, if its CON application is approved, the overall impact on CFRH would be minimal.10 Oviedo HMA's proposal Oviedo HMA proposes to build a new, 60-bed acute care hospital in Oviedo. The project involves 133,081 square feet at a construction cost of $26,616,200, or $200 per gross square foot. The total project cost is $62,734,334. HMA is committed to fund the project, even if it is as high as $82 million, so long as ORHS provides its financial and collaborative commitment as reflected herein. Oviedo HMA proposes to offer a full range of primary and secondary non-tertiary hospital services, such as medical- surgical care, emergency room case, ambulatory surgical care, cardiac catheterization laboratory services, outpatient services, etc., and expressly agrees to "provide Obstetrical Services." The floor plan for the hospital is taken from the replacement facility for Heart of Florida Regional Medical Center in Haines City, Florida, which HMA constructed in 1997. The design includes 47 medical-surgical beds, eight ICU beds, and five dedicated post-partum beds. The hospital will also have four LDR beds. The project includes 12 emergency treatment rooms and two non-licensed observation beds. All patient rooms will be private rooms. The hospital is designed to be expanded horizontally (for example, expanding the Emergency Department), and to be expanded vertically from three to five floors. While disputed by Central Florida, the proposed hospital, with surface parking, can be constructed on 15 to 20 acres, which can also accommodate future expansion. Additional acreage may be needed to accommodate a full build-out of a five- story hospital and additional surface parking. There are currently no plans for a medical office building on-site and additional acreage would be needed. Oviedo HMA did not propose a specific provision of health care services to Medicaid patients and the medically indigent. Rather, Oviedo HMA "commits to accept all Medicaid and Indigent [sic] patients that are clinically appropriate for services offered by Oviedo HMA, Inc." Oviedo HMA's proposal does not enjoy the unconditional support of its parent organization. Rather, the proposal is contingent upon a collaborative effort between Oviedo HMA and ORHS, whereby ORHS has agreed to contribute 20 percent of the project cost of Oviedo HMA's proposal and, in turn, receives 20 percent of the profits of the proposed hospital. HMA formed the belief that the Oviedo market cannot be penetrated by a hospital provider not affiliated with either Florida Hospital or ORHS, and HMA would not attempt to enter the Oviedo market on its own. Each applicant's experts found flaws with the competing applicant's plans for their respective hospitals. Each of the flaws can be remedied prior to construction. Land for the proposals Central Florida In June 2005, Central Florida purchased approximately 27 acres for its proposed hospital, at a cost of $7,864,439, within the $8.2 million budgeted for land in its CON application. The site comprises seven contiguous parcels centrally located in the Oviedo area (within zip code 32765), situated between State Road 417 and State Road 426 and between Red Bug Lake Road and Oviedo Marketplace Boulevard (south-to- north). Four of the seven parcels are currently within the City of Oviedo and Central Florida has requested the City of Oviedo to annex the remaining parcels. The proposed site is approximately ten miles from CFRH. While the subject of some criticism by Oviedo HMA, the site does not pose any significant road access issues which can not be reasonably cured. An amendment to the City of Oviedo's comprehensive plan is required before the site can be developed for hospital use. Central Florida filed its application in October, 2005, and a decision is expected in August or September, 2006. Having a hospital on the site proposed by Central Florida would provide the residents of the Oviedo area with a centrally located hospital site. Central Florida's budget for land costs and site preparation are reasonable. Oveido HMA Oviedo HMA budgeted $5.5 million for the acquisition of the hospital site in the Oviedo area. $3.4 million has been allocated for site development. Oviedo HMA does not anticipate purchasing any land for the project unless its CON application is approved. Oviedo HMA's experts reviewed several sites, which may be potentially suitable for the hospital. See OV 17A and 17-1 through 17-10. Mr. Harling, an expert in civil engineering and commercial site development, and Mr. Axel, an expert in commercial real estate sales, were quite familiar with the real estate market and development potential (for the proposed Oviedo HMA hospital) of several parcels in the Oviedo area. They did not perform a formal feasibility study or an estimate of the probable cost of site development for the sites. Mr. Harling was aware of the nature of the project, a 60-bed hospital, and some details regarding the parcels he examined, such as the existence of utilities and drainage outfall systems, but was not aware of the square footage of the proposed hospital and had not reviewed a site or floor plan. Despite challenges for the development of specific sites, such as the existence of wetland areas, and challenges in purchasing a site within the budgeted amount, based upon his review of the sites and assumptions regarding, in part, the amount of impervious coverage required, he opined that one or more of the parcels was suitable for the planned hospital and that $170,000 per acre for 20 acres was reasonable. The uncertainty regarding the location of the hospital site raises some concerns given Oviedo HMA's primary service area. A new hospital centrally located within the Oviedo area would be optimal to meet the needs of those residents. There was persuasive evidence that Oviedo HMA will be able to purchase a suitable hospital site at the cost reflected in the CON application. However, there are reasonable concerns whether a 15 to 20-acre site can accommodate a fully-expanded hospital with five floors, a medical office building, and any required additional parking. (Oviedo HMA does not have plans to build a medical office building on the 15 to 20-acre site. Such a building would require additional acreage.) Central Florida's proposal receives an edge here because it has already purchased a site which is centrally located for a hospital to serve the Oviedo area. Section 408.035(1), Florida Statutes - The need for the health services being proposed The parties stipulated to the need for a new, 60-bed acute care hospital in Oviedo, Seminole County, Florida, AHCA District 7, subdistrict 7-4. Section 408.035(2), Florida Statutes - The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the district of the applicant Quality health care services proposed by the applicants are available to the residents of District 7, Seminole County, and in particular, the Oviedo area. As noted herein, the health care market in Orange and Seminole Counties is dominated by Florida Hospital and ORHS. The utilization of existing facilities in Seminole County is acceptable notwithstanding the maldistribution of acute care beds in Seminole County. Seminole County residents will continue to outmigrate from Seminole County to Orange County for tertiary care services if Oviedo HMA's project is approved. This outmigration may continue even if Central Florida's project is approved, although some curtailment would be expected in time. Neither applicant is favored by this criterion. Section 408.035(3), Florida Statutes - The ability of the applicant to provide quality of care and the applicant's record of providing quality of care Central Florida (specifically CFRH) has a history of providing high quality of care to its patients. CFRH has received awards for its health care services. Central Florida has the ability to provide quality of care should its project be approved. HMA hospitals have also been honored with several awards and recognitions for quality of care. Oviedo HMA, by virtue of its affiliation with HMA-affiliated hospitals and collaboration with ORHS, has the ability to provide high quality of care should its project be approved. Oviedo HMA proposes to develop its hospital through a clinical and financial collaborative effort with ORHS using ORHS as a tertiary care referral partner and incorporating ORHS' resources in developing a quality program. Both applicants expect that any patients needing tertiary care will be sent to ORHS (for Oviedo HMA hospital patients) or to CFRH (for Central Florida patients). It is anticipated that if certain tertiary care services are not offered at CFRH, Central Florida hospital patients would be referred to Florida Hospital or ORHS. The Oviedo HMA/ORHS collaborative effort offers advantages over the Central Florida/CFRH (or elsewhere) referral network. There is some evidence that hospital transfers within affiliated systems may be quicker and easier than from competing systems. Another advantage is the ability of using an integrated IT system among ORHS affiliated hospitals. It is often cumbersome for non-affiliated hospitals to exchange patient data