The Issue The certificate of need application at issue in these cases involves a proposal to renovate an existing hospital for use as a psychiatric facility and the addition of long-term psychiatric beds, and the relocation of the existing acute care beds of the Petitioner to a newly constructed acute care hospital and the delicensure of 29 acute care beds. Those parties with standing to challenge the portion of the project involving psychiatric services settled their dispute prior to the final hearing. Therefore, it was determined that the only issue to be heard at the final hearing was whether the portion of the Petitioner's proposal to build a new acute care facility should be approved.
Findings Of Fact GENERAL. Procedural. Harborside Hospital, Inc. (hereinafter referred to as the "Petitioner"), filed its original application for certificate of need on June 14, 1984. In its application, the Petitioner sought to relocate its acute care hospital, increase its licensed acute care beds from 129 to 175 and renovate its existing facility for use as an 80 bed psychiatric unit, consisting of 14 existing short-term psychiatric beds and the addition of 66 long-term psychiatric beds. The Petitioner's original application was denied by the Department on October 24, 1984, because of insufficient need for additional beds. On November 29, 1984, the Petitioner filed a Petition for Formal Administrative Hearing with the Department. That Petition was filed with the Division of Administrative Hearings on December 12, 1984, and was assigned case number 84-4368. The Petitioner challenged the denial of the Petitioner's certificate of need application and the proposed issuance of a certificate of need for long- term psychiatric beds to PIA Medfield, Inc., d/b/a Medfield Center (hereinafter referred to as "Medfield"). On January 9, 1985, the Petitioner filed a Stipulation and Agreement in which the Department agreed to issue the certificate of need (number 3349) at issue in these cases to the Petitioner. On February 6, 1985, an Order was issued granting Medfield and Humana the right to intervene in case number 84-4368. On April 10, 1985, case number 84-4368 was consolidated with two other cases in which Morton Plant Hospital Association and University Psychiatric Center, Inc., respectively, had challenged the proposed issuance of a certificate of need to Medfield. Those cases were assigned case numbers 84-4417 and 85-0052. EHW and Bayfront were granted leave to intervene in case numbers 84- 4368, 84-4417 and 85-0052 on June 24, 1985, and August 20, 1985, respectively. During a motion hearing conducted on December 19, 1985, Tampa Bay Community Hospital was denied intervention in the consolidated cases because it is a facility located outside of the planning district involved in these proceedings. Following the agreement of the Department to issue a certificate of need to the Petitioner, several petitions challenging that proposed decision were filed. The petitions in those cases and the case numbers assigned to their cases are as follows: University Psychiatric Center, case number 85-1977, Bayfront, case number 85-1978, Medfield, case number 85-1979, Anclote Manor Hospital, Inc., case number 85-1985 and Humana, case number 85-2230. EHW was granted leave to intervene in case number 85-2230 on August 27, 1985. The Petitioner filed a motion to dismiss and petition to intervene in case numbers 85-1977, 85-1978 and 85- 2230. The petitions to intervene were not granted in case number 85-1978 and 85-2230 because the Petitioner had been named as a respondent in those cases. Intervention was granted in case number 85-1977 at the December 19, 1985, motion hearing. 13. On August 27, 1985, case numbers 84-4368, 84-4417, 85-0052, 85-1977, 85-1978, 85-1979, 85-1985 and 85-2230 were consolidated. On January 21, 1986, an Order was issued closing case numbers 84-4417, 85-0052, 85-1979, and 85-1985. The petitioners in those cases had filed notices of voluntary dismissal. Medfield also withdrew as an intervenor in case number 84-4368. At the December 19, 1985, motion hearing, the motions to dismiss filed by the Petitioner in case numbers 85-1979, 85-1985 and 85-2230 were withdrawn. The motion to dismiss filed by the Petitioner in case number 85-1977 was granted. St. Anthony's was granted leave to intervene in all of the cases at the December 19, 1985, motion hearing. On January 20, 1986, the Petitioner filed Notice of Partial Dismissal pursuant to which it dismissed the portion of its Petition challenging the proposed issuance of a certificate of need to Medfield. Finally, on January 24, 1986, a Motion to Sever and Remand the portion of the Petitioner's application pertaining to the renovation of the Petitioner's existing facility for use as an 80 bed psychiatric facility was denied. Based upon the foregoing, the remaining cases which proceeded to final hearing included case numbers 84-4368, 85-1978, and 85-2230. Case number 85- 1977 still remains open. It will be recommended that case number 85-1977 be dismissed in this Recommended Order. The remaining parties include the Petitioner (the petitioner in case number 84-4368, a respondent in case numbers 85-1978 and 85-2230 and an intervenor in case number 85-1977), the Department (a respondent in all 4 cases), Bayfront (an intervenor in case number 84-4368 and the petitioner in case number 85-1978), EHW (an intervenor in case numbers 84-4368 and 85-2230), Humana (an intervenor in case number 84-4368 and the petitioner in case number 85-2230), St. Anthony's (an intervenor in all 4 cases) and University Psychiatric Center, Inc. (the petitioner in case number 85-1977). University Psychiatric Center, Inc., did not participate in the final hearing. The Parties. The Petitioner is a wholly-owned subsidiary corporation of American Healthcare Management, Inc. (hereinafter referred to as "AHM"). The Petitioner owns and operates Harborside Hospital, a 143 bed acute care hospital located at 401 Fifteenth Street North, St. Petersburg, Pinellas County, Florida. The Petitioner's 143 licensed beds consist of 121 medical/surgical, 8 ICU/CCU and 14 short-term psychiatric beds. The Department is the agency responsible for determining whether the Petitioner's proposal should be approved. Bayfront is a 518 bed not-for-profit, general acute care hospital located in St. Petersburg, Pinellas County, Florida. Bayfront provides a full Spectrum of adult medical/surgical, intensive care and critical care Services. Tertiary level care in cardiology, oncology and rehabilitation medicine is also provided. Pursuant to a joint venture agreement with All Children's Hospital, Bayfront provides tertiary care cardiovascular surgery. All Children's Hospital is located immediately adjacent to Bayfront and is connected by a tunnel. Bayfront serves osteopathic and allopathic physicians and patients. EHW is a 167 bed general acute care hospital located in St. Petersburg, Florida. EHW is located approximately one mile from the existing location of the Petitioner. EHW provides general medical and surgical Services. EHW, which opened in March, 1976, is owned by General Health Services, Inc., a subsidiary of Hospital Corporation of America. Humana is a 301 bed general acute care hospital located in Pinellas County. Humana is accredited by the Joint Commission on Accreditation of Hospitals (hereinafter referred to as the "JCAH"). Humana provides primary and secondary care services. Humana is a designated Level II Trauma Center. Humana has approximately 10 to 15 doctors of osteopathy (hereinafter referred to as "DO's"), on active and courtesy medical staff and approximately 10 to 15 percent of its total admissions are from DO's. St. Anthony's is a 434 bed general acute care, not-for-profit hospital located at 601 Twelfth Street North, St. Petersburg. St. Anthony's is located about 2 blocks from the Petitioner's current location. St. Anthony's is operated by the Franciscan Sisters of Allegheny, through Allegheny Health Systems. St. Anthony's has DO's on its staff. St. Anthony's is licensed for 27 psychiatric beds. The Petitioner's Proposal. On January 9, 1985, the Department and the Petitioner entered into a Stipulation and Agreement in which the Department agreed to issue certificate of need 3349 to the Petitioner based upon the following: 4. This stipulation and agreement is based upon the following stipulated facts: A need exists to replace the current Harborside Hospital facility. Relocating the acute care beds to a site near Ulmerton Road, in the vicinity of Ninth Street and Roosevelt Boulevard accomplished the HRS goal of relocating beds from Southern Pinellas county to avoid maldistribution of general acute care beds in the County. There exists a need for additional long term psychiatric beds and Harborside Hospital has the unique ability to provide long term psychiatric care to adult Medicaid recipients. Harborside Hospital has demonstrated its commitment to providing care to the medically indigent. Certificate of need 3349 was approved by the Department on May 2, 1985, based upon the Stipulation and Agreement. The approved certificate of need, which is the subject of these cases, contemplates two integrated phases: the relocation of the Petitioner's acute care hospital and the renovation of the existing hospital for use as a psychiatric unit. If approved, the project will result in an increase from 143 total beds to 160 acute care and psychiatric beds. The first phase of the project will consist of the relocation of 100 of the Petitioner's 129 licensed acute care beds to a newly constructed hospital. The 100 beds to be transferred will consist of 90 medical/surgical and 10 ICU/CCU beds, (an increase from 8 to 10 beds). Twenty-nine of the Petitioner's existing licensed acute care beds will be delicensed and removed from the inventory of acute care beds in the Department's district 5. The new location of the acute care replacement hospital will be close to Ulmerton Road, near the intersection of Ninth Street and Roosevelt Boulevard North, in Pinellas County. The new site is south of the boundary of the northern Pinellas and southern Pinellas subdistricts of district 5. The replacement acute care hospital will be renamed as Northeast Medical Center. The certificate of need provides that the project will cost $19,998,100.00 and that the new acute care hospital will consist of no more than 100,000 gross square feet. The construction of the replacement acute care hospital should be completed and operational before August, 1988. The second phase of the project is to begin upon completion of the first phase. The Second phase will consist of the renovation of the Petitioner's existing main hospital building for use as a 60 bed psychiatric facility. This facility will consist of the Petitioner's existing 14 short-term psychiatric beds and the addition of 46 new long-term psychiatric beds. During phase two, approximately 15,450 gross square feet of the existing main hospital building will be renovated, new stairwells will be constructed and a variety of code and life safety deficiencies in the main building will be corrected. Nine separate buildings, six of which have already been demolished, are to be demolished. A total of 52,624 gross square feet of space will remain for use for the psychiatric facility. The total approved cost of the second phase is $2,997,735.00. No significant changes to patient rooms in the existing facility will be made. Toilets will be added to some rooms and some doors to existing toilets will be closed off. The wooden portion of the existing main hospital building will be demolished. Two separate buildings currently used by the hospital will not be demolished. One will continue to be used for administration and medical records. The roof of the main hospital building will be replaced and plumbing and wiring will be renovated. During renovation of the main hospital building, which will be closed completely during renovation, the 14 bed existing psychiatric unit will be temporarily moved to the third floor of the proposed new acute care hospital. Renovation of the main hospital building will take approximately 1 year to complete. It is projected to be completed before August, 1989. NEED FOR THE RELOCATION OF THE ACUTE CARE HOSPITAL. General. The Petitioner's proposed location for the new acute care hospital and the location of its existing facility are in Pinellas County. Pinellas County and Pasco County have been designated as service district 5 by the Department. Pinellas County has been designated as consisting of a northern and southern subdistrict. The proposed location of the new facility and the location of the existing facility are in the southern Pinellas County subdistrict. The Existing Acute Care Facility. The Petitioner's existing hospital is located in the central urban area of St. Petersburg, Florida. The hospital is spread over a non-contiguous 3.4 to 3.5 acre site immediately adjacent to Interstate 275. The site is bisected by several streets, some of which dead end at Interstate 275. Present zoning ordinances require a minimum of 10 acres for an acute care hospital. The hospital consists of a main building and 5 other separate buildings (6 other separate buildings were demolished prior to the completion of the formal hearing). The main building was constructed in 1927 and has been used as a hospital Since 1928. Additions to the original structure were made in 1953, 1956 and 1970. The portion of the main building constructed in 1927 consists of a wood-frame structure which currently houses the dietary department, the radiology department and some other functions. The hospital's administrative offices are located in a small building located across the street from the main building. Nursing administration is located in another separate building several blocks from the main building. Central storage and dietary storage are located in another separate building 4 to 5 blocks from the main building. The laboratory is located in another separate building. Samples and specimens must be taken from the main building, under Interstate 275 and across a street to and from the laboratory. The laboratory is located closer to St. Anthony's than the Petitioner's main building. There are no covered walkways between the main building and the various separate buildings used to support the hospital. There are numerous structural, spatial and functional deficiencies associated with the main building, some portions of which are the oldest remaining structures in St. Petersburg. The wooden portion of the main building, which is now prohibited structural material for a multi-story hospital under applicable fire safety codes, is infested with termites and has suffered termite damage. One problem with the main building is the lack of adequate overall space. For a modern acute care hospital, 700 square feet per bed is considered a minimum size. The existing main building is approximately 47,000 to 50,000 square feet. Based upon this square footage, there is currently only 331 to 352 square feet per bed. If the total square footage of the main building and the separate buildings is taken into account - 82,038 square feet - there is currently only 573 square feet per bed. There is also inadequate space for all of the hospital's departments to efficiently function: There is no lobby. The admitting area is too small to provide privacy for patients and their families. Patients and their families must go across the street to a separate building to confer with hospital administration. There are no visitor waiting rooms in the nursing units. There is no waiting room in the physical therapy department and there are insufficient changing rooms. Patients receiving radiological diagnostic tests must disrobe in one room, cross a public hallway and wait in a general waiting room or in the corridor. The corridors of the main building are too narrow to meet modern licensure and code standards. The corridors should be 8' wide, but are only 7'10" to 7'11" wide. The inadequate width hampers efficient patient flow. The only way to correct the corridor width would be to reconstruct the hospital. This deficiency has not, however, been cited in JCAH or American Osteopathic Association (hereinafter referred to as "AOA"), reports. The surgical suite is too small to meet code requirements. It also has a non-conforming wood floor. The suite is approximately 2,200 square feet which is considerably less than the 5,000 to 6,000 square feet currently required. There is inadequate space for sterile gowning areas and in the adjacent 6 bed recovery room, and there is no space for holding preoperative patients, nursing supervision or anesthesiologists and their equipment. The intensive care unit consists of less than 550 total square feet for 8 ICU/CCU beds instead of the minimum of 460 square feet per bed considered adequate. There is insufficient clearance between the beds in the intensive care unit--8 feet at the foot of an intensive care unit bed is considered adequate and there are only 4 feet between beds currently in the intensive care unit. The intensive care unit also lacks room for a nurses' station and support services and there is no way to separate infectious patients or sufficient space for consultations. The emergency room, which was previously housed in a separate building, is located in 2 renovated 4 patient rooms. The emergency room lacks support services, such as a nurses' station, equipment storage space, a trauma room and utility space. There is also no ambulance entrance--patients must be brought through the main public entrance and public spaces to the emergency room. The radiology department, which contains x-ray, fluoroscopy and CAT scan equipment, lacks sufficient code- required space. It is located in the non-conforming, wooden portion of the main building. To access the department's administrative office located at the back of the radiology room, personnel must travel through the radiology room which disrupts x-ray procedures in progress. There is no film supply storage area located in the radiology department. Medical records are housed on the third floor of the main building and partly in a separate building located a block away because of inadequate space. Records must be moved in and out of the main building. Delays in obtaining medical records were cited unfavorably in a 1985 JCAH accreditation report. Central sterile supply lacks sufficient space to meet code-required separation of clean and contaminated equipment. Work space is inadequate and there is insufficient space for support service facilities. There is inadequate work space for the pharmacy and nursing units and inadequate space for equipment storage and support facilities such as nurses' bathrooms. Patient rooms are undersized and some lack bathrooms. Food preparation and dining areas, which are located in the wood portion of the building, are seriously deficient. Equipment is obsolete, food preparation space is insufficient, food must be stored 4 blocks away (because of inadequate space and the inability of the wood floors to support the weight of storage equipment), there is no employee toilet, there is insufficient space for a serving line in the dining area and no more than 25 people can be accommodated in the dining area at a time. The roof of the main building leaks and requires continuous maintenance. Patient rooms often have to be taken