electronically. Conversely, the transfer of patient information to and from CFRH and the new Central Florida hospital, if approved, will facilitate patient care between these hospitals. Certain tertiary services offered by and through ORHS may afford Oviedo residents a greater range of services than those offered by CFRH. This criterion favors Oviedo HMA in light of its collaborative arrangement with ORHS. Section 408.935(4), Florida Statutes - The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation The parties stipulated that the applicants have sufficient funds available for capital and operating expenses, for project accomplishment and operation. Central Florida questioned the reasonableness of Oviedo HMA's land cost projection. The parties also stipulated that the applicants' proposed staffing is adequate and that the proposed average annual salaries are reasonable for their respective hospitals. Oviedo HMA questions whether Central Florida's CON application failed to include the appropriate Schedule 6, whereas Central Florida reserved the right to question whether Oviedo HMA accurately reflected proposed staffing expenses in Schedule 8A. The ability of each applicant to attract the necessary medical and clinical staff necessary to implement their respective hospitals is also is dispute. Both applicants have the ability to recruit and retain nursing and other related medical personnel, including physicians. Oviedo HMA has an edge in recruitment of physicians and nurses by virtue of its collaboration with ORHS and given existing physician referral patterns. Central Florida has identified a need to recruit additional physicians in several practice areas, although they appear to have been recently successful in recruiting physicians for specialty services such as neurosurgery. Both applicants can appropriately manage and operate their respective hospitals. Central Florida's proposed hospital will have its own management team and will be administered separate and apart from CFRH. Oviedo HMA will also operate the proposed hospital notwithstanding the intended collaboration with ORHS. Oviedo HMA's projected land cost is reasonable. Also, Central Florida's Schedule 6 and Oviedo HMA's Schedule 8A are appropriate. By stipulation, the applicants have the ability to fund their respective projects and their construction and equipment costs are reasonable. This criterion is neutral except for Central Florida's purchase of a centrally located site. See Finding of Fact 173. Section 408.035(5), Florida Statutes - The extent to which the proposed services will enhance access to health care for residents of the service district The parties stipulated that the hospitals proposed by the applicants will enhance health care for residents of the Oviedo area. At issue was which hospital project will better enhance such access. Both applicants proposed similar health care services, which are needed in the Oviedo community. As noted elsewhere in this Recommended Order, approval of the Central Florida proposal would afford patients and physicians with another choice of health care provider. It is expected that patients receiving health care services at a Central Florida hospital in Oviedo will be able to access certain tertiary care services (such as open heart surgery) at CFRH, and other tertiary care facilities. On the other hand, the Oviedo HMA proposal does not afford another choice to patients and physicians in the area in any meaningful way, given the current market share of ORHS in the Oviedo area and the expected collaborative effort. This negative is out-weighed by the prospect that patients accessing an Oviedo HMA hospital would be expected to access a full array of tertiary care services at ORHS facilities given the collaborative nature of the relationship. Both proposals would enhance access to health care for residents of the Oviedo area. But the Oviedo HMA project has a significant comparative edge, and it is this edge which ultimately favors approval of the Oviedo HMA project when all statutory and rule criteria are considered. Section 408.035(6), Florida Statutes - The immediate and long-term financial feasibility of the proposals Immediate or Short-term financial feasibility 129. Generally, immediate or short-term financial feasibility refers to the ability of the applicants to fund construction and start up of the proposed project. Each applicant has this ability. Long-term financial feasibility Long-term financial feasibility refers to the ability of the project to break even or show a profit within a reasonable period in the future. There is no AHCA rule that states profitability must be shown within a specific period of years. Generally, applicants project financial feasibility within two years of operation. This may be due, in part, because AHCA requires detailed financial projections, including a statement of the projected revenue and expenses for the first two years of operation after completion of the proposed project. See § 408.037(1)(b)3., Fla. Stat. CON applicants define their financial projections within these general parameters. Where there are two or more competing applicants and one demonstrates financial feasibility within two years and the others do not demonstrate financial feasibility until subsequent years, the competitive advantage often goes to the applicant showing a profit in year two, although AHCA has approved CON applications which projected profitability in later years. OV 69 at 34; CF 84 at 25. The financial projections of each applicant were based upon the hospital utilization projections discussed previously. To the extent the utilization projections were overstated, this would of course effect the financial projections. Each applicant presented evidence to demonstrate the reasonableness of their own financial projections, and offered criticism of the financial projections of the other applicant. A. Oviedo HMA Projections Oviedo HMA projects that it will achieve a net profit in Year 1 of operation of $82,000 (after taxes) and a net profit in Year 2 of $2.4 million (after taxes). The payor mix assumptions in Schedule 7A were derived from existing (historical) discharges generated from the zip codes in the primary service area. Oviedo HMA used three HMA hospitals in Florida, i.e., Brooksville Regional Hospital, Pasco Regional Medical Center (120-bed, excluding newborn nursery, hospital), and Sebastian Hospital, as proxy or target hospitals for the basis of the expense projections in the financial pro formas. (Brooksville and Spring Hill report on a consolidated basis.) Fiscal year 2003 financial data on these proxy hospitals was taken from AHCA Prior Year Actual Reports. See Ov 38. This was the most recent data available to Oviedo HMA's expert at the time the financial portions of the CON application were prepared. These reports are a detailed source of data submitted to AHCA and certified as accurate.11 Each of the three hospitals was profitable for the reporting fiscal year. A hospital's occupancy refers to the average head county divided by the number of days. Average daily census refers to the average number of patients in the facility over the year on average, generally a year. The projected occupancy for the Oviedo facility is 57.9 percent in Year 1 (2008) and 75.1 percent in Year 2 (2009). The average occupancy for the three proxy hospitals was between 55 and 59 percent. Central Florida's expert estimated occupancy levels (for the Oviedo HMA project) of 54 and 69 percent for Years 1 and 2. Compare OV 12, Schedule 5 - Projected Utilization Assumptions with CFRH 25-15. (In Year 2, the occupancy for the Oviedo HMA hospital is projected to be higher than the three proxy hospitals.)12 Central Florida criticized the use of the three proxy hospitals as not appropriate, in part, because one of the hospitals did not include a cardiac catheterization lab, and another did not have an OB program, which are services that will be available at the Oviedo HMA hospital. However, the evidence demonstrates that the three proxy hospitals were reasonable, as these hospitals included one hospital (Pasco Regional Medical Center) which was at the highest end of HMA's cost experience, and two hospitals that were in the middle of HMA's overall cost experience. It does not appear that HMA attempted to choose hospitals with lower- cost experience in an effort to overstate the expected profits. Use of "proxy hospitals" for cost experience is a common methodology, and the hospitals selected appear reasonable. Central Florida also claimed that Oviedo HMA's projected costs were understated because there was not a specific allocation for "fringe benefits" (estimated at 22 percent of salaries) added to the salary costs extrapolated from the FTE and salary projections in Schedule 6.13 Oviedo HMA's financial planner agreed that the financial model he utilized did not make a "straight line" mapping of the Schedule 6 FTEs and salary projections into Schedule 8A statement of expenses. However, an accounting of all salary and wages, as well as fringe benefits, was included in Oviedo HMA's Schedule 8A, based on the actual experience of the three