out of service because of water leakage. The original roof designs is deficient and has been exacerbated by additions to the facility. There are no roof drains and pipes and ducts for heating and cooling systems run on and through the roof area. Replacement, which has been approved by AHM, will require that pipes and drains be removed from the roof. The main building's electrical system is a hodgepodge of circuitry with no complete wiring diagram depicting the entire system in existence. Portions of the system have been hooked into existing, inadequate circuitry with no coordination or balance. This causes fluctuations in current levels. Only about half of the existing wiring is located in electrical conduits. It is difficult to trace the source of electrical malfunctions. The system is inadequate to meet the demands of equipment and should be totally replaced. For example, if the elevator system is operated during an x-ray procedure, the x-ray will be ruined because of insufficient voltage. Also, modern radiographic equipment such as a "C-AHM" and equipment used for digital subtraction angiography cannot be used because of the fluctuations in electric current. An electrical "code blue" alarm system for cardiac arrest for the intensive care unit also cannot be used. The heating, ventilation and air conditioning system is inadequate. The system is centrally controlled. There are no separate thermostats for different sections of the main building. Therefore, efficient heating and cooling, except for the surgery suite which has a separate system, is not possible. There are eleven separate rooftop units which require frequent maintenance. The main components of the air conditioning system were manufactured 20 years ago and are near the end of their useful life. One chiller barrel is in need of repair and replacement (at a cost of approximately $10,000.00) and 3 compressors are inoperative. Air conditioning ducts vary in size and are insufficient to handle air flow necessary for proper cooling. Plumbing in the main building is not standardized. There are 15 to 20 different models of sinks, toilets and faucets in use. Interruption of service to parts of the plumbing system through shut-off valves is not possible because of the design of the system. Even minor repairs require temporary disconnection of the water system for the entire building. In December of 1985, the entire system was shut off at least 6 times. The plumbing system requires constant repair. Some of the built-in equipment in use in the main building is obsolete. The code-required electric nurse call system in use is no longer made and therefore spare parts are not available. Improvised repairs are made to keep it in service. The medical gas (oxygen and suction) system has only one shut-off valve for the entire hospital. Outlets break down frequently because of wear. Maintenance of infection control standards is impaired by the structure of the main building. Three and four bed rooms are not conducive to infection control. There are 6 3-bed patient rooms and 13 4-bed patient rooms (only 4 of which are bin operation), or 47 percent of patient accommodations, at the hospital. Lack of space for separate holding areas for soiled and contaminated linens and equipment inhibits infection control. The main building does not comply with life safety and building codes. Life safety code deficiencies include insufficient corridor width, insufficient fireproofing, insufficient smoke compartmentation, impermissible open stairwell design, use of wood frame structural components and lack of a separate emergency electrical system. Correction of all of these deficiencies is not required because they have been "grandfathered in". The psychiatric department consists of a 14 bed open ward. There is no space for dining, recreation or occupational therapy. There is also no outdoor recreation space. In addition to space and other limitations, the inability to house all departments under one roof impairs functional efficiency. The deficiencies in the main building and the other buildings used by the hospital impair the ability of the Petitioner to compete effectively as an efficient, modern general acute care and psychiatric hospital. The 1985 JCAH accreditation of the Petitioner noted a contingency related to physical deficiencies and required that the Petitioner have additional fire warning and safety systems in place, because of the condition of the plant. Routine maintenance and repair cannot correct some of the deficiencies of the main building and the other buildings. Some of the deficiencies can be removed only by a total renovation or reconstruction project. Many maintenance problems have been remedied and are not recurring. Although the shortage of space and the structural deficiencies interfere with the Petitioner's ability to efficiently serve as a safe and effective health care facility, the Petitioner has been able to provide good quality of care. The Petitioner did not prove that any patient has been refused admission to the Petitioner because of the deficiencies with the hospital facilities. The main building is not architecturally dangerous. The hospital is clean, cheerful and well- maintained. There were fewer maintenance service requests made in 1985 than 1984 and maintenance costs in 1985 were less than one-third of the costs in 1984. In 1985, approximately $52,000.00 were spent for maintenance. The Petitioner's facility is accredited by the JCAH and the AOA. The JCAH and AOA are both involved in insuring patient safety and that quality of care is provided in health facilities. Both organizations grant full and conditional accreditation to health care facilities. The Petitioner has received full accreditation from the JCAH and the AOA notwithstanding the deficiencies of the Petitioner's facility. Most of the plant deficiencies which have been noted by the JCAH and the AOA have been corrected by the Petitioner. The Petitioner received accreditation by the JCAH in March of 1985 for 3 years and by the AOA in July of 1984 for 3 years. The Office of Licensure and Certification of the Department has the duty to determine the number of beds a hospital can effectively and appropriately operate. The Office can grant a conditional license or put a facility on probation. The Petitioner has received an unconditional license for 143 beds from the Office and has not been placed on probation despite its physical deficiencies. The structural deficiencies of the Petitioner's facility have been grand fathered-in and do not require correction for the hospital to continue to operate. The facility can continue to operate even if architectural changes are not made, from an architectural standpoint. AHM's Acquisition of the Petitioner. AHM purchased the Petitioner in November, 1983, for between $14,000,000.00 and $15,000,000.00. AHM owns and operates approximately 35 hospitals. None of its hospitals have been constructed as start-up facilities. AHM has grown primarily by purchasing hospitals that have the potential to do better. Prior to acquiring a hospital, AHM reviews and evaluates the facility. Before the purchase of the Petitioner, AHM's Vice President of Design and Construction conducted an on- site inspection of the hospital facilities. The deficiencies in the main hospital have been substantial since at least 1980 and still were during 1983 when AHM acquired the Petitioner. AHM knew what condition the hospital was in when it purchased it. At the time that AHM acquired the Petitioner, an application for a certificate of need filed by the previous owners was pending review by the Department. This application proposed renovation of the hospital on site. That application was withdrawn by AHM. Shortly after AHM acquired the Petitioner, a decision was made to seek approval of a replacement facility. Property adjacent to the proposed relocation site was acquired by a subsidiary corporation of AHM at about the same time that AHM acquired the Petitioner or shortly thereafter. An option to acquire the proposed relocation site was acquired by the same subsidiary shortly after AHM acquired the Petitioner. The decision to seek approval of a replacement facility was made after the Petitioner's facilities had been evaluated by Joseph Winick, a new employee of AHM. Mr. Winick recommended replacement. Economic Access. The 1985-1987 State Health Plan provides the following with regard to medically underserved populations: Historically, medically underserved populations have included migrant and seasonal farmworkers, medically indigent persons, and those eligible for Medicaid. Further, individuals classified as "medically indigent" can fall into one or more categories. These categories include low income residents and visitors who are not covered by any form of public insurance, uninsured individuals (employed and unemployed) and those who have become indigent due to a catastrophic or chronic illness. Volume 1, page 28 of the 1985-1987 State Health Plan. The District V 1985 Health Plan provides the following: Of the following policies, those with the purpose of: promoting access for the indigent population to adequate health care; optimizing utilization of existing resources; maintaining and/or advancing the highest quality of health care provided; and encouraging cost containment will have priority in descending order for consideration in certificate of need review by the Office of Health Planning and Development, DHRS, State of Florida. The policies below are referenced as to their corresponding priority category. District V 1985 Health Plan, page 159. The top priority contained in the District V 1985 Health Plan is as follows: 1. (A) Future expansion of acute care hospital facilities should be through existing providers with a history as major providers of care to the medically indigent (those persons meeting one or more of the following criteria: eligibility for Medicaid, county assistance, Children's Medical Services support, Baker Act, or without health insurance and below 125 percent of the federal poverty level) as measured by the relative percentage of total Medicaid patient days provided in the planning are (sub-district). District V 1985 Health Plan, page 159. In the Stipulation and Agreement entered into by the Department and the Petitioner approving the issuance of certificate of need 3349 to the Petitioner, the Department indicated that one of the reasons why it was agreeing to issue the certificate of need was the Petitioner's history of providing care to the medically indigent. The Petitioner has a Medicaid participation agreement and participates in the Florida Medicaid program for acute care and psychiatric patients. Historically, the Petitioner has provided a high percentage of its patient care to Medicaid patients: 10 percent in 1982-83 and 15 percent in 1983-84. The Petitioner has been one of the top 3 Medicaid providers in District 5 on a percentage basis and one of the top 2 providers in southern Pinellas County. Looking at the percentage of Medicaid patients at the Petitioner in determining the need to move the acute care facility is somewhat misleading because the Medicaid care provided had been largely attributable to care provided to psychiatric patients. The Petitioner has projected only 511 patient days for the treatment of acute care Medicaid patients in 1990 or 2 percent of its projected acute care services in 1990. The Petitioner has projected no Medicaid patients will be treated in the newly approved 46 long-term psychiatric beds. The Stipulation and Agreement indicates that the Department was agreeing to issue the certificate of need partly because of the Petitioner's "unique ability to provide long term psychiatric care to adult Medicaid patients". This justification for issuing the certificate of need is unfounded. Medicaid reimbursement for psychiatric care is only available to those entities which provide psychiatric care in conjunction with an acute care hospital. Therefore, if the acute care portion of the Petitioner were to close, Medicaid reimbursement would not be available in the psychiatric facility. The Petitioner has projected that 50 percent of its total patient days for short-term psychiatric care will be provided to Medicaid patients: approximately 2,555 days. Historically, approximately 40 percent of the Petitioner's psychiatric patient days have been attributable to Medicaid patients. The Petitioner provides about the only hospital emergency care to Medicaid short-term psychiatric patients. If the Petitioner were unable to provide psychiatric care to Medicaid patients, the amount of care to short-term psychiatric care patients would be diminished in Pinellas county. The Petitioner has been providing a service called "Provide-a-ride" since July of 1985. This service is a free mini-bus service which provides transportation to patients and their families who live within 10 miles of the hospital and need transportation to the hospital regardless of their ability to pay. This service will be continued if the project is approved and will provide transportation to both facilities. Although the Petitioner did not report any indigent care on its HCCB reports, the Petitioner has been providing about 2 percent to 2.5 percent indigent care. Generally, the Petitioner admits indigent patients in need of emergency care only. On occasion, the Petitioner admits indigents who are not in need of emergency care upon request by staff or if the patient is a person who has had a long term relationship with the hospital. The Petitioner's indigent care policy will continue if the project is approved. Total indigent care and bad debt has been projected at 5.7 percent of gross revenue. Most of the Petitioner's Medicaid patients reside in the area which surrounds the present location of the hospital. This area is a lower economic class neighborhood of downtown St. Petersburg, Florida. At least 50 percent of the Petitioner's patients reside in the immediately surrounding area. The proposed location of the new acute care hospital is in a higher economic class area of Pinellas County. If the acute care hospital is moved, the facility will be less accessible to the indigent and Medicaid patients the Petitioner has served in the past. The new acute care facility would be located approximately 8 to 10 miles from the present location of the Petitioner. This problem may be alleviated somewhat by the Provide-a-ride service. Approval of the project would give access to a relatively small number of Medicaid patients to a modern and efficient acute care facility. Medicaid patients are currently receiving adequate care at the existing facility. Therefore, if the project is not approved, it does not mean that Medicaid patients will not have access to the care they need. Maldistribution of Beds and Overbedding. The 1985-1987 State Health Plan contains 11 top priority goals as an "agenda for action" for state health planners. Goal 8 of the State Health Plan's top goals is "[t]o promote the efficient utilization of acute care services". An "objective" of goal 8 and the recommended action to accomplish the objective are -as follows: OBJECTIVE 8.1: By 1989, attain an average normal occupancy rate of at least 80 percent for all non- federal, short-stay hospital beds considered together in each of Florida's eleven HRS districts. RECOMMENDED ACTION: 8.1a.: Restrain increases in the supply of licensed hospital beds in Florida via the state certificate of need program. 8.1b.: Eliminate excess capacity via bed retirement or reallocation. The 1985-1987 State Health Plan recognizes that there is a significant surplus of acute care beds in Florida. The Plan suggests that, while the certificate of need program has been effective in containing further increases in acute care beds, the program has not been used systematically as a means of reducing the existing surplus of beds. It is then indicated that the following methods of reducing the surplus should be explored: "delicensure, bed retirement, 'selective phase-out', bed conversion, and bed relocation". With regard to bed retirement, the Plan provides: Bed retirement is a planned reduction in hospital bed capacity in conjunction with an effort to either renovate that hospital or to amortize its capital expenditures. Its most significant advantages over the delicensure strategy include the ability to be implemented directly through the certificate of need process and the ability to target actions directly to geographic areas with identified needs or surpluses of beds. The plan provides the following with regard to bed relocation: Finally, hospital bed relocation is an alternative which involves either the construction of a satellite facility, the construction of a new facility and "closing" the old one, or reducing the number of beds in one location while concomitantly increasing them at another. While this option first necessitates an applicant making an application for a move, it has the potential of reducing the number of beds in areas of surplus while increasing the supply of beds in identified shortage areas. The District V 1985 Health Plan contains the following goal: (B) Major plant renovation or replacement should be evaluated against the possible relocation to a sector of the planning area with a stated need. According to the Stipulation and Agreement entered into between the Petitioner and the Department, the proposed relocation of the Petitioner's acute care hospital "accomplishes the HRS goal of relocating beds from Southern Pinellas County to avoid maldistribution of general acute care beds in the County". In determining whether there is a maldistribution of beds in southern Pinellas County, Coal 7 of the State Health Plan should be considered. Coal 7 of the State Health Plan emphasizes the need to insure adequate geographic access of the population of a planning area to allopathic and osteopathic acute care beds. Being able to access an acute care bed within 30 minutes drive time is considered an appropriate standard in determining whether the population has adequate access. No area in Pinellas County or southern Pinellas County is more than a 30 minute drive from existing acute care facilities. The population surrounding the proposed new location of the Petitioner's acute care hospital does not have any geographic access problems. Allopathic and osteopathic acute care beds are readily accessible to those persons. Even if the Petitioner's acute care beds were eliminated completely, there would be no geographic access problem in Pinellas County. There is no need to improve geographic access to the population of southern Pinellas County. The Petitioner's present location is close to 4 other existing acute care hospitals: EHW is located within 1 mile or less; St. Anthony's is only 2 blocks away; Bayfront is approximately 2 miles away; and Humana-Sunbay is less than 5 miles away. These 4 hospitals have 1,120 licensed acute care beds or 49 percent of the acute care beds in southern Pinellas County. Relocation of the Petitioner's acute care hospital will relieve some of the congestion of acute care beds in the downtown St. Petersburg area and will relocate the acute care hospital to an area where there are no other hospitals within approximately 5 miles. The closest acute care hospitals to the proposed new location are Humana's facility and Metropolitan General, an osteopathic hospital. The Petitioner is an osteopathic hospital. It is the only osteopathic hospital in the area surrounding its present location. Therefore, if the acute care facility is relocated, there will not be any osteopathic hospitals left in the St. Petersburg area. The remaining hospitals should, however, be able to provide adequate osteopathic care to the St. Petersburg area. The proposed new location for the acute care hospital is closer to an existing osteopathic hospital. There is, therefore, less of a need for an osteopathic hospital in the proposed new location than there is in the present location. The State Health Plan suggests that relocation of acute care beds should be considered as a means of reducing excessive beds. Goal 4(B) of the local health plan also provides that relocation of an acute care facility should be evaluated in considering major renovations or replacements of facilities. Both plans, however, indicate that such relocations should be to an area where there is an "identified shortage" or a "stated need". Based upon the fact that the Petitioner does not currently offer or propose to offer any services not offered at other existing allopathic or osteopathic hospitals and the findings of fact concerning the need for acute care beds made, infra, the proposed location for the new acute care hospital is not an area with an identified shortage or a stated need. The Petitioner's proposal would result in a reduction of 29 acute care beds in southern Pinellas County. There are 4,205 licensed acute care beds in Pinellas County and 2,444 licensed acute care beds in southern Pinellas County. If 29 acute care beds are delicensed, there will be 4,176 acute care beds in Pinellas County and 2,415 acute care beds in southern Pinellas County. The delicensing of 29 beds is consistent with the methods for reducing the surplus of acute care beds recommended for consideration in the State Health Plan. Based upon the findings of fact set out, infra, there is such a significant excess of acute care beds in Pinellas County, the reduction of 29 beds is insignificant. Coal 8 of the State Health Plan promotes efforts to achieve 80 percent occupancy in acute care hospitals through retirement or reallocation of beds. The goal is not to simply delicense beds or reallocate beds. Delicensing 29 acute care beds and relocating the Petitioner's acute care facility will not achieve, or substantially aid achievement of, Goal 8. The Need for Acute Care Services. There is a significant surplus of acute care beds in district 5, Pinellas County and southern Pinellas County. For 1991, it has been projected by the local health council that there will be a surplus of 912 acute care beds in district 5, 943 in Pinellas County and 691 in southern Pinellas County. The excess of beds has caused hospitals to take licensed acute care beds out of operation. For example, the Petitioner is only operating 108 of its 129 acute care beds and only 75 of its total beds are actually staffed. The excess of acute care beds would exist if the Petitioner were to delicense 29 acute care beds or even if the Petitioner closed. There is also a surplus of osteopathic acute care beds. In 1991, it is projected that there will be an excess of 258 osteopathic acute care beds in district 5, 274 in Pinellas county and 179 in southern Pinellas County. These projections are based upon the 1985 use rate for osteopathic beds and 1991 population projections. It has been projected by the Department that there will be an excess of 196 osteopathic acute care beds in Pinellas County in 1989. Even if the Petitioner closed there would be an excess of osteopathic beds. There are a total of 18 osteopathic hospitals in Florida. Pinellas County has 4 osteopathic hospitals while no other county in Florida has more than 2. Three of the 4 hospitals are located in southern Pinellas County. Nationally the health care industry has experienced dramatic decreases in inpatient utilization: lengths of stay, use rates and occupancies have decreased significantly. One reason for the decline in inpatient utilization has been the development and application of the prospective payment system for Medicare services. This system, commonly referred to as "DGR's", has drastically reduced the length of stay of Medicare patients and has emphasized a shift from inpatient acute care service to outpatient care. The DGR system could cause some hospitals to close. Another reason for the decline in utilization has been the increased activities of insurance companies in utilization review and the promotion of outpatient and ambulatory care. A third reason for the decline in utilization has been the development and use of HMO's during the past 3 to 4 years. HMO's emphasize cost containment, reduction of inpatient stays and the use of outpatient and ambulatory care. The final reason for the decline in utilization has been the growth of ambulatory surgery centers and minor and emergency care centers. The decline in inpatient utilization began in 1983 and continued through 1984 and 1985. It is likely that the trend will soon stabilize, if it has not already done so. The high utilization levels of 1982-1983 will not return, however. The local health council's patient day projections assume a constant 1985 use rate. The trend in inpatient utilization in district 5 and Pinellas County has paralleled the national trend. There has been a significant decline in inpatient days, occupancy levels and use rates from 1983 to 1985. From 1983 to 1985, there was a drop in total patient days of 15 percent in district 5 (a drop of 220,000 days), 15 percent in Pinellas County, and 18-19 percent in southern Pinellas County (a drop of 130,000 days). Medical/surgical and ICU patient days dropped 18-19 percent in district 5, 20 percent in Pinellas County and 23 percent in southern Pinellas County, the largest drop in the district. Occupancy rates from 1983 to 1985 also declined: from 68 percent to 56 percent in district 5 and 65 percent to 52 percent in southern Pinellas County. Medical/surgical and ICU occupancy rates declined during this same period from 70 percent to 55 percent in district 5 and from 66 percent to 51 percent in southern Pinellas County. The declines in inpatient utilization experienced in southern Pinellas county and district 5 have occurred notwithstanding the fact that the population of the area has been growing during the period of decline. As a result, the use rate has also declined from 1983 to 1985. In district 5 the use rate (patient days per 1,000 people) dropped 20 percent for all beds and 22-23 percent for medical/surgical and ICU beds. A similar drop in the use rate was experienced in Pinellas County and southern Pinellas County. Osteopathic utilization has also declined. Total osteopathic patient days in district 5 have decreased 16 percent. Osteopathic medical/surgical patient days have decreased 22-23 percent. The 1985 occupancy rates for the 4 osteopathic hospitals in Pinellas County were 25 percent at the Petitioner, 59 percent at Metropolitan, 43 percent at University General and 46 percent at Sun Coast. These facilities experienced declines from 1983 to 1985 in occupancy similar to all district 5 hospitals. It is expected that total patient days in Pinellas County will stabilize at the 1985 levels or even decrease further. These projections are based upon the fact that patient days currently in Pinellas County are high. Occupancy rates may increase in Pinellas County a little but will not begin to approach 80 percent, the optimal occupancy rate for medical/surgical and ICU beds. The occupancy rate projected for 1991 is 54 percent for southern Pinellas County, 58 percent for Pinellas County and 61 percent for district 5. If the Petitioner's acute care beds were no longer in existence, the projected 1991 occupancy rate would still only be 61 percent in district 5, 60 percent in Pinellas County and 57 percent in southern Pinellas County. No osteopathic hospital would achieve the optimal occupancy rate of 80 percent even if the Petitioner's beds were eliminated. The population growth projected for Pinellas County is expected to be moderate to low. From 1985 to 1990 the population is projected to grow at a rate of 6.7 percent compared to a rate of growth during the same period of 11 percent for the State. The rate of population growth in southern Pinellas County may only be 4.3 percent. The rate of growth for the zip code of relocation is only projected at 5.5 percent. The declines in utilization being experienced in southern Pinellas County have also been experienced at the Petitioner's facility. Although the Petitioner did not experience a decline in its utilization between 1984 and 1985, it has had a decline from 1983 to 1985 in its patient days of from 20,000 to 12,000 patient days or a 40 percent drop. The Petitioner's occupancy rate of 25 percent is also extremely low. The occupancy rate of its ICU unit is less than 50 percent. The average length of stay at the Petitioner has also decreased from 9.28 days to 6.9 days. The Petitioner's proposed new acute care facility will offer no services not currently available at existing osteopathic hospitals in southern Pinellas County. The foregoing findings of fact support a finding that the proposed location of the new acute care facility is overbedded and there are ample acute care beds to meet any need of the population residing in that area. There is simply no need for additional acute care beds in the area the Petitioner proposes to relocate to. Osteopathic Considerations. The Petitioner is an osteopathic hospital. It is the oldest osteopathic hospital in Florida. The Petitioner is accredited by the AOA. AOA accreditation requires that the chief of medical staff, the vice chief of staff, and all major department heads must be DO's and that there be a high concentration of DO's on staff. Osteopathic medical practice differs in philosophy from allopathic medicine. Osteopathy emphasizes the importance of the musculoskeletal system as a determinant of disease. Osteopathy utilizes manipulative therapy as a treatment modality while also utilizing the same type of pharmaceutical and surgical treatments employed by allopathic physicians. Approximately 70 percent of the total patient admissions at the Petitioner are admitted by DO physicians. Approximately 85 percent of the acute care (non-psychiatric) admissions by the top 20 admitting physicians are made by DO's. During the period January through October of 1985 70.8 percent of admissions were by DO's and 29.2 percent were by allopathic physicians. The percentage of DO and allopathic physician patient days experienced by the Petitioner is comparable to the percentage of admissions. The Petitioner does not advertise as an osteopathic hospital. There are approximately the same number of allopathic physicians and DO's on the Petitioner's staff. Psychiatric patient days account for approximately one-third of the Petitioner's total patient days. The psychiatric department is chaired by an allopathic physician. EXISTING PROVIDERS. The Availability, Quality of Care, Efficiency, Appropriateness, Accessibility, Extent of Utilization and Adequacy of Like and Existing Health Care Services. Like and existing health care services are readily available, accessible, adequate and significantly under- utilized. The evidence failed to prove that like and existing health care services do not provide quality of care or are not efficient or appropriate. Effect on Existing Providers; Standing. The Petitioner proposes to relocate its acute care facility in zip code 33702. The zip codes contiguous to this zip code are 33565, 33709, 33714 and 33703. The proposed relocation site is approximately 8 to 10 miles from the Petitioner's existing site. Therefore, the Petitioner would be moving further away from all of the Intervenors except Humana if the project is approved. The proposed site will be closer to Humana's current location. The Petitioner, the Intervenors and other existing acute care facilities in southern Pinellas County currently compete throughout the planning area for patients. All of the parties draw patients from most of southern Pinellas County, including the relocation area. The Petitioner's service area consists of most of southern Pinellas County east of 49th Street and north to the subdistrict boundary. One of the factors which influences where patients go for acute care is the proximity of an acute care hospital to the patient's residence. Patients generally tend to seek care at a hospital close to their residence. Because patients tend to seek care at a hospital close to their residence, the closer hospitals are to each other the greater the impact they have on each other. Another factor which influences where patients seek acute care services is their physician's affiliations with area hospitals. If a patient's physician has admitting privileges to a particular hospital, the physician will refer the patient to that facility. The Petitioner had 99 physicians on staff of which 48 admitted patients in 1985. More than half of the Petitioner's active physicians have offices proximate to the Petitioner's present location. Approximately one-third of its active physicians have offices closer to the proposed relocation site. No less than 8 physicians currently have offices in zip code 33702. If the Petitioner relocates its acute care facility to zip code 33702, its primary service area will shift to the north of its current location. This conclusion is based partly upon the fact that patients tend to seek services at the closest hospital. Therefore, the Petitioner would more than likely draw a greater number of patients from zip code 33702 and the immediately surrounding zip codes than it currently does. The shift in the Petitioners primary service area will also be influenced by its efforts to recruit additional allopathic and osteopathic physicians. Because physicians tend to seek admitting privileges at hospitals closer to their offices, it is probable that any newly recruited physicians will come from near the area of the proposed relocation. Physicians in the area of relocation attract patients who reside in the area. Therefore, the addition of physicians will tend to increase the number of patients from the area of relocation which will be referred to the Petitioner's new facility. The conclusion that the Petitioner's service area will shift to the north is further supported by the fact that the Petitioner's current primary service area includes the area within a 2 to 3 mile radius of the current location of the Petitioner's hospital. Only 28 percent of the Petitioner's admissions currently come from the area north of 38th Street North, which is south of the proposed new location. Finally, the finding that the Petitioner's service area will shift to the north is supported by the fact that the Petitioner currently receives a significant percentage of its admissions through its emergency room. Emergency rooms tend to be used primarily by patients in proximity to the location of the hospital. The Petitioner has projected that it will have over 25,000 patient days at its acute care facility in 1990 and over 28,000 patient days in 1991. The Petitioner currently has had only 12,000 acute care patient days. To achieve the Petitioner's projected patient days for 1990 and 1991, the Petitioner will have to increase its patient days by more than 13,000 days in 1990 and more than 16,000 days in 1991. The increase in patient days necessary to achieve the Petitioner's projections for 1990 and 1991 assumes that the Petitioner will retain its current patient load. This is not a reasonable assumption because the Petitioner's relocation will cause a shift in its service area away from its existing location. Therefore, it is reasonable to conclude that the Petitioner will experience some loss of the patient days it has been experiencing at its current location. The Petitioner may lose up to 40 percent of its current patient days because of the relocation of the acute care facility or 4,800 patient days. Unlike a newly proposed hospital, the Petitioner has an on-going relationship with local physicians, nursing homes, home health agencies and mental health organizations which will assist the Petitioner in ensuring some continuum of patient care. The expected continuing referral base will not, however, result in the Petitioner retaining all of its existing patients. The Petitioner has also projected a significant increase in its outpatient services. Such an increase will likely have the effect of decreasing its inpatient days. Based upon these findings of fact, the Petitioner will have to significantly increase its patient days in 1990 and 1991 in order to meet its projections. The increase in patient days required is significantly more than 13,000 days in 1990 and 16,000 days in 1991. The area of relocation is projected to have higher population growth than other areas of southern Pinellas county. The relocation area is also an area of higher income, residents in the relocation area are generally older than those near the existing site and there is a substantial amount of undeveloped land in the area of the proposed relocation. Despite these facts, it is not likely that the Petitioner can generate the increases in patient days necessary to achieve its projections unless it can enlarge its service area and/or increase its market share significantly. This conclusion is based upon the moderate growth rate expected in Pinellas county and southern Pinellas County projected for 1990 and 1991, and the fact that the use rate of acute care beds is not likely to increase in the future, in southern Pinellas County. In order for the Petitioner to enlarge its service area and/or increase its market share it will be necessary for the Petitioner to take patient days from other existing acute care providers in southern Pinellas County. In light of the significant surplus of acute care beds and the very low utilization of acute care facilities in southern Pinellas County, if patient days are reduced at other acute care facilities by the relocation of the Petitioner's acute care facility, there will be an adverse impact on existing providers who currently serve the proposed area of relocation of the Petitioner. The adverse impact which will be caused by the proposed move of the Petitioner's acute care hospital will include a reduction of both osteopathic and allopathic patient days. There are currently adequate services being provided to persons who desire osteopathic services in Pinellas County. Existing osteopathic acute care facilities are experiencing low occupancies and have a large surplus of beds. These circumstances will not significantly change by 1990 and 1991. It is unrealistic to assume that the increase in patient days which the Petitioner will have to achieve to meet its projections will come from just osteopathic patients. Applying the osteopathic use rate of 1985 to the 1990 projected population, there will only be an increase of 2,000 osteopathic patient days. Even if the Petitioner were able to capture this entire increase (which is not realistic since there are two other osteopathic hospitals in southern Pinellas County) it would still be necessary for the Petitioner to capture a significant number of allopathic patient days to achieve its projections. Although the Petitioner's proposed relocation site is close to