proxy hospitals as reflected in the Prior Year Actual Reports. Each of the proxy hospitals is required to report all of its hospital costs, including salaries and fringe benefits, in the Prior Year Actual Reports, and all costs from these proxy hospitals were included in Oviedo HMA's financial model. Although the Prior Year Actual Reports do not have a specific "fringe benefits" line item, these expenses are included in the reports either under the columns for "salary and wages" or for "other" expenses. All of the costs were carried over into the financial model. The applicant also conducted a reasonableness test when the financial model and Schedule 8A were prepared, by comparing the total salaries and wages from the three proxy hospitals ($15.7 million) versus the extrapolation of total salary and wages from Schedule 6 ($15 million). The amount allocated in the model and placed on Schedule 8A for salaries and wages was more than sufficient to cover all salaries and wages on Schedule 6. Additional allocation for fringe benefits was included within the "other" cost centers in the Prior Year Actual Reports which also carried over to Schedule 8A. Oviedo HMA's expert also conducted a series of other "sensitivity analysis" verifying that the costs included on Schedule 8A for salaries and wages and fringe benefits, and other expenses were reasonable. Central Florida criticized the "sensitivity analysis" claiming one year of inflation for expenses was omitted in the analysis. However, even if accepted as true, applying an inflation adjustment of 3.5 percent for one additional year of expenses, does not materially change any of the sensitivity analysis, because revenues would also have to be inflated forward for the additional year. Further, Oviedo HMA's Schedule 8A included $15.7 million for salary and wage expenses, and included additional costs for fringe benefits in other line items. Central Florida also criticized Oviedo HMA for not including any interest expense to account for financing the proposed project. However, no interest is anticipated, as the project will be funded by the parent company through cash on hand and operating cash flow without borrowing; the company does not charge interest to its affiliates (even though for tax accounting and external audit reports it may impute interest to the affiliates). Moreover, to the extent any interest would be hypothetically imputed to the project as overall corporate overhead, it is captured in the financial pro formas through the management fee which was allocated as an expense in the pro formas. Moreover, even if Central Florida's claims of over $1 million in omitted expenses are accepted as valid, the project is likely to show a profit in the second year of operation. In sum, the financial model utilized by Oviedo HMA was a reasonable approach to financial forecasting. Given the Oviedo HMA's occupancy projections, the hospital is likely to be financially feasible in the long-term and likely show a profit by the second year of operation. B. Central Florida's Projections The revenues and expenses projected for the proposed hospital are based on the experience of CFRH's existing facility, with adjustments made to reflect the service lines and payor mix of the proposed hospital. Based on this record, in the past, it appears that CON applicants for a new hospital generally have projected financial feasibility by the first two or three years of operation. This does not necessarily mean that they have been successful at achieving these projections, only that the projections have been made. Central Florida projected that the proposed hospital, before taxes, will have net income losses before taxes of: $8,978,068 in Year 1; $6,641,454 in Year 2; $3,318,963 in Year 3; and $1,140,062 in Year 4 of operation. In Year 5, Central Florida projects a profit (net income before taxes) of $1,970,340 and a profit (net income after taxes) of $1,162,501 at 75 percent occupancy. CF 12 at Table 8A-2. (Central Florida projected profitable years (Years 1 through 5) on an EBDITA (earnings before depreciation, interest, taxes, and amortization) basis. Id.) Despite the projected losses for the first four years of operation of the project, HCA, by its representatives, considers the project to be financially feasible in the long- term and is committed to the project. The assumptions made for the revenue and expense projections are reasonable, notwithstanding criticisms by Oviedo HMA which have been considered. It is concluded that Central Florida's proposed hospital is likely to be financially feasible in the long-term and by Year 5.14 This criterion is neutral. Section 408.035(7), Florida Statutes - The extent that the proposal will foster competition that promotes quality and cost- effectiveness The greater Orlando area is a competitive market. Nevertheless, Mr. Gregg, for AHCA, stated that he would want to see more diversity in the greater Orlando market. ORHS and Florida Hospital are large health care provider systems. Notwithstanding the potential improvement of the delivery of health care services to the residents of the Oviedo area, the net impact of a 60-bed acute care hospital is going to be minimal when compared to these systems. Currently ORHS, Florida Hospital, and to a much lesser extent CFRH compete for patients from the Oviedo area. ORHS and Florida Hospital are the dominant providers. If Oviedo HMA were sponsoring the project alone, it could be said that approval of its project would bring a new provider to the market. However, this is not the case. Notwithstanding the day-to-day management of the new hospital by Oviedo HMA, the expected collaborative arrangement between Oviedo HMA and ORHS, discussed in Oviedo HMA's CON application and presented as a significant feature at the final hearing, negates the suggestion that Oviedo HMA will be a new provider. This is especially so given the expected referrals to ORHS. Central Florida argues that its proposal would release the strangle-hold of Florida Hospital and ORHS on the greater Orlando area, including the Oviedo area. The presence of Central Florida would give the Oviedo area residents (and physicians) another choice for acute care related health care services and, in time, could be expected to cause a re-direction of patients needing certain tertiary care services away from ORHS and Florida Hospital, to CFRH. Nevertheless, the applicable statutory review criteria specifically states that it applies to competition that promotes "quality" and "cost effectiveness." ORHS and Florida Hospital provide high quality of care. No persuasive evidence was presented that either Oviedo HMA's or Central Florida's proposal will foster competition that will promote quality of care to any significant degree. As to cost-effectiveness, while there is an argument that having additional choices will enhance cost-effectiveness, it was not demonstrated by either applicant in this case. There was no persuasive analysis offered of the current costs of healthcare in the Oviedo area and what impact, if any, the addition of Oviedo HMA or Central Florida would have on those costs. The best that can be said about enhancement in competition is that another provider might have some impact on managed care rates. Without specific detailed analysis, this evidence can be given very little weight. Also, there is insufficient evidence to say which applicant would more likely impact managed care rates. In light of the statutory criterion, Central Florida and Oviedo HMA did not demonstrate that their proposals should be given any advantage under this criterion. Section 408.035(8), Florida Statutes - The costs and methods of proposed construction, including the costs and construction of energy provision and the availability of alternative, less costly, or more effective methods of construction The parties stipulated that each party meets this criterion and that costs are not in dispute in this proceeding. However, each party reserved the right to argue their design was better and the impact of cost on financial feasibility. Central Florida also reserved the right to argue that its proposal should be more favorably reviewed comparatively because it has purchased land in the Oviedo area and because Oviedo HMA cannot purchase enough land in the Oviedo area at the price reflected in the CON Application. Both applicants project reasonable costs and methods of construction and satisfy this criterion. Regarding this criterion, despite some criticism, Central Florida should receive an edge because it has purchased a desirable site, which is centrally located in the Oviedo area. Section 408.035(9), Florida Statutes: Applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent The parties stipulated that HMA's Florida hospitals and Central Florida have historically provided significant health care services to Medicaid patients and the medically indigent. Central Florida proposes to provide 7.8 percent of total patient days to Medicaid patients and 1.74 percent of total patient days to charity patients, as a condition of its CON. By comparison, Oviedo HMA did not propose a specific percentage of patient days dedicated to Medicaid or charity patients. Rather, Oviedo HMA commits to accept all Medicaid and indigent patients that are clinically appropriate for services offered by Oviedo HMA. Central Florida should receive a comparative edge regarding this criterion. Section 408.035(10), Florida Statutes - The applicant's designation as a Gold Seal Program nursing facility pursuant to Section 400.235, Florida Statutes, when the applicant is requesting additional nursing home beds at that facility The parties stipulated that this criterion is not applicable.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order approving Oviedo HMA, Inc.'s CON application No. 9807P and denying Central Florida Regional Hospital, Inc. d/b/a Central Florida Regional Hospital's CON application No. 9805. DONE AND ENTERED this 23rd day of August, 2006, in Tallahassee, Leon County, Florida. S CHARLES A. STAMPELOS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of August, 2006.
The Issue Whether Florida Hospital Medical Center is entitled to reimbursement in the amount preliminarily determined by the Department of Financial Services, Division of Workers’ Compensation, in a reimbursement dispute regarding bills submitted by Florida Hospital Medical Center to Macy’s Claims Services and Amerisure Mutual Insurance Company for medical services provided to two individuals involved in work-related accidents; and Whether Macy’s Claims Services and Amerisure Mutual Insurance Company properly adjusted those bills of Florida Hospital Medical Center in accordance with the requirements of Florida’s Workers’ Compensation law and applicable rules.
Findings Of Fact Florida Hospital is a full-service, not-for-profit hospital system located in Orlando, Florida, that operates a smaller satellite hospital in Winter Park, Florida. Florida Hospital is a “health care provider” within the meaning of Section 440.13(1)(h), Florida Statutes. Macy’s and Amerisure are “carriers” within the meaning of Sections 440.02(4) and 440.02(38), Florida Statutes. The Department has exclusive jurisdiction to resolve disputes between carriers and health care providers regarding payments for services rendered to injured workers, pursuant to Sections 440.13(7) and 440.13(11)(c), Florida Statutes. Qmedtrix is a medical bill review company.3/ Case No. 09-6871 R. P., an employee of Macy’s, slipped and fell at work on May 20, 2009, and presented to Florida Hospital Winter Park for evaluation and treatment where medical personnel documented vomiting, brain attack, and brain trauma. After evaluation and treatment, patient R. P. was diagnosed with a bruise to the head and released the same day. On September 16, 2009, Florida Hospital submitted its bill for services provided to R. P. totaling $5,547.20 to Macy’s for payment, utilizing Form DFS-F5-DWC-90, also known as UB-04 CMS-1450, identifying the charges billed for each line item by revenue code and HCPS or CPT codes. Macy’s forwarded the bill to its workers’ compensation medical bill review agent, Qmedtrix. Qmedtrix reviewed the bill by comparing the procedure codes and diagnosis codes reported by Florida Hospital with examples in the CPT book for billing of emergency department services. Florida Hospital reported ICD diagnosis code 920, which reads “contusion of face, scalp, or neck.” Use of this code means R. P. presented with a bruise or hematoma, but not a concussion. Florida Hospital also reported ICD diagnosis code 959.01 (“head injury, unspecified”) which also means that R. P. did not present with a concussion, loss of consciousness, or intracranial injuries. Florida Hospital’s bill included a charge of $2,417 with CPT code 99285 for emergency department services. The bill also included separate charges for a head CT, and various lab tests, drugs, and IV solutions. According to Mr. von Sydow, the bill was sent through Qmedtrix’s computer program for review, and was flagged for review by a physician. Mr. von Sydow further testified that one of Qmedtrix’s medical director’s suggested that the CPT code of 99285 be reduced. The medical director, who Mr. von Sydow said reviewed the bill, however, did not testify and no documentation of his recommendation was submitted at the final hearing. Qmedtrix determined that Florida Hospital should have used CPT code 99284 when billing for the emergency services rendered instead of CPT code 99285. Qmedtrix found that, while the hospital billed $2,417 with CPT code 99285, its usual charge for an emergency department visit billed with CPT code 99284 is $1,354. Macy’s paid Florida Hospital a total of $2,683.55, which amount included $1,010.24 for the emergency department visit based on [approximately] 75 percent of Florida Hospital’s usual charge for CPT code 99284. The payment was accompanied by an EOBR. The EOBR Macy’s (or its designated entity)4/ issued to Florida Hospital for services rendered to R. P. identifies the amount billed by Florida Hospital as to each line item in a column designated “Billed,” and has columns designated as “BR Red,” “PPO Red,” “Other Red,” and “Allowance,” each containing an amount for each line item in the “Billed” column. There is also a column entitled “Reason Code” which sets forth codes, as required by Florida Administrative Code Rule 69L-7.602(5)(o)3., that are supposed to explain the reason for adjustment of any line item.5/ The “reason code” set forth adjacent to the $2,417.00 billed by Florida Hospital for emergency department services is “82,” which means “Payment adjusted: payment modified pursuant to carrier charge analysis.” There is also another code, “P506” listed in the “Reason Code” column adjacent to the same line item, which, according to the key provided on the EOBR, means “[a]ny questions regarding this Qmedtrix review, please call (800)-833-1993.” “P506,” however, is not a “reason code” listed in Florida Administrative Code Rule 68L- 7.602(5)(o)3. The EOBR does not advise that the bill was adjusted because of a determination that Florida Hospital should have used CPT code 99284 when billing for the emergency services rendered instead of CPT code 99285 as originally billed. Upon receipt of the payment and the EOBR, Florida Hospital timely filed a Petition for Resolution of Reimbursement Dispute with the Department pursuant to Section 440.13(7)(a), Florida Statutes, and Florida Administrative Rule 69L-31, contending that payment should be at 75 percent of its total charges, and citing the Florida Workers’ Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). Qmedtrix timely filed a response to Florida Hospital’s petition on behalf of Macy’s pursuant to Section 440.13(7)(b), Florida Statutes, and Florida Administrative Code Rule 69L-31, asserting that correct payment should be determined based on, first, whether the hospital in fact billed its usual charge for the services and, second, whether the hospital’s charges are in line with the charges of other hospitals in the same community, citing One Beacon Insurance v. Agency for Health Care Administration, 958 So. 2d 1127 (Fla. 1st DCA 2007) for the proposition that “SB-50 amended section 440.13 . . . [revealing] legislative intent to eliminate calculation of a “usual and customary charge” based on the fees of any one provider in favor of a calculation based on average fees of all providers in a given geographic area.” Qmedtrix’s response on behalf of Macy’s also contended that “upcoding” and “unbundling” were additional grounds for adjustment or disallowance that were not identified on the EOBR. The response explained that “upcoding” refers to billing with a procedure code that exaggerates the complexity of the service actually provided; that CPT codes 99281 through 99285 describe emergency department services; that the CPT book includes examples of proper billing with these codes; that the hospital billed $2,417 with CPT code 99285; and that the CPT book describes an “emergency department visit for a healthy, young adult patient who sustained a blunt head injury with local swelling and bruising without subsequent confusion, loss of consciousness or memory deficit” as an example of proper billing with CPT code 99283. The response requested a determination by the Department that Macy’s payment equaled or exceeded the amount usual and customary for CPT code 99283. On November 13, 2009, the Department, through its Office of Medical Services (OMS) issued a determination (Determination in 09-6871) which found, in pertinent part: The petitioner asserts that services provided by Florida Hospital Medical Center to the above-referenced injured employee on May 20, 2009, were incorrectly reimbursed. Florida Hospital Medical Center billed $5,547.20 and the carrier reimbursed $2,683.55. The petition does not address a contract and does not reflect a contract discount in the calculation of requested reimbursement. The Carrier Response to Petition for Resolution of Reimbursement Dispute disputes the reasonableness of the hospital’s “usual and customary charges”, maintains the petitioners’ charges should be based on the average fee of other hospitals in the same geographic area, references a manual not incorporated by