the bridges connecting Pinellas and Hillsborough Counties and is served by major traffic arteries the Petitioner failed to prove that it will generate a substantial number of patient days from traffic accidents. Humana is a designated Level II Trauma Center. Major traffic accident victims would therefore probably be taken to Humana and not to the Petitioner's proposed new hospital. All of the intervenors derive a substantial number of their patients from the area of the proposed relocation. EHW receives 14.7 percent of its patients from around its present location. It also receives 35 percent of its patients from the area of the proposed relocation. It receives the second highest number of patients from zip code 33702. Humana's service area is proximate to its present location which is close to the proposed relocation site. It receives the second highest number of patients from zip code 33702. St. Anthony's and Bayfront have historically derived patients from the proposed relocation area. In order for the Petitioner to achieve its projected utilization it will have to draw more patients from the proposed relocation site. Those patients will have to be taken from the patients currently being received by the Intervenors. The proposed relocation area provides a higher percentage of private pay and commercially insured patients to some of the intervenors. Therefore, patients lost by the Intervenors will be paying patients. Bayfront provided more than $12,500,000.00 of uncompensated care in 1985. This amounted to 15 percent of its gross revenue. During the first 10 months of 1986, Bayfront provided $15,800,000.00 in uncompensated care. Bayfront is a leading provider of indigent care in Pinellas County. St. Anthony's provided $9,000,000.00 of uncompensated care in 1985. Medicaid, charity and bad debt amounted to approximately one-third of its gross revenue. St. Anthony's is a leading provider of indigent care in Pinellas County. If the Petitioner relocates its acute care hospital, those Intervenors currently located in proximity to the Petitioner will receive some of the patients which do not choose to use the Petitioner's proposed new location site. Many of those patients will be indigents. The loss of paying patients and the increase in indigent patients which can be expected at Bayfront and St. Anthony's will affect their ability to provide indigent care. The fixed costs at Bayfront and St. Anthony's will not change substantially. These costs will be absorbed by fewer paying patients. This will cause an increase in medical costs to paying patients at those hospitals. The Intervenors already have low occupancies. Humana's occupancy in fiscal 1985 was only 31 percent. During the last four months of calendar 1985, Humana's occupancy was 27 percent, 26 percent, 29 percent and 25 percent, respectively. The occupancy rate at EHW is 46 percent. Based upon the foregoing findings of fact, it is concluded that the proposed relocation of the Petitioner's acute care facility will have a substantial and adverse impact on the Intervenors if the Petitioner is to achieve its projected utilization. The Intervenors, therefore, have standing in this proceeding. PROJECT COSTS AND FINANCIAL FEASIBILITY. Project Costs. The estimated total project cost for the proposed new acute care facility approved by the Department was $19,998,100.00. This total cost consists of the following amounts: PROJECT DEVELOPMENT COSTS $ 35,000 FINANCING COSTS 1,011,300 PROFESSIONAL SERVICES: Architect-Engineering Fees $764,400 Site Survey-Soil Borings 15,000 Construction Supervision 50,000 SUB TOTAL PROFESSIONAL SERVICES 829,400 CONSTRUCTION COSTS: Site Preparation $230,000 Construction (Labor, Etc.) 10,400,000 Contingency (5 percent) 520,000 SUB TOTAL CONSTRUCTION COSTS 11,150,000 EQUIPMENT COSTS: Fixed Equipment $375,830 Movable Equipment 4,367,570 SUB TOTAL EQUIPMENT COSTS 4,743,400 RELATED COSTS: Land Acquisition $1,325,000 Pre-Opening Expense 15,000 SUB TOTAL RELATED COSTS 1,340,000 ESTIMATED TOTAL PROJECT COSTS . . . $19,998,100 The amended certificate of need application approved by the Department indicated that a 12.78 acre parcel of land would be acquired by the Petitioner for the location of the new acute care facility. Only 10 acres of the 12.78 acre parcel will actually be used by the Petitioner for the acute care facility. A wholly owned subsidiary of AHM acquired 7.42 acres of the land to be used for the acute facility for $1,400,000.00. In addition to the purchase price for the land, $210,000.00 was paid in option payments of $14,000.00 a month for 15 months before the land was acquired. The same subsidiary acquired the other 2.58 acres of land to be used for the new acute care facility for $50,800.00. The other 2.78 acres of the 12.78 acre parcel are owned by the same subsidiary corporation and are used by a medical clinic/diagnostic center. The total purchase price for land to be used for the new acute care facility is $1,660,800.00. This is $335,800.00 more than the amount approved by the Department for the acquisition of land for the project. The approved construction costs for the new facility were based upon an estimated cost of $105.00 per square foot of construction. The total square footage of the new facility is 99,062 square feet. Based upon the experience of AHM at Riverside Hospital, an AHM project in district 5, the new proposed facility can be constructed for $100.00 per square foot, including site preparation which was approved as a separate amount in excess of the $105.00 per square foot of construction in the proposed certificate of need. The total construction costs, including site preparation, will be $10,055,000.00 as opposed to the $10,630,000.00 approved in the proposed certificate of need ($10,400,000.00 for construction plus $230,000.00 for site preparation). This results in a reduction in the total cost for construction and site preparation of $575,000.00. The reduction in construction costs also results in a reduction in the contingency which was based upon an estimate of 5 percent of construction costs. The reasonable contingency is $502,750.00 or $17,250.00 less than the $520,000.00 approved by the Department. The total construction costs will be $10,557,750.00 instead of $11,150,000.00 as approved by the Department. This results in a total reduction of the estimated construction costs of $592,250.00. This amount is more than enough to cover the additional costs for the acquisition of land for the new facility. The $764,400.00 architect-engineering fees approved by the Department are based upon an estimated 7 percent of construction costs and contingency. These fees can reasonably be based only on the new construction costs without the contingency fee. Because the construction costs will only be $10,055,000.00, the fee will be $703,850.00 or a reduction in the total costs of $60,550.00. The approved costs for project development ($35,000.00), site survey- soil borings ($15,000.00), construction supervision ($56,000.00) and pre-opening expense ($15,000.00) are reasonable. The approved total cost for equipment of $4,743,400.00 is reasonable. This amount is approximately $1,100,000.00 less than the cost for equipment for a 100 bed acute care facility because the Petitioner will be able to use equipment already being used at the existing acute care facility. The $1,900,300.00 approved by the Department for financing costs for construction of the new facility is sufficient to cover financing costs. This amount is based upon a 20 month construction period and at an interest rate in excess of 11 percent. The project can be completed in 15 months and can be financed at an 11 percent interest rate. Therefore, even if the additional land costs of $335,800.00 are added to the amount to be financed, the approved amount of financing is adequate. Additionally, the amounts saved for construction costs and architect-engineering fees will reduce the amount of interest. The projected cost of the acute care facility is within the reasonable range of $180,000.00 to $200,000.00 per bed. The Department has approved $1,948,040.00 for construction pertaining to the psychiatric phase of the proposed project. This amount consists of $100,000.00 for site preparation, $1,760.040.00 for labor and materials and a 5 percent contingency of $88,000.00. The duration of this phase is 12 months. Architect-engineering fees of $147,850.00 and construction supervision charges of $37,800.00, or a total of $185,650.00, have been approved for the psychiatric phase. Pre-opening expenses of $15,000.00 for the psychiatric phase have been approved. Equipment costs of $639,900.00 have been approved for the psychiatric phase. This amount is between $260,000.00 and $560,000.00 less than the cost necessary to equip a new facility. The estimated $54,000.00 necessary to demolish 9 existing structures is an overestimate. Six buildings have already been demolished for a total cost of $16,000.00 instead of $36,000.00 or a savings of $20,000.00. The original estimate was based upon a cost of $6,000.00 per building. The $209,145.00 for financing cost associated with the psychiatric phase is more than will be incurred. The psychiatric phase can be financed at 11 percent, which is less than the rate of interest used to originally estimate financing cost for this phase. The projected costs for both phases of the proposed project are reasonable. Both phases can be constructed and equipped for less than the originally approved total project cost of $22,995,835.00 approved by the Department. The total project cost is reasonable. Short-Term Financial Feasibility. The Petitioner, through its parent AHM, has the ability to fund the proposed project in the short-term. One method of financing the project would be through an existing $250,000,000.00 revolving credit facility. Of this amount, approximately $230,000,000.00 has currently been borrowed at an average interest rate of 9.9 percent. Loans through the credit facility are generally for no longer than 1 year. No long-term financing for the project has been arranged by the Petitioner or AHM. In addition to the revolving credit facility, other methods of financing are available, including $7,000,000.00 to $10,000,000.00 in lease lines which are available for equipment acquisition from 10 leasing companies. The Petitioner's project is financially feasible in the short-term. Long-Term Financial Feasibility. The proposed project involves two phases: the construction of a new acute care facility and the renovation of the existing structure for use as a psychiatric facility. Therefore, the Petitioner prepared pro formas for the first 2 years of operation of the total project. The psychiatric phase, the last to be completed, will be completed in August, 1989. Therefore, the Petitioner prepared pro formas for calendar years 1990 and 1991. The formal hearing in these cases only involved the question of whether the acute care phase of the project should be approved. Therefore, at the final hearing the Petitioner only presented pro formas for the acute care phase. The pro formas presented were for the calendar years 1990 and 1991. The acute care phase of the project is to be completed in approximately August, 1988. Evidence as to how the acute care facility will perform financially during the 16 to 17 months between the time the acute care facility would open and the first calendar year for which a pro forma was prepared has not been presented. The acute care phase of the proposed project represents the largest portion of the project both in terms of total costs and revenue. Therefore, pro formas should have been prepared and presented to the Department and at the final hearing indicating the projected performance of the acute care facility from August, 1988 until 1990. The Petitioner has projected a loss before taxes of $186,418.00 from operation of the acute care facility in 1990. It is reasonable to conclude that the acute care facility will also lose money during the 16 to 17 months of operation before 1990. The Department requires that pro formas must reflect financial feasibility during the first 2 years of operation. The 2 years begin when the facility is opened. In this case, the "facility" is a combination of the acute care and psychiatric facilities. Therefore, the Petitioner properly submitted financial statements for 1990 and 1991. The Petitioner has failed to include the probable loss from its acute care facility during the first 16 to 17 months of operation in its pro formas for 1990 and 1991. The Petitioner's projected revenues from the proposed project are based upon patient utilization and payor mix projections. For 1990, the Petitioner's payor mix will be 8 percent of patient days attributable to Medicaid, 40 percent Medicare, 2 percent Blue Cross, 46 percent private pay and other insurance, and 4 percent HMO. For 1991, the payor mix will be 7 percent Medicaid, 39 percent Medicare, 2 percent Blue Cross, 49 percent private pay and other insurance and 4 percent HMO. Acute care patients will consist of all the projected payor classes. Short-term psychiatric patients will consist of all the projected payor classes except HMO. Long-term psychiatric patients will consist of private pay and other insurance only. The revenue estimated for the acute care facility for 1990 and 1991 is based upon the Petitioner's projected fees for its services and its projected 1990 and 1991 patient days. From a health planning perspective, financial feasibility during the first 2 years of operation is very important. The Petitioner's projected 1990 and 1991 patient days were derived by the application of several "differing products derived from the same basic methodology using combinations of different historic utilization data in order to reflect overall trends occurring since 1982. In arriving at its projected 1990 and 1991 patient day forecasts the Petitioner made two assumptions: the Department's July, 1985 estimate of patient days for district 5 for 1990 and 1991 is a reasonable estimate of the total patient days for the district for 1990 and 1991; and the Petitioner's share of the district acute care patient days in Pinellas County will remain the same--there will be no adverse impact on existing providers and the Petitioner will not increase its market share. The Petitioner determined its estimate of its 1990 patient days generally in the following manner: In 1985, there were 1,157,024 total acute care patient days in district 5. Pinellas County had 82.7 percent of the total acute care patient days for the district in 1985--1,157,024 x 82.7 percent = 956,349 days. Osteophatic hospitals in southern Pinellas County had 13.5 percent of the total acute care patient days for Pinellas County in 1985--956,349 x 13.5 percent 129,027 days. In 1983 the Petitioner had 14.6 percent of the total osteopathic acute care patient days. In 1985 the Petitioner had 14.3 percent of the total-- 129,027 x 14.3 percent 18,407 days. The Department's July, 1985 estimate of 1990 patient days for acute care hospitals in district 5 is 1,626,476 days. If Pinellas County retains 82.7 percent of the total district patient days in 1990, Pinellas County will have 1,345,096 acute care patient days in 1990. If Pinellas County osteopathic hospitals retain 13.5 percent of the Pinellas County patient days, they will have 181,588 acute care patient days in 1990. If the Petitioner retains 14.3 percent of the osteopathic hospital patient days, it will have 25,967 acute care patient days in 1990. The Petitioner estimated its 1991 patient days forecast in essentially the same manner that it estimated its 1990 patient days. For 1990 the Petitioner has projected a total of 39,905 patient days for both facilities. For 1991 the Petitioner has projected a total of 45,030 patient days for both facilities. For 1990 the Petitioner has projected a total of 25,560 acute care patient days and 14,345 psychiatric patient days. For 1991 the Petitioner has projected a total of 28,167 acute care patient days and 16,863 psychiatric patient days. To determine whether the Petitioner's patient days forecasts are reasonable, the demographics of the area, the occupancy at existing providers, utilization trends in the area and the historical performance of the Petitioner must be considered. Findings of fact concerning demographics of the area had been made, supra. The population estimates used by the Department in its patient day projections which were relied upon by the Petitioner for purposes of forecasting patient days are reasonable. The population figures used by the Department are based upon the Office of the Governor's 1990 and 1991 population estimates. Findings of fact concerning the occupancy of existing providers have also been made, supra. For 1990, the Petitioner's projected patient days would require that the Petitioner achieve a 70 percent occupancy rate. There is not a single acute care facility in southern Pinellas County which currently has a 70 percent occupancy rate. In the immediate area where the Petitioner proposes to relocate its acute care facility, the closest existing acute care facilities, Humana and Metropolitan (an osteopathic hospital), currently have had occupancy rates of only 28 percent and 59 percent, respectively. Based upon trends in acute care hospital utilization, it is unreasonable to project a 70 percent occupancy rate at the Petitioner's proposed facility. Findings of fact concerning utilization trends in Pinellas County have been made, supra. Those findings of fact affect the determination of whether the Petitioner's reliance on the Department's projected patient days for 1990 and 1991 is reasonable. The Department's patient day projections are made and used by the Department for projecting acute care bed need throughout the various districts of the state pursuant to Rule 10-5.11(23), Florida Administrative Code. This rule has no direct application in this case (It is for use in estimating bed need and not financial feasibility) and therefore the reasonableness of the patient day forecasts made for use under the rule must be determined in this proceeding. The patient day forecasts made by the Department are based upon the 1983 and 1984 utilization data for district 5. These utilization rates and average lengths of stay are outdated and do not properly take into account the current trends in the health care industry. The local health council uses current utilization trends to project 1990 utilization. In order to conclude that the Petitioners estimates are reasonable, it should have also used current occupancy, utilization and average length of stay trends. Although the Department's projections of patient days take into account inter-district patient inflow and outflow, they do not take into account the continuing trend of decreased utilization and average length of stay and the increase in out-patient care which has been experienced in Pinellas County in 1985. These trends will continue or at least not be reversed in the immediate future. In making its projections, the Petitioner has projected a 19 percent increase in patient days from 1990 to 1991. From 1983 to 1985 patient days have been decreasing. The use rate from 1983 to 1985 has declined 22 percent. It is, therefore, very unlikely that the Petitioner will experience a 19 percent increase in patient days from 1990 to 1991. In order for the Petitioner to achieve its forecast of patient days it will have to more than double its present patient days. In 1984 and 1985 the Petitioner had 12,000 and 11,964 patient days, respectively. Its current occupancy rate is less than 30 percent. It is very unreasonable to project that its patient day total and its occupancy rate will more than double. This fact is supported by the fact that the Petitioner has assumed a significant increase in outpatient services. Such an increase would cause a decrease in inpatient services. Therefore, if the Petitioner achieves its projected outpatient increase in services, it will be even more difficult for the Petitioner to achieve its projected utilization. Although the Petitioner did not experience a decline in its utilization from 1984 to 1985, it has had a decline in its patient days of from 20,000 to 12,000 patient days or a 40 percent drop from 1983 to 1985. From 1983 to 1985 the Petitioner also experienced a drop in its average length of stay from 9.28 days to 6.9 days or a 30 percent decrease. The declines in use of the Petitioner's acute care facility have been similar to the trends experienced at other acute care facilities. Therefore, although the Petitioner can expect some improvement in its utilization if it could replace its present facility, it is unlikely that it can achieve its projected increases in light of the trends generally being experienced by most acute care facilities in Pinellas County. In making its projections, the Petitioner included its short-term psychiatric bed utilization. The use of its short-term psychiatric beds has been substantially greater than its acute care beds. Therefore, its 1985 utilization of 14.3 percent is inflated. The only way that the Petitioner could hope to achieve its 1990 and 1991 projected patient days would be to increase its market share. The Petitioner had a 2.5 percent share of the market in southern Pinellas County in 1985. If this market share is applied to the local health council's projected patient days for southern Pinellas County for 1990, the Petitioner would only have 12,000 to 13,000 patient days. It would therefore have to double its market share to achieve its projections. The local health council relies upon current occupancy data in projecting future utilization. A large part of any increase in the Petitioner's market share would come from the area around its area of relocation. The Petitioner can expect some increase in its utilization if the proposed project is approved. Such an increase would be attributable to increases in population and the availability of a modern acute care facility. Optimistically, the Petitioner may be able to generate no more than 15,000 acute care patient days in 1990 if the facility is relocated. Utilization of osteopathic hospitals in Pinellas County has decreased since 1983 even though the number of osteopathic physicians has increased. Therefore, even an increase in osteopathic physicians between now and 1990 may not cause an increase in patient days at the Petitioner's proposed facility. Based upon the foregoing findings of fact, the Petitioner's forecast of patient days and its reliance upon the Department's forecast of patient days for 1990 and 1991 for purposes of Rule 10-5.11(23), Florida Administrative Code, are unreasonable. The Petitioner's projected psychiatric utilization for 1990 is reasonable. It is supported by the historically high psychiatric utilization experienced by the Petitioner and at the district's only existing long-term psychiatric facility, Anclote Manor of Tarpon Springs. In 1985, for example, Anclote Manor experienced 39,157 patient days at its 130 bed facility. Anclote Manor's occupancy levels have ranged from 98 percent in 1983 (99 licensed long- term beds) to 85 percent in 1985 (130 licensed long-term beds), well above the 80 percent occupancy level deemed necessary by Rule 10-5.11(27), Florida Administrative Code, to support an increase in beds, even in light of the approximate 31 percent increase in the number of beds licensed at Anclote. The Petitioner projects that its existing fourteen short-term psychiatric beds will experience the same full utilization historically maintained, thereby providing approximately 5,110 patient days. To achieve the projected total psychiatric utilization, the 46 long-term beds need only experience a 55 percent occupancy rate to yield the total of 9,235 patient days needed to fulfill the projection. The charges for services upon which the pro forma revenue projections are based are the current room rates for acute care and short-term psychiatric services inflated by a factor of 4.5 percent per annum. Room rates for long- term psychiatric services are based upon the rates charged by Anclote Manor in 1983. Combined gross revenues consist of inpatient revenue, outpatient revenue, and "other" revenue. The Petitioner projects combined gross revenues for the pro forma period broken down as follows: 1990 1991 Acute Care $30,182,802 $34,562,630 Psychiatric 4,963,960 5,913,486 Total $35,146,762 $40,476,116 Inpatient revenues include room charges and ancillary service charges associated with the patient's hospital stay. Inpatient revenues are projected as follows: 1990 1991 Acute Care $23,349,071 $26,456,771 Psychiatric 4,904,392 5,842,524 Total $28,253,463 $32,299,295 Inpatient revenue projections are based upon the projected room charges and a per patient day ancillary services factor. The ancillary services factor is based upon ancillary services revenue experienced in 1985 inflated by a factor of from 4 percent to 6 percent per year. Little ancillary revenue is projected for the psychiatric unit, since, historically, psychiatric patients make less use of ancillary services during hospital stays. Outpatient revenue-projections are based upon the Petitioner's historical experience and, consistent with recent trends toward increased outpatient utilization, include a 2 percent to 3 percent percentage increase over present experience. Outpatient-- revenues are projected as follows: 1990 1991 Acute Care $ 6,759,474 $ 8,030,174 Psychiatric 54,604 65,049 Total $ 6,814,078 $ 8,095,223 The Petitioner's pro formas project a small amount of "other" revenue, derived from such things as recycling silver from x-ray film. Total other revenue for 1990 is projected at $79,221.00 and for 1991, $81,598.00. This total represents the Petitioner's 1985 historical experience inflated to the future at the same 4 percent to 6 percent inflation rate utilized to derive other revenues. The Petitioner's proposed charges are reasonable. The total amount of projected inpatient acute care revenue, however, is overstated because the utilization projections upon which the Petitioner estimated inpatient acute care revenue are unreasonable. Deductions from gross revenues flow from the fact that revenue received for services to certain classes of patients is less than the full charges for services rendered; e.g., Medicare DRG payment, below-cost Medicaid reimbursements, HMO discounts, etc. Deductions from revenue are projected at 38 percent of 1990 combined gross revenue, and at 40 percent for 1991, broken down as follows: 1990 1991 Acute Care $12,995,855 $15,464,713 Psychiatric 569,821 696,580 Total $13,565,676 $16,161,293 292. Medicare and Medicaid deductions represent the majority of deductions from revenue. For 1990, a combined total of $10,317,912.00 in Medicare and Medicaid deductions from revenue is projected. For 1991, this total is $12,425,883.00. The majority deductions are attributable to acute care services, which are reimbursed on the DRG system for Medicare and on a fixed fee, below-cost reimbursement under Medicaid. Unlike acute care services, psychiatric services are still reimbursed on a cost basis by Medicare. Medicaid psychiatric charges are sufficient to cover the cost of rendering the service provided. Projected 1990 Medicaid psychiatric service reimbursements contribute to, rather than require a deduction from, revenue. For 1990, $1,244,398.00 is projected as "other" deductions from revenue. For 1991, this figure is $1,428,271.00. This deduction is attributable to the Petitioner's participation as a HMO contract facility. All of this deduction is attributable to acute care services, there being no expected HMO involvement in psychiatric services. Based upon the Petitioner's actual 1985 experience as reported to the Hospital Cost Containment Board, "other" deductions attributable to HMO deductions for 1985 constituted 6.7 percent of gross revenue. The Petitioner's projection for 1990 is 4.1 percent of gross revenues. It is not reasonable to assume that the Petitioner's HMO deduction will decrease between 1985 and 1990. If 6.7 percent of gross revenues for 1990 and 1991 are assumed to be the correct percentage of the HMO deduction, the Petitioner has understated its deductions from gross revenues for 1990 by $785,000.00 and for 1991 by $899,000.00. The final deduction from revenue is attributable to charity and bad debts. For 1990, $2,003,336.00 is projected; for 1991, $2,307,139.00. These figures represent 5.7 percent of the combined gross revenues projected for each of the pro forma years. The percentage was selected as being representative of the Petitioner's historical experience. The Petitioner's actual 1985 charity and bad debt amounted to 6.8 percent of gross revenue. The evidence failed to prove, however, that the use of 5.7 percent was unreasonable. Salary expense projections are the product of the calculation of a current average salary rate per hour for the Petitioner, adjusted for inflation at a rate between 3 percent and 5 percent per year to the projected year, and multiplied by 2,080 hours and the number of projected FTE employees required. Benefit expense is computed as a percentage of projected salaries, at a rate of approximately 16.5 percent. Benefits include the cost of health insurance, FICA, unemployment taxes and related fringe benefit costs. Salary and benefit expenses are projected as follows: 1990 1991 Acute Care $ 7,366,540 $ 8,145,709 Psychiatric 2,367,717 2,750,973 Total $ 9,734,257 $10,896,682 The Petitioner's pro formas project $1,662,233.00 for depreciation expenses in 1990 and in 1991. For each year, $1,283,094.00 is allocated to the acute care facility, while $379,139.00 is allocated to the psychiatric unit. Depreciation is calculated on the straight line method typically employed by hospitals, as required by Medicare. Depreciation on buildings is calculated on the basis of a thirty year depreciation period with a 20 percent salvage value. Severable building equipment (such as elevators) is depreciated on a fifteen year period (with no salvage value); all other assets are depreciated on a ten year period, also with no salvage value. The cost for depreciation of existing assets is incorporated in the depreciation projections at their current value; new-assets are identified at their cost prices, to be depreciated when they are placed in service. The project depreciation expenses are overstated because construction costs are overstated. The category of operating costs includes much items as supplies, physician and consulting fees, utility costs, telephone expenses, taxes on real estate, and all other costs which do not fall under other specifically itemized categories. The estimated operating costs contained on the pro formas were derived by breaking down potential expenses into three categories: fixed costs, fixed costs related to real estate, and variable costs. For variable costs, based upon 1985 actual experience, a rate per patient day was derived and inflated at a rate of between 3 percent and 5 percent to derive a future estimated variable cost. For fixed costs related to real estate (such items as real estate taxes, telephone, light, heat, and power costs), appropriate usage rates were computed based upon expectations for the new facility. For example, on the assumption that new telephone system would be installed, a cost rate appropriate for a new system was incorporated within the projections. As to fixed costs generally, they were projected to the future based upon the same 3 percent to 5 percent inflation assumptions utilized elsewhere in the pro formas. Combined total operating costs are projected as follows: 1990 1991 Acute Care $ 6,073,843 $ 6,832,275 Psychiatric 760,234 777,607 Total $ 6,834,077 $ 7,609,882 The Petitioner's projected operating costs amount to 19.5 percent of its projected gross revenues for 1990 and 18.8 percent for ;991. The Petitioner's actual 1985 operating costs were 33.3 percent of its 1985 actual gross revenues. It is probable that the new facility will operate at lower fixed costs because of the efficiency of new and renovated facilities. Lower fixed costs and higher utilization volume should result in operating costs being a lower percentage of gross revenue. The evidence fails to prove whether the reduction from 33.3 percent to 19.5 percent is reasonable, however, or that 19.5 percent is reasonable. Interest expense relates to all debt associated with existing assets, with new equipment, and with the newly constructed facilities of the project. Approximately 76 percent of the interest is allocated to the new acute care facility. Interest expenses are projected as follows: 1990 1991 Acute Care $ 2,649,888 $ 2,607,487 Psychiatric 832,943 827,612 Total $ 3,482,831 $ 3,435,099 303. The pro formas incorporate the conservative assumption that interim financing will carry an 11.4 percent rate of interest. AHM customarily forecasts interest rates with a margin of 100-200 basis points (1-2 percentage points) higher than average market rates to compensate for unexpected rate increases or cost swings. Actual interest costs will be determined on the date of borrowing; recent borrowings by AHM carried a 9.3 percent rate. The Petitioner failed to include interest expense associated with working capital which will be necessary to finance such things as accounts receivable. It is inappropriate and unreasonable not to include interest expense for working capital. Interest expense attributable to land cost should have been included in the pro formas also. Additional land costs not taken into account by the Petitioner totaled $335,800.00, which includes $210,000.00 in option payments made on behalf of the Petitioner. The Petitioner's projected interest expense is based upon an 11.4 percent interest rate. This rate of interest is higher than it is likely to actually be. A lower actual interest rate will result in a reduction in interest expense. The pro formas do not include the total management fee to be paid by the Petitioner to AHM. The treatment of the management fee on the pro formas is consistent with auditing and accounting standards for a consolidated group of corporations. It is not, however, appropriate in determining whether the Petitioner standing alone is financially feasible. Management fee expenses are understated. Petitioner's pro formas project that the hospital will experience a net loss of $66,156.00 for 1990 and a net profit of $355,463.00 in 1991. These projections take into consideration the income tax consequences of an actual loss of $132,312.00 in 1990. The 1990 pro forma assumes that, to the extent that the Petitioner is a subsidiary of AHM, which is taxed at an approximate 50 percent rate, a loss experienced by the Petitioner will proportionately reduce the income tax balance owed by AHM. With respect to 1991 profit figures, the pro forma assumes that a profit by the Petitioner will have equal proportionate adverse tax consequences for AHM. Accordingly, the 1991 net profit figure of $355,463.00 is based upon a gross profit of $710,927.00. Several facts enhance the possibility that the project might be financially feasible in the long term: The Petitioner is an existing facility with established physician admitting practices. It will be able to continue operating as an acute care facility during the construction of the new acute care facility; The Petitioner is a subsidiary of AHM and is therefore associated with a multi-hospital health care group. The Petitioner will be able to draw on the expertise of AHM and AHM's volume purchasing power and personnel resources. Based upon the foregoing findings of fact it is concluded that the Petitioner has failed to prove that its project is financially feasible in the long-term. The projected utilization of the acute care facility is overstated and therefore gross revenues are overstated, it has failed to take into account the performance of the acute care facility from August, 1988 until January, 1990, the HMO deduction from gross revenue is understated, the Petitioner has failed to prove that operating costs are reasonable, the correct amount of interest expense has not been proved and the management fee expense is understated. OTHER CRITERIA. Staffing. The Petitioner will be able to staff the proposed new hospital. The Petitioner's existing staff is available and it has had no difficulty recruiting. Long-Range Plan. The proposal is consistent with the Petitioner's long-range plan. Education. The project will not substantially enhance education opportunities for medical personnel. Although the Petitioner currently offers some education programs, it does not propose to offer any new programs. Alternative Methods of Construction. The proposed project involves the construction of a 100 bed replacement facility for the Petitioner's acute care facility and the renovation of the existing facility as a 60 bed care hospital to a newly constructed facility would clearly warrant approval. Approval of a newly constructed modern acute care facility would enable the Petitioner to compete more effectively with other acute care providers in southern Pinellas County. The problem with the Petitioner's proposal, however, is that a newly constructed modern acute care facility will not appreciably improve acute care services available to the people of southern Pinellas County. Despite the deficiencies of the Petitioner's facility, the Petitioner is providing quality care to the patients it serves. Additionally, other providers of acute care services in southern Pinellas County are readily available, accessible, adequate, and able to provide quality of care. The most significant problem with concluding there is a need for the Petitioner's proposed relocation is the state of acute care utilization in southern Pinellas County: acute care utilization is extremely low. Because of the severe underutilization of acute care facilities being experienced in southern Pinellas County there is simply no need for an additional modern acute care facility in southern Pinellas County. Although the Petitioner is an osteopathic hospital, this fact does not entitle the Petitioner to any special consideration. Section 381.494(2), Florida Statutes (1985), does provide that the need for the construction or expansion of and osteopathic acute care hospital is to be determined on the basis of the need for and availability of osteopathic services in the district. The Petitioner's proposal does not, however, involve the construction or expansion of an osteopathic acute care hospital. The Petitioner is an already existing facility. Even if the availability of only osteopathic hospitals is considered, there are osteopathic acute care services readily available, accessible, adequate and able to provide quality of care. Osteopathic acute care facilities