rule, and provides CPT codes that the respondent alleges are correct. There are no rules or regulations within Florida’s Workers’ Compensation program prohibiting a provider from separately billing for individual revenue codes. The carrier did not dispute that the charges listed on the Form DFS-F5-DWC-90 (UB-92) or the charges listed on the itemized statement did not conform to the hospital’s Charge Master. Nor did the carrier submit the hospital’s Charge Master in the response or assert that the carrier performed an audit of the Charge Master to verify the accuracy of the billed charges. Therefore, since no evidence was presented to dispute the accuracy of the Form DFS-F5-DWC-90 or the itemized statement as not being representative of the Charge Master, the OMS finds that the charges billed by the hospital are the hospital’s usual and customary charges. Rule 69L-7.602, F.A.C., stipulates the appropriate EOBR codes that must be utilized when explaining to the provider the carrier’s reasons for disallowance or adjustment. The EOBR submitted with the petition conforms to the EOBR code requirements of Rule 69L-7.602(5)(q), F.A.C. Only through an EOBR is the carrier to communicate to the health care provider the carrier’s reasons for disallowance or adjustment of the provider’s bill. Pursuant to s. 440.13(12), F.S., a three member panel was established to determine statewide reimbursement allowances for treatment and care of injured workers. Rule 69L-7.501, F.A.C., incorporates, by reference, the applicable reimbursement schedule created by the panel. Section 440.13(7)(c), F.S., requires the OMS to utilize this schedule in rendering its determination for this reimbursement dispute. No established authority exists to permit alternative schedules or other methodologies to be utilized for hospital reimbursement other than those adopted by Rule 69L-7.501, F.A.C., unless the provider and the carrier have entered into a mutually agreeable contract. Rule 69L-7.501, F.A.C., incorporates, by reference, the Florida Workers’ Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). Since the carrier failed to indicate any of the services are not medically necessary, the OMS determined proper reimbursement applying the above referenced reimbursement guidelines. Therefore, the OMS has determined that the carrier improperly adjusted reimbursement to Florida Medical Center for services rendered to the above- referenced injured employee on May 20, 2009. Based on the above analysis, the OMS has determined that correct reimbursement equals $4,160.40 ($5,547.20 x 75% [Hospital Manual]=$4,160.40). The carrier shall reimburse Florida Hospital Medical Center $4,160.40 for services rendered to the above-referenced employee; and submit proof of reimbursement of the amount determined by the OMS within thirty days of the date the Determination is received. . . . The difference between what Petitioner Macy’s paid Florida Hospital for services rendered to R. P., and the amount the Department determined that Petitioner Macy’s is required to pay for such services, equals $1,476.85. The Determination in 09-6871 did not directly address Macy’s allegation of the alleged billing error of “upcoding.” The Determination in 09-6871 provided a 21-day notice for request of an administrative hearing and, as noted in the Preliminary Statement above, Macy’s timely requested a hearing. Case No. 09-6872 J. L., an employee of Major League Aluminum, was injured in a work-related accident on the evening of May 3, 2009, and visited the emergency department of Florida Hospital Orlando. After evaluation and treatment, J. L. was diagnosed with a bruise to the knee and released the next morning. On September 23, 2009, Florida Hospital submitted its bill for services provided to J. L. totaling $2,851 to Amerisure, Major League Aluminum’s workers’ compensation insurer, for payment, utilizing Form DFS-F5-DWC-90, also known as UB-04 CMS-1450, identifying the charges billed for each line item by revenue code and HCPS or CPT codes. Amerisure forwarded the hospital bill to its medical bill review agent, Qmedtrix for review. Qmedtrix’s medical bill review in this case, as in the companion case, entailed comparing the procedure codes and diagnosis codes reported by the hospital with examples in the CPT book. The hospital reported ICD diagnosis code 924.11, which reads “contusion of . . . knee.” The hospital also reported ICD diagnosis codes 724.2 (“lumbago”), E888.1 (“fall on or from ladders or scaffolding”) and 959.7 (“injury, other and unspecified . . . knee, leg, ankle, and foot.”). Florida Hospital billed $1,354 with CPT code 9924 for emergency department services and also billed for X-rays and various drugs and IV solutions. Comparing procedure codes and diagnosis codes reported by the hospital with examples in the CPT book, Qmedtrix concluded that billing with CPT code 99284 was not appropriate, but that billing with CPT code 99282 was. Qmedtrix also found that, while the hospital billed $1,354 with CPT code 99284, the average charge in the community for a visit to the emergency department billed with CPT code 99282 is $721. Qmedtrix determined the “usual and customary charge” in the community from its own database compiled by entering all of particular hospital bills into Qmedtrix’s database, along with data from the American Hospital Directory. Qmedtrix derives the average charge in the community based upon zip codes of the hospitals. Amerisure paid Florida Hospital a total of $1,257.15, which amount included $524.70 for the emergency department visit codes based on 75 percent of what Qmedtrix determined to be the average charge in the community for CPT code 99282. The payment was accompanied by an EOBR. The EOBR Petitioner Amerisure (or its designated entity)6/ issued to Florida Hospital for services rendered to J. L. identifies the amount billed by Florida Hospital as to each line item in a column designated “Billed Charges,” and has columns designated as “FS/UCR Reductions,” “Audit Reductions,” “Network Reductions,” and “Allowance,” each containing an amount for each line item in the “Billed Charges” column. There is also a column entitled “Qualify Code” which sets forth reason codes that are supposed to explain the reason for adjustment of any line item.7/ The code set forth adjacent to the $1,354.00 billed by Florida Hospital for emergency department services is “82,” which means “Payment adjusted: payment modified pursuant to carrier charge analysis.” The EOBR does not advise that the bill was adjusted because of a determination that Florida Hospital should have used CPT code 99282 when billing for the emergency services rendered instead of CPT code 99284 as originally billed. Upon receipt of the payment and the EOBR, Florida Hospital timely filed a Petition for Resolution of Reimbursement Dispute with the Department pursuant to Section 440.13(7)(a), Florida Statutes, and Florida Administrative Code Rule 69L-31, contending that payment should be at 75 percent of its total charges, and citing the Hospital Manual. Qmedtrix timely filed a response to Florida Hospital’s petition on behalf of Amerisure pursuant to Section 440.13(7)(b), Florida Statutes, and Florida Administrative Code Rule 69L-31, asserting that correct payment should be determined based on, first, whether the hospital, in fact, billed its usual charge for the services and, second, whether the hospital’s charges are in line with the charges of other hospitals in the same community, citing One Beacon, supra. Qmedtrix’s response on behalf of Amerisure contended “upcoding” as an additional ground for adjustment or disallowance that was not identified on the EOBR. As in the companion case, the response explained “upcoding,” that CPT codes 99281 through 99285 describe emergency department services, and that the CPT book includes examples of proper billing with these codes. The response further stated that the hospital billed $1,354 with CPT code 99284, and that the CPT book describes an “emergency department visit for a patient with a minor traumatic injury of an extremity with localized pain, swelling, and bruising” as an example of proper billing with CPT code 99282. The response requested a determination by the Department that Amerisure’s payment equaled or exceeded the usual and customary charge for CPT code 99282. On October 20, 2009, the Department’s OMS issued a determination (Determination in 09-6872) which found, in pertinent part: The petitioner asserts that services provided by Florida Hospital Medical Center to the above-referenced injured employee on May 3, 2009, and May 4, 2009, were incorrectly reimbursed. Florida Hospital Medical Center billed $2,851.00 and the carrier reimbursed $1,257.15. The petition does not address a contract and does not reflect a contract discount in the calculation of requested reimbursement. The Carrier Response to Petition for Resolution of Reimbursement Dispute disputes the reasonableness of the hospital’s “usual and customary charges”, maintains the petitioners’ charges should be based on the average fee of other hospitals in the same geographic area, and references a manual not incorporated