have also been experiencing significant underutilization. There is therefore no need for an additional modern osteopathic acute care facility in southern Pinellas County. The district 5 and the state health plans also do not sufficiently support approval of the Petitioner's proposed relocation of its acute care hospital. The 1985-1987 State Health Plan and the District V 1985 Health Plan both indicate that access to medically underserved groups, including indigent and Medicaid patients, should be promoted. In the Stipulation and Agreement entered into by the Department approving the Petitioner's proposal, the Department indicated that one of the reasons why it was agreeing to issue the certificate of need at issue was the Petitioner's history of providing care to the medically indigent and the Petitioner's ability to provide long-term psychiatric care to adult Medicaid patients. The evidence does not support these reasons. The Petitioner has projected that it will provide only 511 patient days for the treatment of acute care Medicaid patients or 2 percent of the projected acute care service in 1990. The Petitioner has not projected any Medicaid care for long-term psychiatric patients. Although the Petitioner has projected a continuation of its significant amount of care to short-term psychiatric Medicaid patients, the evidence did not prove that care of short- term psychiatric Medicaid patients would not be continued if the proposed relocation of the acute care facility is not approved. Based upon these facts, the Petitioner's proposal will not significantly improve access by the medically undeserved to acute care or long-term psychiatric services in southern Pinellas County. As to the care of indigent patients, the evidence failed to prove that the Petitioner intends to provide any significant care to indigent patients. Because of the new location of the Petitioner's facility, the Petitioner will be less accessible to indigent and Medicaid patients than it is in its present location. The continuation of "Provide-a-ride" will not make the new location accessible to indigent patients since the Petitioner's indigent care is primarily for patients in need of emergency care. The district and state health plans also indicate that consideration should be given to projects involving reductions and relocations of acute care beds. The Department has indicated in the Stipulation and Agreement that the Petitioner's proposal meets these objectives. Although it is true that there are a significant excess of acute care beds in the St. Petersburg area and that the relocation of the Petitioner's acute care facility will reduce this congestion, the evidence also indicates that the Petitioner is the only osteopathic hospital in the St. Petersburg area and that there is an existing osteopathic hospital closer to the proposed site. The evidence also proves that there is no need for additional acute care beds at the proposed relocation site. The district and the state health plans indicate that relocation to an area with an "identified shortage" or a "stated need" should be favored. The facts in this case prove that the proposed relocation site is not in need of additional acute care beds. Goal 7 of the state health plan emphasizes the need to insure adequate geographic access of the population of a planning area to acute care beds. The facts prove that no part of the population of southern Pinellas County, including the area of the proposed relocation, is unable to adequately access acute care services. Therefore, while the Petitioner's proposal will reduce the congestion of acute care beds in St. Petersburg, the ability of the population to obtain acute care services will not be improved. Goal 8 of the state health plan promotes efforts to achieve 80 percent occupancy in acute care hospitals through retirement or reallocation of beds. Although the Petitioner has agreed to delicense 29 acute care beds and to relocate its facility, these actions will not significantly enhance achievement of this goal. Because of the significant underutilization of acute care facilities in southern Pinellas County, a reduction of 29 acute care beds will not achieve or substantially aid achievement of 80 percent occupancy at any acute care facility. Because acute care beds are readily accessible to the residents of the proposed relocation site, relocation of the Petitioner's facility will not achieve or substantially aid achievement of 80 percent occupancy either. Section 381.494(6)(c)2, Florida Statutes (1985). Section 381.494(6)(c)2, Florida Statutes (1985), requires that the following be taken into account: The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district of the applicant. The evidence in these proceedings did not prove that like and existing acute care facilities in southern Pinellas are not available, efficient, appropriate, accessible, adequate or providing quality of care. The evidence did prove that existing providers of acute care services in southern Pinellas County are significantly underutilized. There is a surplus of acute care beds in southern Pinellas County and occupancy rates at existing providers are extremely low. These conditions are not projected to change by 1990 or 1991, the first 2 years of operation of the Petitioner's total project. In order for the Petitioner to achieve its projected utilization, patients will have to be taken from existing providers, including the Intervenors. If the Petitioner were successful in taking patients away from existing providers, this would result in a further reduction in the utilization of acute care facilities in southern Pinellas County. Therefore, the Intervenors have standing to participate in these proceedings. All of the parties attract patients from the proposed relocation site. Although the Petitioner, by relocating to the site, is not acquiring an exclusive franchise over the population of the area, it will take patients away from acute care facilities which are severely underutilized. The fact that the Petitioner is primarily an osteopathic hospital does not refute this conclusion. Again, to achieve the Petitioner's projected utilization, it will be necessary for the Petitioner to attract allopathic and osteopathic patients. Because of the under utilization of osteopathic facilities in southern Pinellas County, there are not sufficient osteopathic patients to meet the Petitioner's projected utilization. The only way that the Petitioner can achieve its projections is to attract allopathic patients. Because use rates are not expected to increase, the moderate to low increase in population growth projected for Pinellas County will not be sufficient to meet the Petitioner's projected utilization. The Petitioner must take patients away from already under utilized acute care hospitals. Section 381.494$(6)(c)3, Florida Statutes (1985). Section 381.494(6)(c)3, Florida Statutes (1985), requires a consideration of whether the applicant can provide quality of care. The evidence supports a conclusion that the Petitioner can provide quality of care. Section 38l.494(6)(c)4, Florida Statutes (1985). This provision does not apply. Section 381.494(6)(c)5, Florida Statutes (1985). Although the Petitioner will operate the acute care facility and the psychiatric facility jointly, this does not enhance the Petitioner's proposal. The Petitioner is already operating as a single facility. By separating the location of the acute care beds and the psychiatric beds, the Petitioner is increasing the cost of operation of the two types of beds. Section 381.494(6)(c)6, Florida Statutes (1985). This provision does not apply. Section 381.494(6)(c)7, Florida Statutes (1985). Section 381.494(6)(c)7, Florida Statutes (1985), requires that the need for research and educational facilities be considered. The Petitioner did not prove that there were any special needs for research and educational facilities in southern Pinellas County. Nor did the Petitioner prove that it will provide any educational opportunities it is not already providing. Section 381.494(6)(c)8, Florida Statutes (1985). This Section provides for a consideration of several factors. The Petitioner proved that resources needed to carry out its proposal are available and that its facility will be generally accessible to residents of southern Pinellas County. The Petitioner failed to prove that the remaining relevant portions of this criterion will be met. Section 381.494(6)(c)9, Florida Statutes (1985). This Section requires a consideration of the immediate and long-term financial feasibility of the proposal. The Petitioner proved that the proposed acute care project is financially feasible in the short-term. The Petitioner failed to prove that the acute care facility will be financially feasible in the long-term. The Petitioner's pro formas for its acute care facility suffer from a number of problems. First, the Petitioner failed to take into account the operation of the acute care facility for the 16 to 17 months after it opens and before the total project is completed. More importantly, the evidence supports a conclusion that the Petitioner will not be able to achieve the patient utilization it has projected for the acute care facility. Because the Petitioner cannot be expected to achieve its projected utilization, it cannot reasonably be concluded that the Petitioner's projected gross revenues are reasonable. The assumptions made by the Petitioner in projecting its utilization are not reasonable. The Petitioner cannot achieve its projections only from osteopathic patients, it must increase its share of osteopathic and/or allopathic patients and its reliance on the Department's July, 1985 estimate of patients days for district 5 for 1990 and 1991 is misplaced. The Department's estimate of patient days only takes into account 1983 and 1984 utilization trends. While 1985 utilization trends alone may not be sufficient to determine future utilization, those trends should not be ignored as they are in the Department's projections. A consideration of the 1985 utilization trends supports a conclusion that the Department's projections, which are intended for use in determining the need for additional acute care beds, does not support the Petitioner's projected utilization. The Petitioner would have to achieve a 70 percent occupancy at its acute care facility in order to achieve its projected utilization. Based upon the trends in acute care hospital utilization, it is unreasonable to project a 70 percent occupancy at the Petitioner's facility. The Petitioner also failed to prove that its projected HMO deduction from gross revenue is reasonable. This deduction was understated by $785,000.00 for 1990 and $899,000.00 for 1991. Finally, the Petitioner failed to prove that its operating cost deduction, interest expense deduction, and management fee deduction are accurate or reasonable. Section 381.494(6)(c)12, Florida Statutes (1985). The Petitioner failed to prove that this provision will be met by its proposal. If the Petitioner is allowed to construct a new and modern acute care facility it will be able to more effectively compete with other acute care facilities in southern Pinellas County. That competition will not, however, benefit the people of Pinellas County. While the Petitioner may be able to improve its financial position, the costs to the people of southern Pinellas County will increase because of the underutilization of acute care services. Section 381.494(6)(c)13, Florida Statutes (1985). The Petitioner proved that the costs and methods of proposed construction of its project are reasonable. The Petitioner also proved that there are no "alternative, less costly, or more effective methods of construction". Based upon a consideration of all of the relevant provisions of Section 381.494(6)(c), Florida Statutes (1985), the Petitioner has failed to prove that the proposed relocation of its acute care facility should be approved. The project cost, which is reasonable, is $22,995,385.00. This is in addition to the $14,000,006.00 to $15,000,000.00 it cost to acquire the Petitioner's facility. The only benefit which will be achieved by approving the relocation of the acute care facility will be to provide the Petitioner with a modern and more efficient acute care facility. Although this will help the Petitioner, medical care to the people of southern Pinellas County will not be significantly enhanced. The patients that the Petitioner serves are receiving quality care. Quality care is also readily available at other existing, accessible and severely under- utilized facilities. Indigent patients and Medicaid patients will not receive any significant increase in services that they are not already receiving. The most significant reason why the Petitioner's proposed relocation of its acute care facility is not needed is the fact that acute care facilities in southern Pinellas County are so greatly underutilized. In light of this fact, it does not make sense to approve an expenditure of over 20 million dollars just so patients using the Petitioner's facility can use a modern acute care facility. If utilization trends were different or if the Petitioner had proved that its ability to continue to provide quality of care will be jeopardized if it is not able to replace its facility, it might be concluded that there is need for the Petitioner's proposed relocation of its acute care facility. Those facts were not, however, proved. The proposed relocation of the acute care facility is also not financially feasible in the long-term, there are adequate acute care services readily available and accessible and existing acute care providers would be harmed if the Petitioner were able to achieve its projected utilization. II. CASE NUMBER 85-1977. Case number 85-1977 involves a challenge to the Petitioner's proposal by University Psychiatric Center, Inc. (hereinafter referred to as "University"). University is located in Tampa, Florida, which is located in the Department's planning district 6. In its Petition for Hearing, University alleges that approval of the Petitioner's proposal, which involves planning district 5, will adversely affect University because the Petitioner will be serving the same service area served by University. In order for University to challenge the Petitioner's proposal it must sufficiently allege that it has a "substantial interest" sufficient under Chapter 381, Florida Statutes (1985), to conclude that it has standing. To be substantially affected, University must allege sufficient facts to support a conclusion that the tests of Agrico Chemical Company v. Department of Environmental Regulation, 406 So.2d 478 (Fla. 2d DCA 1983), have been met: that he will suffer injury in fact which is of sufficient immediacy to entitle him to a section-120.57 hearing, and that his substantial injury is of a type or nature which the proceeding is designed to protect. In order for University to meet the second test of Agrico Chemical, University must allege that its interest comes within the "zone of interest" protected by Chapter 381, Florida Statutes (1985). The interest of University in initiating case number 85-1977, as set forth in its Petition, is based upon its status as a provider of similar services to those proposed by the Petitioner in a service district adjacent to the area to be served by the Petitioner. This interest is not protected by Chapter 381, Florida Statutes (1985). None of the criteria of Section 381.494(6)(c) require a consideration of the effect of a proposal on providers of similar services located in service areas other than the service area of the applicant. See North Ridge General Hospital v. NME Hospitals, Inc., 478 So.2d 1138 (Fla. 1st DCA 1985). Based upon the foregoing it is concluded that University has failed to allege that it is substantially affected. The Petitioner's Motion to Dismiss should therefore be granted.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the portion of the Petitioner's certificate of need seeking approval of the relocation of its acute care facility to a newly constructed acute care facility be DENIED. It is further, RECOMMENDED: That case number 85-1977 be DISMISSED with prejudice. DONE AND RECOMMENDED this 26th day of January, 1987, 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 26th day of January, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 84-4368, 85-1977, 85-1978, 85-2230 All of the parties except University have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they were accepted. Those proposed findings of fact which have been rejected and the reasons for their rejection have also been noted. Paragraph numbers in the Recommended Order are referred to as "RO ". The Petitioner's and the Department's Proposed Findings of Fact: Proposed Finding of Fact Number: RO Number of Acceptance or Reason for Rejection 1. RO 21-23 and 173-74. 2. RO 38-42 and 44. 3. RO 46-48 and 55-56. 4. RO 38. RO 59 and 91-92. The weight of the evidence does not support a finding that there were "numerous structural deficiencies noted in the JCAH accreditation or that failure to correct deficiencies may jeopardize accreditation. 6. RO 59. 7. RO 61-62 and 69. 8. RO 63-67 and 70-71. 9. RO 68 and 70. 10-11. RO 71. 12. RO 72. The weight of the evidence does not support a finding that the building is too small to allow efficient patient flow. 13. RO 73. 14. RO 74. 15. RO 75. 16. RO 89. 17. RO 78-80. 18. RO 76. 19. RO 77. 20. RO 81. 21. RO 82. 22.-24. RO 83. 24-25. RO 84. 26. RO 85. 27. RO 86. 28. RO 87. 29. RO 88. 30. RO 93. 31. RO 317. Irrelevant. The weight of the evidence does not support this proposed finding of fact. 34. RO 137. 35. This proposed finding of fact is generally accepted in RO 132-133. 36. RO 135. 37. RO 136. 38. RO 138 and 148. 39. RO 148. 40. RO 143. 41. RO 144. 42. RO 128, 182, 198 and 202. The weight of the evidence does not prove the third sentence. 43. RO 113. 44. RO 114. 45. RO 115. 46. RO 116-117. 47. RO 127 and 130. 48. RO 131. 49. RO 126. 50. RO 127. The weight of the evidence does not support a finding that 5.7 percent is a similar percentage to that which it has [sic] experienced historically" or that all uncollectable debts are "incurred by medically indigent patients who are unable to pay". 51. RO 121-132. 52. RO 124. 53. RO 173-174. 54. RO 175. 55. This proposed finding of fact is generally accepted in RO 56. RO 187. The second and third sentences are not supported by the weight of the evidence. RO 185. The last two sentences are not supported by the weight of the evidence. 59. RO 311. 60. RO 195. 61. RO 312. 62. RO 218 and 220. $63. RO 211 and 223-224. 64. RO 211 and 221-225. 65. RO 226. 66. RO 227. 67. RO 228. 68. RO 229. 69-70. Not supported by the weight of the evidence. No computation of the interest cost of the project taking into account all of the correct figures was made by the Petitioner. 71. RO 231. 72. RO 232-233. 73. RO 234. 74. RO 235. 75. RO 236. The last sentence is rejected. See 69-70 above. 76-77. See 69-70 above. Hereby accepted. RO 237. The facts concerning the cost of renovations at other hospitals is irrelevant. 80. RO 238-239. 81. RO 242 and 245. The last sentence is a conclusion of law and is rejected. 82. RO 251 and 256-258. 83. RO 248-249. 84. RO 250 Not supported by the weight of evidence. RO 253, 260 and 269. The first sentence is not supported by the weight of the evidence. 87. RO 253-254. 88-90. RO 254. 91. RO 282. 92. RO 283. 93. RO 255. 94. RO 284. 95. RO 285. 96. RO 286. 97. RO 287. 98. RO 288. 99. RO 289. 100. RO 291. 101. RO 292. 102. RO 293. 103. RO 295. Although these are the Petitioner's projections, the weight of evidence does not support a finding of fact that they are reasonable. None proposed. 106. RO 297. 107. RO 298. 108. RO 302. 109. RO 303. 110. RO 299. 111. RO 300. 112. RO 308. Not supported by the weight of the evidence. See RO 307. RO 307. The first sentence is not supported by the weight of the evidence. RO 290. The first and last sentences are not supported by the weight of the evidence. RO 272. The last sentence is irrelevant. 117. RO 279. Not supported by the weight of the evidence. RO 297, 298, 301 and 306. The first and last sentences are not supported by the weight of the evidence. RO 240. The last sentence is not supported by 121. the weight of the evidence. Not supported by the weight of the evidence. 122. RO 309. The project is not, however, financially feasible. 123. RO 309. 124. Not supported by the weight of the evidence. 125. RO 59-105. 126. Not supported by the weight of the evidence. 127. RO 148. The last sentence is not supported by the weight of the evidence. 128. The first sentence is irrelevant. The last sentence is not supported by the weight of the evidence. 129-130. Not supported by the weight of the evidence. 131. Hereby accepted. 132-134. Not supported by the weight of the evidence. Bayfront's Proposed Findings of Fact: 1. RO 21-22 and 106. 2. RO 23 and 152. 3. None proposed. 4. RO 68 and 108-109. 5. RO 106. The weight of the evidence does not support a finding that there was no need for another acute care facility when AHM acquired the Petitioner. The second sentence is irrelevant. 6. RO 111. 7. RO 94, 99 and 101. 8-9. Not supported by the weight of the evidence. 10. RO 1-2, 5 and 38. 11. RO 38-42, 44 and 47. 12. RO 40-42 and 47. 13. RO 44 and 50. The portion of this proposed finding of fact from "and $1,200,000 . . ." to the end is irrelevant or not supported by the weight of the evidence. 14. RO 25-27. 15-16. RO 209. 17. Irrelevant. 18. RO 28-30. 19. RO 31-33. 20. RO 34-37. 21. RO 156. 22. RO 157. 23. RO 158. 24. RO 159. 25. RO 160. 26. RO 161. 27. RO 162. 28-31. RO 163. 32-33. RO 164. 34-36. RO 165. 37-39. RO 166. 40. RO 161. 41. Cumulative. 42-43. RO 169. 44-45. RO 168. 46. RO 170. 47. RO 156-160. 48. RO 166 and 170-171. 49. RO 253. 50. RO 257-258, 276 and 281. 51. RO 258, 270-271 and 277. 52. RO 262-264. 53. RO 276 and 281. 54-55. RO 277. 56. RO 276 and 281. -57. RO 279. 58. RO 281. 59. RO 264, 269 and 281. 60. RO 151. 61. RO 154. 62. RO 140. 63. RO 169 and 172. The first sentence is a conclusion of law and the remainder of the finding of fact is not supported by the weight of the evidence. Not supported by the weight of the evidence. RO 243. The last 2 sentences are not supported by the weight of the evidence. 67-75. These findings of fact are too speculative or are not supported by the weight of the evidence. 76. RO 304. The last three sentences are not supported by the weight of the evidence. 77-78. Irrelevant. 79. RO 251. 80. RO 244. 81. RO 290. 82. RO 281 and 290. 83-84. RO 294. 85. RO 296. 86-87. Hereby generally accepted. The weight of the evidence failed to prove what the proper rate should be. 88. RO 304. The last sentence is not supported by the weight of the evidence. 89-90. Not supported by the weight of the evidence. 91-95. Although there is testimony which supports these findings of fact, the weight of the evidence does not support them. If the Petitioner's projections had been correct, the proposal would be financially feasible despite-- this evidence. This evidence only represents one method of determining the financial feasibility of a proposal. Hereby accepted. Irrelevant. 98. RO 310. 99. RO 188. 100. RO 185. 101. RO 191. 102. RO 276. 103. RO 198. 104. RO 200. 105. RO 201. 106. RO 196. 107. RO 205 and 214-215. The last sentence is not supported by the weight of the evidence. 108-110. Too speculative and not supported by the weight of the evidence. None of the intervenors took into account all of the facts that will influence the impact of the proposed new acute care facility. 111. RO 208. 112. RO 211. The last sentence is not supported by the weight of the evidence. 113. RO 213. 114-115. See 108-110 above. Not supported by the weight of the evidence. RO 215. The last two sentences are not supported by the weight of the evidence. 118. RO 210. 119. RO 215. RO 204. The last sentence is rejected. See 108-110 above. See 108-110 above. 122. RO 313-. Irrelevant. Irrelevant. Not supported by the weight of the evidence. RO 122. The portion beginning with "it needs to build . . ." to the end is argument and is rejected. Irrelevant. EHW's Proposed Findings of Fact: 1. RO 22 and 61. 2. RO 21, 106 and 108-109. 3. RO 110. 4. RO 107. 5. RO 111-112. 6. RO 128. 7. RO 174 and 178. 8. RO 1, 40-41 and 47. 9. RO 59-60. 10. RO 62-63, 73-74, 77, 80 and 87. 11. RO 59. 12. RO 99 and 101-102. The last sentence is not supported by the weight of the evidence. 13. RO 72. 14. RO 70. 15. RO 87. Reducing the capacity of the hospital is irrelevant. 16. RO 82-83 and 85. 17. RO 51. 18. RO 51-54. 19. RO 143-144. 20. The first sentence is argument, the second is not supported by the weight of the evidence and the last is irrelevant and not supported by the weight of the evidence. 21.-22. The evidence did not establish that the EHW renovation and the Petitioner's proposal are comparable. Not supported by the weight of the evidence. Argument. 25. RO 140, 144 26. RO 118-119. 27. Irrelevant and argument. 28. RO 119 and 122. 29. Not supported by the weight of the evidence. 30. RO 125 and 128. 31. Not supported by the weight of the evidence. 32. RO 43. 33. Irrelevant. 34. RO 238. 35. RO 242 and 244. 36. RO 253, 257 and 267. 37. RO 253-254. 38. RO 254 and 275. 39. RO 262-264, 266 and 270. 40. RO 151. 41. RO 154. 42. RO 164 and 166. 43. RO 168-169. 44. RO 170. 45. RO 271, 274 and 276. 46. Irrelevant or not supported by the weight of the evidence. 47. RO 262-263. 48. Hereby accepted. 49. RO 242-243. 50. RO 294 and 296. 51. RO 296. The last sentence is too speculative. 42. RO 310. 53. RO 304. The last sentence is not supported by the weight of the evidence. 54. RO 307. 55. RO 305. RO 217-218. The amount of land cost included by the Petitioner was for 10 and not 9 acres and the option payments totaled $210,000.00 and not $168,000.00. Irrelevant. Not supported by the weight of the evidence. See Bayfront's 91-95. Irrelevant. 61. RO 182 and 204. 62. RO 208 and 215. 63. RO 189. 64. RO 214. 65-69. See Bayfront's 108-110. Argument and irrelevant. Not supported by the weight of the evidence. Irrelevant. 73-76. Irrelevant and not supported by the weight of the evidence. Humana's Proposed Findings of Fact. 1. RO 22 and 173. 2. RO 23 and 152. 3. RO 23. 4. RO 99, 101 and 104. 5. RO 94. 6-7. RO128 8. Irrelevant. 9. RO 177. 10. RO 179. 11. RO 21. 12-13. RO 106. 14-14a. RO 109. 15. RO 108. 16. Irrelevant. 17-18. RO 107. 19. RO 40. 20. RO 47. 21. RO 41 and 43. 22. RO 130. The proposed site is not 12.87 acres. 23. RO 45. 24. RO 46 and 55. 25. RO 56. 26. RO 55. 27-28. RO 31. 29-30. RO 33. 31. RO 32 and 20. 32. RO 205. 33. RO 183. 34. RO 214. 35. RO 156 and 161-162. 36. RO 157-160. 36a. RO 157. 37. RO 161. 38-39. RO 167. 40. RO 168. 41. RO 163. 42. RO 164. The decline in District V is from 70 43. percent to 55 percent and not 55 percent to 40 percent. RO 165. 44-45. RO 166. 46. RO 170. 47. RO 41 and 170. 48-48a. RO 168. 49. RO 161. 50. RO 168. 51-52. 53-54. RO 151. The projection for south Pinellas County is 691 and not 619. RO 155. 55. RO 171. 56-57. RO 154. 58-59. RO 169. 60. RO 139. 61-63. RO 140. 64. RO 141. 65-67. Irrelevant. 68-69. RO 126. 70-71. Hereby accepted. 72. RO 120. 73-74. RO 119. 75. Not supported by the weight of the evidence. The service only began in the middle of 1985. 76-77. RO 125. 78-79. RO 128. 80. Not supported by the weight of the evidence. 81. RO 139. 82. RO 140 and 142. 83-86. RO 147. 87. RO 151. 88. RO 172. 89. RO 251. 90. RO 257-258. 91. Not supported by the weight of the evidence. 92. RO 253. 93. RO 281. 94. RO 259. 95. RO 169. 96. RO 164, 168 and 261-263. 97. RO 263. 98. RO 156 and 265. 99-100. RO 271. 101. RO 276-277. 102. RO 277-278. 103. RO 191. 104. Not supported by the weight of the evidence. 105-106. RO 271. 107. Hereby accepted. 108. RO 32. 109-110. RO 280. 111. RO 279. 112. RO 253-254 and 281. 113. RO 267 and 269. Projections are based upon 1983 and 1984 and not 1982 and 1983, however. 114-115. RO 268. 116-117. RO 245. 118. RO 242. 119. RO 243. 120. Not supported by the weight of the evidence. See RO 243. 121. RO 244. 122. Not supported by the weight of the evidence. 123a-124a. RO 256. 123-129. See Bayfront's 108-110. 130. Hereby accepted. 131-133. RO 294. 134. RO 296. 135-136. The record fails to establish what the correct percentage or amount should be. 137. RO 301. 138. Not supported by the weight of the evidence. 139. RO 304. 140. RO 305. 141-142. Not supported by the weight of the evidence. RO 305. The total acres and amount of interest are not supported by the weight of the evidence. Not supported by the weight of the evidence. 145. RO 307. Irrelevant. RO 148-150. Irrelevant. 151. RO 215. 152. RO 185. 153. RO 186. 154. RO 183. 154a. RO 205. 155. RO 188. 156. RO 185 and 191. 157. RO 185. 158. RO 195. 159. Not supported by the weight of the evidence. 160. RO 192 and 198. 161. RO 195-197. 162-163. RO 195. 164-165a. See Bayfront 91-95. 166. RO 196. 167-172. See Bayfront's 91-95. 173. RO 200. 174-175. RO 201. 176. RO 313. 177-180. Cumulative. See RO 313. 181. Irrelevant. 182. RO 99 and 101. 183-184. RO 100. 185-186. RO 104. 187. Not supported by the weight of the evidence. 188-189. RO 104. 190. RO 95. 191. RO 96. 192. RO 93. 193-195. RO 98. 196-197. Irrelevant. 198. RO 102. 199. RO 97. 200. RO 315. 201. RO 110. 202. Irrelevant. 203. RO 316. 204-211. Irrelevant. 212. RO 217-218 and 220. 213. RO 217. The last sentence is not correct. 214-215. Not supported by the weight of the evidence. 216. RO 218. there were more than 12 option 217-220. payments. Irrelevant. 221-223. RO 172. 224. RO 154. 225-237. Irrelevant. St. Anthony's Proposed Findings of Fact. 1. RO 22-23. 2. RO 34. 3. RO 31. 4. RO 28. 5. RO 25. 6. RO 41 and 47. 7. RO 47. 8-9. Conclusions of law. 10. RO 21. 11. RO 108. 12. RO 109. 13. RO 108-109. Not supported by the weight of the evidence. RO 41 and 43. Not supported by the weight of the evidence. See RO 111. RO 43 and 188. The project will not have a "new group of doctors with a fresh association" or "new ownership". Irrelevant. 19. RO 218-219. Irrelevant. Conclusion of law. Not supported by the weight of the evidence. 23-25. Irrelevant. 26. RO 220. Financing costs and attorneys' fees are accounted for elsewhere. 27. RO 230. 28-29. Not supported by the weight of the evidence. 30. RO 316. 31-32. RO 105. 33. RO 99, 101 and 103-104. 34. Hereby accepted. 35. RO 94. 36. RO 97. 37-38. RO 94. 39. RO 151 and 154. 40. RO 152. 41-42. Irrelevant. 43. RO 172. 44. RO 153. 45. RO 168. 46. RO 155. 47. RO 155 and 166. 48. RO 455. 49. RO 166. 50. RO 140 and 142. 51. Cumulative. 52. RO 155. 53. RO 140. 54. RO 171. 55-56. RO 140. 57. RO 215. 58. Not supported by the weight of the evidence. 59. RO 210 and 212. 60. RO 206. 61-63. Not supported by the weight of the evidence. 64. RO 128. Not supported by the weight of the evidence. There is no geographic access problem in southern Pinellas County. Hereby accepted. 67. RO 243. 68. RO 286 and 290. 69. RO 253, 276, and 281. 70. RO 281. 71. RO 272. 72. RO 277. 73. None proposed. 74. RO 271. 75. RO 257 and 262. 76. Irrelevant. 77. RO 294. 78. RO 296. 79. RO 307. 80. RO 301. Not supported by the weight of the evidence. RO 304. The last sentence is not supported by the weight of the evidence. 83. RO 305. 84. RO 307. 85-90. Not supported by the weight of the evidence or irrelevant. COPIES FURNISHED: Leonard A. Carson, Esquire Ivan Wood, Esquire Robert Daniti, Esquire Herbert Schwartz, Esquire Carson & Linn, P.A. Judith Marber, Esquire Mahan Station Wood, Lucksinger & Epstein 1711-D Mahan Drive The Park in Houston Center Tallahassee, Florida 32308 Suite 1400 1221 Lamar John D. Harwell, Esquire Houston, Texas 77010-3015 Memel, Jacobs & Ellsworth 1801 Century Park East Gregory L. Coler, Secretary 25th Floor Department of Health and Los Angeles, California 90067 Rehabilitative Services 1323 Winewood Boulevard Douglas L. Mannheimer, Esquire Tallahassee, Florida 32301 Culpepper, Pelham, Turner & Mannheimer Post Office Box 11300 Tallahassee, Florida 32302 Harry Purnell, Esquire Sydney H. McKenzie, III, Esquire Oertel and Hoffman, P.A. Post Office Box 6507 Tallahassee, Florida 32310 Donna H. Stinson, Esquire Moyle, Flanigan, Katz, Fitzgerald & Sheehan, P.A. 118 North Gadsden Street Tallahassee, Florida 32301 James C. Hauser, Esquire Messer, Vickers, Caparello, French & Madsen Post Office Box 1876 Tallahassee, Florida 32302
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: On August 1, 1978, a letter of intent to construct an osteopathic hospital in Ft. Myers was filed by Hospital Affiliates International on behalf of the petitioner/applicant Gulf Coast Hospital, Inc. The petitioner is comprised of seven osteopathic physicians practicing in Lee County, Florida. The application seeks approval for the construction and operation of a 116-bed , acute care hospital at a proposed cost of $12,805,000.00. The petitioner's application was reviewed by the South Central Florida Health System Council, Inc. The Board of Directors recommended disapproval of the application by a vote of 21 to 11. The Administrator of the respondent's Office for Community Medical Facilities advised the applicant by letter dated March 14, 1979, that its proposal was not favorably considered. As grounds for this decision, it was found that the project was not consistent with the local Health Systems Plan; that there was no need for the project in terms of availability, accessibility, extent of utilization and adequacy of like and existing facilities and services; and that there are less costly, more appropriate alternatives to the proposed project. Thereafter, the petitioner timely requested an administrative hearing on the denial of its application and the Fort Myers Community Hospital (FMCH) timely moved to intervene in the proceeding. There are four hospitals located in Lee County, with a total of 1,146 beds. Lee Memorial Hospital has 558 beds and operates at an occupancy rate of approximately 59 percent. Over the past twelve months, Lee Memorial averaged 250 empty beds. FMCH has 400 beds and an occupancy rate of 40 percent. It averaged 150 empty beds last year. Cape Coral Hospital has 100 beds with a 74 percent occupancy rate and Lehigh Acres has 88 beds with an occupancy rate of approximately 46 percent. According to the local Health Systems plan, Lee County will still have 265 excess hospital beds in the year 1983. Prior to the time the applicant filed its letter of intent, there was an established practice in the Lee County community of discriminating against osteopathic physicians (D.O.) by excluding them from admittance to the medical staffs of three of the four local hospitals. The only exception to total exclusion was Lehigh Acres which gave one osteopathic physician, Dr. N. Centafont, staff privileges, Dr. Centafont has experienced a coolness in attitude from some of the staff at Lehigh, different requirements with regard to a sponsor were applied to him and he has not been able to perform manipulative medical treatment under anesthesia to his patients at Lehigh. Lehigh has recently rejected the applications of two other D.O.'s, although the grounds for such rejection were not fully clarified at the hearing. Dr. A. J. Piccola, an osteopathic physician and organizer and spokesman for the petitioner/applicant, applied to Fort Myers Community Hospital for staff privileges in 1974. His application was tabled and not acted upon for a period of almost four years. The Board of FMCH made several attempts during this interim period to change the interpretation of its bylaws by vote of the medical staff so as to allow osteopathic physicians to become members of the staff. Several votes were taken on the issue, but each time the issue was defeated. Dr. Piccola also submitted a letter of intent to file an application for membership on FMCH's staff in 1977. However, he never did file another application. In August or September of 1978, after the time that FMCH learned of the petitioner's certificate of need application, the Administrator of FMCH contacted Dr. Piccola and asked him if he wished to have his application for staff membership reactivated. Dr. Piccola informed the Administrator that he did not. Nonetheless, the credentials committee of FMCH unilaterally reactivated Dr. Piccola's 1974 application and, on October 26, 1978, informed Dr. Piccola that he had been appointed an associated member of the Hospital's medical staff. Dr. Piccola has not exercised the privileges extended to him because he does not believe he was properly accepted as a member of the medical staff in accordance with the bylaws of FMCH and because he felt that to do so would jeopardize the petitioner's efforts in obtaining a certificate of need for its own hospital. FMCH considered Dr. Piccola to be a member of its medical staff. Three other osteopathic physicians who were original organizers of the petitioner have been accepted as consulting staff members of the FMCH. At least two of these physicians felt some pressure to join the staff of FMCH after petitioner filed its application for a certificate of need. These three D.O.'s have apparently withdrawn as organizers of petitioner and at least two of the three would remain at FMCH even if petitioner's hospital were built. Other than the four D.O.'s discussed above, no other osteopathic physicians have applied to FMCH for staff privileges. Several of the local D.O.'s testified that they did not apply to FMCH prior to their own application for a certificate of need because they knew it would be a futile effort and that they did not apply afterward because it would hamper the granting of authority to have their own hospital. The Administrator of FMCH testified that it will be the policy of FMCH in the future to admit osteopathic physicians to its staff if they are otherwise qualified, and that FMCH stands ready to purchase equipment necessary for the practice of manipulative medicine if requested to do so by its osteopathic physicians. It was also his testimony that the granting of privileges to local D.O.'s at the same time of their certificate of need application was a coincidence of time and not of intent. At the time of the hearing and at all times prior thereto, the other two hospitals in the area, Lee Memorial and Cape Coral Hospitals, unequivocally denied osteopathic physicians the right to practice in their hospitals. The 1979 Legislature passed a new law which became effective on July 1, 1979. Section 395.035, Florida Statutes, prohibits licensed hospitals from excluding doctors of osteopathy from staff membership or privileges on the sole basis that they are D.O.'s. It further mandates each hospital to set standards and procedures to be applied in considering and acting upon applications for staff privileges and to make the same available for public inspection. This must be accomplished within 180 days of July 1, 1979. As noted above, the petitioner seeks to build and operate a 166-bed acute care hospital. Its application stated that osteopathic physicians presently treat 40,000 patients in the area. This figure was not verified or substantiated by testimony or other evidence during the hearing, nor was there sufficient testimony concerning the number of patients osteopathic physicians were presently admitting to area hospitals. Several of the D.O.'s do practice manipulative medicine. Such treatment requires a specialized straight table. The cost for this equipment was not established, and the testimony indicates that its cost can range from several hundred to several thousand dollars. If petitioner's application is granted, it is proposed that petitioner will have a manipulative medicine department with two treatment rooms and two full-time personnel for this purpose. During the first days of the hearing, it had not yet been determined whether the petitioner would have an open or mixed staff of osteopathic and allopathic doctors. It was originally thought that petitioner would be solely a D.O. hospital, with consulting medical doctors on staff. Because of the new law, petitioner now intends to have a mixed staff. Testimony from witnesses who had had experience with working on mixed staff hospitals established that D.O.'s and M.D.'s can and do work harmoniously together. The only real difference in the physical plants of allopathic and osteopathic hospitals are the treatment rooms for manipulative medicine. Many D.O.'s do not practice manipulative medicine and only ten to fifteen percent of those who do require a hospital setting. There is some small difference in the medical charts used by D.O.'s with regard to a space for the structural examination. Otherwise, there is no substantial difference in the day-to-day function or operation of an osteopathic hospital. There was no conflict in the testimony that Lee County and the Ft. Myers area is presently overbedded by at least 400 beds. The Administrators of FMCH and Lee Memorial Hospital testified that the addition of 116 hospital beds as proposed by petitioner would financially harm their institutions, raise patient charges, and create an even greater excess of hospital beds. They further testified that the staffing of petitioner's facility with 253 employees would create manpower shortages in the area, and cause their facilities to be required to increase salaries for their personnel.