by rule. There are no rules or regulations within Florida’s Workers’ Compensation program prohibiting a provider from separately billing for individual revenue codes. Therefore, the charges, as billed by the hospital, did not constitute billing errors. The carrier did not dispute that the charges listed on the Form DFS-F5- DWC-90 (UB-92) or the charges listed on the itemized statement did not conform to the hospital’s Charge Master. Nor did the carrier submit the hospital’s Charge Master in the response or assert that the carrier performed an audit of the Charge Master to verify the accuracy of the billed charges. Therefore, since no evidence was presented to dispute the accuracy of the Form DFS-F5- DWC-90 or the itemized statement as not being representative of the Charge Master, the OMS finds that the charges billed by the hospital are the hospital’s usual and customary charges. Rule 69L-7.602, F.A.C., stipulates the appropriate EOBR codes that must be utilized when explaining to the provider the carrier’s reasons for disallowance or adjustment. The EOBR submitted with the petition conforms to the EOBR code requirements of Rule 69L-7.602(5)(q), F.A.C. Only through an EOBR is the carrier to communicate to the health care provider the carrier’s reasons for disallowance or adjustment of the provider’s bill. Pursuant to s. 440.13(12), F.S., a three member panel was established to determine statewide reimbursement allowances for treatment and care of injured workers. Rule 69L-7.501, F.A.C., incorporates, by reference, the applicable reimbursement schedule created by the panel. Section 440.13(7)(c), F.S., requires the OMS to utilize this schedule in rendering its determination for this reimbursement dispute. No established authority exists to permit alternative schedules or other methodologies to be utilized for hospital reimbursement other than those adopted by Rule 69L-7.501, F.A.C., unless the provider and the carrier have entered into a mutually agreeable contract. Rule 69L-7.501, F.A.C., incorporates, by reference, the Florida Workers’ Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). Since the carrier failed to indicate any of the services are not medically necessary, the OMS determined proper reimbursement applying the above referenced reimbursement guidelines. Therefore, the OMS has determined that the carrier improperly adjusted reimbursement to Florida Medical Center for services rendered to the above- referenced injured employee on May 3, 2009, and May 4, 2009. Based on the above analysis, the OMS has determined that correct reimbursement equals $2,138.25 ($2,851.00 x 75% [Hospital Manual]=$2,138.25). The carrier shall reimburse Florida Hospital Medical Center $2,138.25 for services rendered to the above-referenced employee; and submit proof of reimbursement of the amount determined by the OMS within thirty days of the date the Determination is received. . . . The difference between what Petitioner Amerisure paid Florida Hospital for services rendered to J. L. and the amount the Department determined that Petitioner Amerisure is required to pay for such services equals $881.10. The Determination in 09-6872 did not directly address Amerisure’s allegation of the alleged billing error of “upcoding.” The Determination in 09-6872 provided a 21-day notice for request of an administrative hearing and, as noted in the Preliminary Statement above, Amerisure timely requested a hearing. Alleged “Upcoding” for Emergency Department Services The Petitioners’ responses in both cases allege that Florida Hospital “upcoded” its bill for emergency department evaluation and management services. Neither EOBR submitted to Florida Hospital, however, reported alleged “upcoding” as an explanation for the Petitioners’ adjustment or disallowance of reimbursement. While the Dispute Determinations by the Department do not directly address the carrier’s allegation of the alleged billing error of “upcoding” raised in the Petitioners’ responses, they found that “Rule 69L-7.602, F.A.C., stipulates the appropriate EOBR codes that must be utilized when explaining to the provider the carrier’s reasons for disallowance or adjustment[, and that] [o]nly through an EOBR is the carrier to communicate to the health care provider the carrier’s reasons for disallowance or adjustment of the provider’s bill.” According to Mr. von Sydow, who was offered by Petitioners as an expert in billing, coding, reimbursement, and payment issues,8/ the “reason codes” that workers’ compensation carriers are to use pursuant to Florida Administrative Code Rule 69L-7.602, do not mention “upcoding,” and therefore an EOBR could not be generated with a reason code explaining reduction or disallowance based on “upcoding.” The following reason codes, however, are included in Florida Administrative Code Rule 69L-7.602: 23 – Payment disallowed: medical necessity: diagnosis does not support the services rendered. – Payment disallowed: insufficient documentation: documentation does not substantiate the service billed was rendered. – Payment disallowed: insufficient documentation: level of evaluation and management service not supported by documentation. Neither EOBR submitted to Florida Hospital includes reason code 23, 40, or 41. And neither EOBR explains or otherwise suggests that that Florida Hospital’s level of billing was not supported by medical necessity, services rendered, or sufficient documentation. In fact, Petitioners did not disallow reimbursement and do not contend that reimbursement should be denied for any services rendered by Florida Hospital to R. P. and J. L. on the grounds that the billed services were not medically necessary for the injured employees’ compensable injuries. In addition, Petitioners did not adjust or disallow payment for any of the billed procedures on the grounds that the procedures were not provided. In sum, the EOBR’s did not give Florida Hospital notice that alleged “upcoding” was an issue. Even if Petitioner’s EOBR’s gave Florida Hospital notice that it was asserting “upcoding” as a reason to reduce or adjust the hospital’s bill, the evidence does not support a finding that Florida Hospital utilized the wrong code in its billing for emergency department evaluation and management services. The CPT® 2009 Current Procedural Terminology Professional Edition, (Copyright 2008), (CPT book), is adopted by reference in Florida Administrative Code Rule 69L-7.602(3)(d) and Florida Administrative Code Rule 60L-7.020(2). The CPT book sets forth the procedure codes for billing and reporting by hospitals and physicians. The CPT book sets forth CPT codes ranging from 99281 through 99285 used to report evaluation and management services provided in a hospital’s emergency department, described as follows: 99281: Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: A problem focused history; A problem focused examination; and Straightforward medical decision making. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient’s and/or family’s needs. Usually, the presenting problem(s) are self limited or minor. 99282: Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: An expanded problem focused history; An expanded problem focused examination; and Medical decision making of low complexity. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient’s and/or family’s needs. Usually, the presenting problem(s) are of low to moderate severity. 99283: Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: An expanded problem focused history; An expanded problem focused examination; and Medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient’s and/or family’s needs. Usually, the presenting problem(s) are of moderate severity. 99284: Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: A detailed history; A detailed examination; and Medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient’s and/or family’s needs. Usually, the presenting problem(s) are of high severity, and require urgent evaluation by the physician but do not pose an immediate significant threat to life or physiologic function. 99285: Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: A comprehensive history; A comprehensive examination; and Medical decision making of high complexity. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient’s and/or family’s needs. Usually, the presenting problem(s) are of high severity and pose an immediate significant threat to life or physiologic function. Mr. von Sydow testified that a Qmedtrix “medical director,” reviewed Florida Hospital’s bill for services rendered to R. P., but not the medical records, and recommended that the hospital’s charge for emergency department services under CPT 99285 be “re-priced” to Qmedtrix’s determination of the “usual and customary charge” for CPT 99284. Mr. von Sydow acknowledged the need for physician review for some cases (as opposed to review by non-physician coders) by testifying, “The more complicated the medicine, the more likely it is that he [a medical director at Qmedtrix] wants to see it.” Despite Qmedtrix’s original determination to “reprice” the bill from CPT code 99285 to CPT code 99284 (reflected in the reduced payment but not explained in the EOBR), Mr. von Sydow opined that the correct CPT code for emergency department services provided to patient R. P. was 99283, as opposed to 99285 billed by the hospital. Mr. von Sydow testified that his opinion was based upon his own review of the medical records, without the assistance of a medical director or medical expert, and review of examples for the CPT codes for emergency department services from the CPT book, and various provisions of ICD-9 and CPT book coding resources. Aside from the fact that Mr. von Sydow’s opinion differed from the purported recommendation of a Qmedtrix “medical director,” Mr. von Sydow is not a physician. Moreover, Qmedtrix failed to provide the testimony of the medical director, or anyone else with medical expertise to evaluate the medical records and services provided or to validate either the opinion of Mr. von Sydow or the original recommendation to “re- price” Florida Hospital’s use of CPT Code 99285 in its bill for emergency department services rendered to patient R. P. Mr. von Sydow offered similar testimony and examples to explain Qmedtrix’s “re-pricing” of Florida Hospital’s bill from CPT code 99284 to CPT code 99282 for emergency services rendered to patient J. L. on behalf of Amerisure. According to Mr. von Sydow, an internal Qmedtrix coder (not a medical director) reviewed the bill for emergency services rendered to J. L. and determined it should be re-priced to the usual and customary charge, as determined by Qmedtrix, using that CPT code 99282. While knowledgeable of the various codes and their uses, given the manner in which preliminary diagnostics under emergency circumstances drives Florida Hospital’s determination of the appropriate CPT code for billing emergency department services, without the testimony of a medical expert familiar with the medical records generated in these cases in light of the facts and circumstances surrounding the emergency care rendered to patients R. P. and J. L., Mr. von Sydow’s testimony was unpersuasive. Ross Edmundson, M.D., an employee, vice-president, and medical manager for Florida Hospital, explained that, unlike other settings, hospitals generally do not have the medical histories of patients presenting for emergency hospital services. When a patient comes to Florida Hospital for emergency services, they are triaged by a nurse to determine the level of urgency, then a doctor sees the patient, conducts a differential diagnosis to rule out possible causes, obtains the patient’s history, and then performs a physical examination. While emergency room physicians at Florida Hospital do not decide which CPT code is utilized for the evaluation and management services provided by its emergency department, the various tests and procedures they undertake to evaluate and treat emergency department patients do. James English, the director of revenue management for Florida Hospital explained the process through his deposition testimony. Florida Hospital, like over 400 other hospitals, uses the “Lynx System” – a proprietary system for creating and maintaining medical records electronically. The program captures each medical service, supply, and physician order that is inputted into the electronic medical record. The hospital’s emergency evaluation and management CPT code is generated from the electronic record. A “point collection system” in the Lynx System translates physician-ordered services, supplies it to a point system, and then assigns the CPT code that is billed based upon the total number of “points” that are in the system at the time the patient is discharged from the emergency department. The level of the evaluation and management CPT code (99281 to 99285) that is reported on Florida Hospital’s bill is a direct reflection of the number and types of medical services that a patient receives from his or her arrival through discharge. In light of evidence showing the manner in which emergency services are provided and the importance of medical records in generating the appropriate billing code for emergency evaluation and management services, it is found that Petitioners failed to provide an adequate analysis of the medical records of either R. P. or J. L. to show that the appropriate CPT codes were not utilized by Florida Hospital in billing for those services. On the other hand, both Petitions for Resolution of Reimbursement Dispute filed by Florida Hospital with the Department attached appropriately itemized bills utilizing Form DFS-F5-DWC-90, also known as UB-04 CMS-1450, identifying the charges billed for each line item by revenue code and HCPS or CPT codes. In addition, medical records for the evaluation and treatment provided by Florida Hospital for both patients R. B. and J. L. supporting the itemized bills were submitted to the Department. These documents were also received into evidence at the final hearing. Florida Hospital’s bills at issue correctly identified the hospital’s usual charges for each individual and separately chargeable item, service or supply, with the corresponding code assigned to such billable items as maintained in Florida Hospital’s “charge master.” In addition, Petitioners concede the compensability of both patients’ work-related injuries and do not dispute whether any service or supply rendered and billed by Florida Hospital for these two cases were “medically necessary.”9/ Unbundling As noted above, in Case No. 09-6871, Qmedtrix’s response to Florida Hospital’s petition for resolution of reimbursement dispute contended “unbundling” as a ground for adjustment or disallowance of reimbursement. At the final hearing, Arlene Cotton, the nurse who issued the Dispute Determinations, explained that reason code 63 regarding “unbundling” is inapplicable to hospital billing, as there is no rule that requires hospitals to bundle bill for its services. Mr. von Sydow agreed that reason code 63 was inapplicable. In addition, footnote 2 of Petitioners’ Proposed Recommended Order states, “they did not pursue the allegations of unbundling.” Therefore, it is found that Petitioners did not prove and otherwise abandoned their claim of “unbundling” as a ground to adjust or disallow reimbursement to Florida Hospital. Usual and Customary Charges The Dispute Determinations issued by the Department found that correct payment in both cases equaled 75% of billed charges, citing “Rule 69L-7.501, F.A.C., [which] incorporates, by reference, the Florida Workers’ Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). Both Section 440.13(12)(a), Florida Statutes, and the Hospital Manual provide that hospital services provided to patients under the workers’ compensation law “shall be reimbursed at 75 percent of usual and customary charges.” The Department interprets the term “usual and customary charges” as set forth in the Hospital Manual and Section 440.13(12)(a), Florida Statutes, quoted above, to mean a hospital’s usual charges of the hospital, whereas Petitioners contend that “usual and customary charges” means the average fee of all providers in a given geographical area. While apparently not contending that Petitioners failed to raise the issue of “usual and customary” charges in their EOBR’s,10/ at the final hearing, the Department argued that “nowhere in [either Macy’s or Amerisure’s] response is the issue of customary charges raised.” A review of the responses filed by Qmedtrix to Florida Hospital’s reimbursement dispute petitions filed with the Department reveal that both raise the issue of “usual and customary charges.” Paragraphs 3 and 4 of Mr. von Sydow’s letter attached to both responses state: As you may know, the proposed adoption of Medicare’s Outpatient Prospective Payment System as a methodology for reimbursing hospitals 60% and 75% of “usual and customary charges” follows from the decision of the First District Court of Appeals in One Beacon Insurance v. Agency for Health Care Administration, No. 1D05-5459 (Fla. 1st DCA 2007) (SB-50 amended section 440.13 to remove all reference to the charges of any individual service provider; this amendment reveals the legislative intent to eliminate calculation of a “usual and customary charge” based on the fees of any one provider in favor of a calculation based on average fees of all providers in a given geographical area). This court decision requires DFS to define payment rates for out patient service that are uniformly applicable to all hospitals in a given geographic area. In addition, at the final hearing, the Department argued that the petitions for administrative hearing did “not raise as a disputed issue of fact or law whether or not usual and customary charges should apply in this case.” Indeed, a review of the request for relief set forth in the petitions for administrative hearings filed by Petitioners do not mention the issue of “usual and customary charges.” Rather, the relief requested by both petitions for administrative review of the Dispute Determinations, as summarized in the Joint Prehearing Stipulation, is: Petitioner[s] seeks reversal of OMS’ Determination(s) and the matters remanded for the Department to: direct payment based upon the actual treatment required/provided and pursuant to the correct CPT code; find that the hospital upcoded and that Petitioner properly reimbursed (or exceeded amount due); and determine that the hospital has the burden of proof to substantiate its billing and the use of the chosen CPT code. Contrary to the Department’s argument, however, both petitions for administrative hearing raise the issue of “usual and customary charges.” Page 9 of Macy’s petition, in pertinent part states: Petitioner submits that in issuing the above findings OMS failed to consider the holding in One Beacon Insurance v. Agency for Health Care Administration (wherein the Court determined that reimbursement should not be based solely upon a mathematical equation [as found within the Reimbursement Manual] and applying it to the fee charged by a particular provider; and that by eliminating the reference to any one facility’s charges, the legislature intended that the charges be based on average fees of all providers in a geographical area as opposed to the fees of the particular provider in question). Likewise, review of Amerisure’s petition for administrative hearing reveals that the issue of “usual and customary charges” was raised. Pages 7 and 8 of Amerisure’s petition state, in pertinent part: Further, if the Hospital is permitted to utilize incorrect revenue codes it would be impossible to determine whether the charges are consistent with the Hospital’s own [usual and customary] charges for the service, procedure or supplies in question and, further, whether such charges are consistent with charges by other like facilities (in the same geographical area) for the same services, procedures, or supplies. See One Beacon Insurance, supra. In addition, Amerisure’s petition on page 12 states with regard to the Department’s determination: Such finding was issued without consideration of . . . the amounts charged for the same services in the Orlando area where this hospital is located. Petitioners further preserved the issue of “usual and customary charges” in the first paragraph of their statement of position on page 3 of the Joint Prehearing Statement, as follows: Petitioners, Macy’s and Amerisure, take the position that the Determinations must be reversed as the Department has the duty to scrutinize the bills in question in order to determine, first, whether the hospital, in fact, charged its usual charge for the services provided, and second, whether the billed charges are in line with the customary charges of other facilities in the same community (for the same or similar services) and that the Department failed to do so. As such, Petitioners contend that payment for services provided by Florida Hospital should have been based upon 75% of usual and customary charges, not 75% of billed charges. Therefore, it is found that Petitioners have preserved the issue of “usual and customary charges” for consideration in this administrative proceeding. Although preserved, Petitioners failed to demonstrate that their interpretation of “usual and customary charges” should prevail. The Department has consistently interpreted the term “usual and customary charges” as used in the Hospital Manual, Section 440.13(12)(a), Florida Statutes, and rules related to hospital reimbursement under the workers’ compensation law as the “usual and customary charges” of the hospital reflected on the hospital’s “charge master.” The Hospital Manual requires each hospital to maintain a charge master and to produce it “when requested for the purpose of verifying its usual charges. . . .” (Emphasis added). Petitioners did not conduct or request to conduct an audit to verify whether the charges billed by Florida Hospital corresponded with the Florida Hospital’s charge master. In fact, Mr. von Sydow conceded at the final hearing that Florida Hospital’s bills at issue were charged in accordance with Florida Hospital’s charge master. Nor did Petitioners institute rule challenge proceedings against the Department regarding the Hospital Manual, incorporated by reference into Florida Administrative Code Rule 38F-7.501. Instead, Petitioners assert that they should be able to reduce Florida Hospital bills based upon a different interpretation of the phrase “usual and customary charges” to mean the average charge in the community as determined by Qmedtrix. Qmedtrix is not registered with the Florida Department of State, Division of Corporations, and does not employ any Florida-licensed insurance adjuster, physician, or registered nurse. Qmedtrix earns 12 to 15 percent of “savings” realized by carriers utilizing their bill review services. For example, if a bill is reduced by $100, Qmedtrix is paid $12.11/ Qmedtrix uses a proprietary bill review system called “BillChek.” According to Qmedtrix’s website: BillChek reviews out-of-network medical charges for all bill types in all lines of coverage, including group health, auto, medical, and workers’ compensation. BillChek is a unique specialty cost- containment service that determines an accurate and reasonable reimbursement amount for non-network facility and ancillary medical charges. BillChek incorporates historical data to help determine reasonable payment recommendations across all sectors of the health care industry. All BillCheck recommendations are backed by extensive medical and legal expertise, and supported by Qmedtrix’s experienced Provider Relations and Dispute Resolution teams. According to the testimony of Mr. von Sydow, Qmedtrix collects and maintains data from various sources, including Florida’s Agency for Health Care Administration (AHCA), the American Hospital Directory (AHD.com), and HCFA 2552’s (data reported to the Centers of Medicare and Medicaid Services on HCFA 2522) in order to construct a database of health care providers’ usual charges. Mr. von Sydow advised that AHD.com data was a principle source for constructing the database. He also advised that AHCA data was included in the database even though Qmedtrix found the AHCA data defective. Examples of data downloaded from AHD.com for Florida Hospital showing a profile of the facility was received into evidence as P-5. The data did not, however, show usual charges for the CPT codes for emergency department services at issue in this case. Petitioners also introduced into evidence Exhibits P-6 and P-7, which contained AHD.com data showing average charges for Florida Regional Medical Center and Florida Hospital, respectively, for Level 1 through Level 5 emergency room visits (corresponding to CPT codes 99281 through 99285). Mr. von Sydow explained that the data was part of the information Qmedtrix used to construct the average charge in the community. Petitioners failed to provide similar AHD.com data for other hospitals in the area Qmedtrix determined to be the “community.” In addition, Petitioners introduced AHCA’s Florida Health Finder Web-site, as Exhibit P-8, which ostensibly included average charges for all hospitals in Florida for the subject emergency department CPT codes (99281 through 99285). Mr. von Sydow explained, however, “[w]e find that [the AHCA data] is not refreshed very often, unfortunately, and some other defects in the scrubbing of the data by the agency, which they know, I will say. But this is incorporated in our database to a large extent.” The exhibit was received into evidence for the purpose of helping to explain how Qmedtrix constructed its database, with the recognition that it was largely composed of hearsay. In sum, while Petitioners showed their methodology of constructing the database, other than the AHD.com data for Orlando Regional Medical Center and Florida Hospital, Petitioners failed to introduce reliable evidence sufficient to show the “usual and customary charge” of all providers in a given geographical area as determined by Qmedtrix. In addition, the AHCA data, though characterized by Mr. von Sydow as unreliable, indicates that there is a wide range of differences in emergency room charges between hospitals in Florida. Petitioners’ interpretation of “usual and customary charge” to mean the average fee of all providers in a given geographical area does not take into account an individual hospital’s indigent care, cost of labor, overhead, number of beds, size, age, or various other differences between facilities that could affect amounts each hospital charges for emergency department and other services; the Department’s interpretation does.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a Final Order consistent with this Recommended Order that: Directs Macy’s Claims Services to reimburse Florida Hospital Medical Center $4,160.40 for services rendered to patient R. P., and to submit proof of reimbursement of that amount within 30 days from the date the Final Order is received; Directs Amerisure Mutual Insurance Company to reimburse Florida Hospital Medical Center $2,138.25 for services rendered to patient J. L., and submit proof of reimbursement of that amount to the Department within 30 days from the date the Final Order is received. DONE AND ENTERED this 17th day of June, 2010, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of June, 2010.