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is RECOMMENDED that the petitioner's application for a certificate of need to construct and operate a 116-bed acute care hospital in Ft. Myers be DENIED. Respectfully submitted and entered this 19th day of September, 1979, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Jean Laramore Suite 646 Lewis State Bank Building Tallahassee, Florida 32302 Eric J. Haugdahl Assistant General Counsel Department of HRS 1323 Winewood Boulevard Tallahassee, Florida 32301 E. G. "Dan" Boone Post Office Box 1596 Venice, Florida 33595 Bruce E. Smith 1030 Merchants Plaza-East Tower Indianapolis, Indiana 46204 Art Forehand, Administrator Office of Community Medical Facilities 1323 Winewood Boulevard Tallahassee, Florida 32301
Findings Of Fact Petitioner, Osteopathic General Hospital, is a nonprofit osteopathic hospital in Dade County, Florida. It was established in 1953, and is currently licensed for 264 beds. It is one of two osteopathic hospitals located in the Dade-Monroe County area which is the service area of the Dade-Monroe Health System Agency. It is a full service community and teaching hospital providing care in all areas of osteopathic medicine including, but not limited to, radiology. It maintains an emergency room which is open twenty-four (24) hours a day, seven (7) days per week. At the November 30, 1976, meeting of the HSA Review Committee I, Petitioner's proposal for the acquisition of a total body CAT Scanner was recommended for approval by a vote of 6 to 1 with one abstention. At its December 21st meeting, the HSA Board of Directors voted to recommend denial on the basis that South Florida already had sufficient scanners to meet current demand. On January 19, 1977, Petitioner was notified by Respondent, HRS, that the Capital Expenditure proposal was not favorably recommended to the Department of Health, Education and Welfare. The ground for the unfavorable recommendation was that further installation of CAT scanning equipment would compound low utilization of existing facilities. At the time of the hearing in this case, Nine (9) scanners were in operation in Dade County. Of these nine (9) scanners, five (5) were full body scanners and the remaining four (4) head scanners. Eight of these scanners are hospital owned and one physician owned. An additional CAT Scanner is being installed at American Hospital but no evidence was introduced to establish its projected use. Two additional hospitals in Dade County have outstanding approvals under Section 1122 of the Social Security Act (42 U.S.C.A. 1320a-1) for the installation of CAT Scanning equipment. They are Parkway General and Veterans Administration Hospitals. Outstanding 1122 approval is valid for a period of one year and may be extended for a six months period. At the time of the hearing, three (3) scanners in Dade County were utilized at a rate less than 2,040 scans per year. They are Baptist Hospital, Miami International Hospital and North Shore Hospital. Baptist Hospital is located on the other end of town from Petitioner's facility and is not reasonably accessable to patients at Petitioner's facility. The scanner at Miami International Hospital is a first generation head scanner and not a full body scanner. Even so, the utilization of the scanner at Miami international Hospital is less than 100 scans from the OPA 85 percent criteria. The facility at North Shore Hospital was recently placed at that location. The volume of studies performed at CAT Scanner installations typically grows by more than 25 percent between the first and second years of scanner operation. Therefore, during its first year of operation, it should increase its present utilization rate of 1,220 scans per year to 1,525 scans per year. At that point it would be under utilized to the extent of 515 scans per year which far from accommodates the projected needs of Osteopathic General Hospital, the Petitioner. Figures for 1976, showing the actual use by the nine (9) machines range from a low yearly total of 1,220 to over 3,000. The average annual use per scanner is approximately 2,358 scans. The total number of scans in the area for the calendar year 1976, was approximately 18,864. As of the date of the hearing, Respondent had not developed a position as to guidelines for criteria against which CAT Scanner applications would be reviewed. However, a proposal for such guidelines issued from the office of Community Medical Facilities of the Respondent, Department of Health and Rehabilitative Services on February 21, 1977. The guidelines suggest that community need would be established by a demonstration that other existent CAT Scanners in the same HSA area are being utilized at a minimum of 70 percent level or 1,456 scans per year. A standard which the Respondent accepts is that each CAT Scanner in a particular health system agency area must operate at 85 percent of its capacity. Capacity is determined to be 2,400 patients per year which when multiplied by 85 percent equals a standard of 2,040 scans per year. The HSA uses as a part of its planning criteria the estimate that from 3 to 10 percent of the given population can expect to be scanned in a year. The Dade-Monroe population projected for 1980 is 1,650,000 which would generate an annual patient count between 49,000 and 165,000. Assuming a utilization rate of 2,500 scans per year, between 19 and 64 scanners would be required in the community to accommodate the demand. Petitioner's projected use of the CAT scanner is 2,094 procedures annually. This figure does not include additional procedures incurred by virtue of the participation of Westchester General Hospital, the other osteopathic facility in the Dade-Monroe area. Petitioner projects that the cost per scan to be charged by its facility will be $250.00, which includes both the hospital and physician fee. Frequently, the use of the CAT Scanner will obviate the requirement of one or more alternative procedures which may entail more cost to the patient and higher morbidity. There is a waiting time of at least one to two days for ambulatory or inpatient referral from another hospital to one in which scanners are currently located, Inpatient delay, however, is either nonexistent or significantly less in those same institutions. Petitioner does not refer its patients to those facilities having a utilization rate of below 2,040 per year. The installation of a CAT Scanner in Petitioner's facility would result in a substantial saving in cost in many cases by reducing the length of hospital stay, the number of diagnostic procedures employed and elimination of transportation costs to other facilities. The Department of Health, Education and Welfare has established as a guideline for the development of health systems plans that a consumer demand for osteopathic services should be considered by the HSA in light of availability of osteopathic facilities to osteopathic physicians and patients. The Bureau of Health Planning and Resources Development of HEW is sensitive to the possibility of osteopathic concern being either slighted or ignored in many health care settings. The Secretary of HEW, because of his concern about discrimination against populations who wish to be served by osteopathic services and facilities in their communities, strongly encourages State agencies and HSA's to incorporate consideration of the needs of the population being served by such services and to their health plans. There is a definite segment of the population in the Dade-Monroe County area which uses exclusively osteopathic physicians for their medical needs. However, there is no CAT Scanner within the Dade-Monroe area which is either owned or operated by an osteopathic facility. All CAT Scanners within the area are operated by allopathic physicians or facilities.
Recommendation Based upon these findings of fact and conclusions of law, it is recommended that Respondent's unfavorable recommendation to the Department of Health, Education and Welfare be reversed. DONE and ENTERED this 19 day of August, 1977, in Tallahassee, Florida. MICHAEL R.N. McDONNELL Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: Eric Haugdahl, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Sheldon M. Simons, Esquire Professional Building 3661 South Miami Avenue Miami, Florida 33133
Findings Of Fact At all times relevant hereto, Lawrence A. Decker was licensed as an osteopathic physician in Florida. On November 18, 1980, D. K. was admitted to Sun Coast Osteopathic Hospital, with an admitting diagnosis of acute generalized anxiety disorder, under the care of Dr. Kaye, a psychiatrist. On her initial examination, she complained of severe menstrual cramping. She was referred to an internist and a gynecologist (Respondent). Exhibit 1). At her gynecology examination, D. K. gave a history of pain in the right lower quadrant of her abdomen shortly following a tubal ligation some six years earlier. She had visited three gynecologists in the intervening years and had been treated with medication (Estrace, Valium and Progesterone) by one of these gynecologists without significant improvement in her symptoms; one suggested she had a prolapse, a hysterectomy was indicated and Tranxene was prescribed; and a third physician stated she had a sore muscle on her right ovary, but no therapy was suggested. Respondent suggested a hysterectomy might relieve the menstrual cramps, but was unlikely to improve her anxiety disorder unless that was brought on by the dysmenorrhea. D. K. talked to her husband and then told Respondent she would like to have the hysterectomy during her current admission rather than be discharged and return at a later date. After concluding D. K. was capable of consenting to the surgery, the hysterectomy was scheduled for November 24, 1980. In Dr. Joyes' hospital notes (Exhibit 1), an entry dated November 21, 1980 states in part: "Anxiety re surgery. Feels her problems are due to physical causes." November 22, 1980 entry: "States relief decision made to have surgery (hysterectomy) scheduled for Monday." November 23, 1980 entry: "Patient expresses anxiety re A.m. surgery. Able to understand others and is supportive to their needs. Lacks emotional insight into her own." Nurses notes in Exhibit 1 (page 61) for November 22, 1980 reads: "Attended group session . . . Participated very well. Appears more relaxed and comfortable this evening." Nurses notes for November 23, 1980 read: "Good participation during group. Insight into other's problems good. Nothing specific to solving own anxieties offered except surgery." At no time did Dr. Joye conclude that D. K. was unable to fully and knowingly consent to the surgery that was performed by Respondent on November 24, 1980. Petitioner's witness, Dr. Eli Rose, opined that D. K. was unable to give informed consent to the surgery based upon her admitting diagnosis of acute anxiety reaction and Dr. Joye's comment in Exhibit 1 (finding 5 above) "that [she] lacks emotional insight into her own." He also opined that from the symptoms of D. K. as contained in the patient records there was insufficient medical justification for the hysterectomy performed. Dr. Rose was also perturbed that the operation was scheduled so quickly, disregarding (or not knowing) that D. K. had requested the surgery be performed during that hospitalization. Before becoming aware that a second surgeon assisted Respondent in performing this hysterectomy, Dr. Rose opined that the length of the operation, forty-five minutes, was too short a time for this procedure to be safely and adequately performed. After learning that another surgeon assisted Respondent, Dr. Rose backed away from this position. After this case was referred to Dr. Rose for consultation, he became aware that he was D. K.'s physician two years earlier who had treated D. K.'s symptoms with medication. In addition to his own testimony, Respondent presented two gynecologists, one board certified and the other board eligible. Dr. Broadnax reviewed the patient records of D. K. and the depositions of other witnesses. He opined that in the treatment of D. K., Respondent exercised the level of care, skill and treatment which is recognized by a reasonably prudent similar osteopathic physician as acceptable under similar conditions and circumstances. The parties stipulated if Dr. Rothman, a board certified gynecologist, was called he would testify that in the treatment of D. K., Respondent exercised the care, skill and treatment which is recognized by a reasonably prudent osteopathic physician as acceptable under similar conditions and circumstances. With respect to the charge involving inadequate record keeping, no creditable evidence was presented to support this charge. Petitioner's only witness acknowledged that he was unaware there is a standard of care for the keeping of medical office records.
Findings Of Fact The following Findings of Fact are based upon the testimony and documentary evidence presented at hearing, the demeanor and credibility of the witnesses, and on the entire record of this proceeding. Petitioner is the state agency charged with regulating the practice of osteopathic medicine pursuant to section 20.43, and chapters 456 and 459, Florida Statutes. At all times material to these proceedings, Respondent was a licensed osteopathic physician within the State of Florida, having been issued license number OS 8729. Respondent's address of record at the time of filing the Administrative Complaint was 11950 County Road 101, Suites 101, 102, and 103, The Villages, Florida 32162. Respondent's current address of record is 13767 U.S. Highway 441, Lady Lake, Florida 32159. Respondent currently holds no board certification in any specialty area, and did not complete any residency other than in emergency medicine. Respondent attended Michigan State University, College of Osteopathic Medicine. In 2002, he began full-time practice as an emergency room physician at Munroe Regional Medical Center in Ocala, Florida. He worked as an emergency room physician until he opened Exceptional Urgent Care Center (“EUCC”). At all times material to this complaint, Respondent owned and operated EUCC. Treatment Provided to Patient J.K. On March 15, 2018, J.K., along with his wife, presented to EUCC with complaints of a sore throat and fever. This was the first of two visits to the clinic. J.K. reported his medications as Amlodipine, Warfarin, Tamsulosin, and Dofetilide (unless otherwise indicated, hereinafter referred to by its trade name "Tikosyn"). J.K. was prescribed these medications by his cardiologist at the William S. Middleton Memorial Veterans Hospital (“V.A. Hospital”) in Wisconsin, his home state. Relevant to this matter, Tikosyn helps patients maintain a normal heartbeat rhythm. Tikosyn was prescribed to keep J.K.'s heart in rhythm as he had atrial fibrillation. J.K. was treated by a nurse practitioner, who ordered a chest x-ray and a flu swab. The flu swab returned negative, and the chest x-ray showed no focal pneumonia. J.K. was prescribed Tamiflu and Naproxen. J.K. elected not to fill the Tamiflu due to the “expensive cost.” Respondent was not involved in J.K.'s treatment on this date. On March 16, 2018, J.K. and his wife K.K. returned to EUCC as J.K.’s symptoms had not improved. On this visit, J.K. saw Dr. Im. Dr. Im evaluated J.K. and ordered two tests. Dr. Im ordered a Prothrombin Time International Normalized Ration ("PT INR") test to determine J.K.'s coagulation and he ordered a CT scan of the chest. The PT INR results were within the therapeutic range. The CT scan showed shattered ground- glass opacification in the posterior right lower lobe and the medial left upper lobe. The CT scan findings were interpreted as "non-specific, may represent hypoventilatory change or an infectious inflammatory process (acute or chronic).” Respondent advised J.K. and K.K. that the CT scan appeared to show the start of pneumonia, and he was going to prescribe three medications: Levaquin 750 mg, Prednisone 20 mg, and Zyrtec 10 mg. K.K. testified that she asked Respondent if the Levaquin, Prednisone, or Zyrtec were contraindicated with any of J.K.'s current prescriptions, specifically Tikosyn. K.K recalls that Respondent replied that he was not familiar with Dofetilide (Tikosyn), and advised them to check with the pharmacist to see if there were any contraindications. Although Respondent initially advised J.K. and K.K. that he was not familiar with Tikosyn, Respondent testified that he advised J.K. and K.K. of the possible interactions between Levaquin and Tikosyn and told her that the interaction was very rare. He testified that he advised J.K. and K.K. that the pharmacist is a safety net, and the pharmacist would call him to discuss the prescriptions if he missed anything. K.K. credibly testified that Respondent did not counsel J.K. or K.K. on any risks regarding the medications Dr. Im prescribed or provide them with any alternatives during the visit on March 16, 2018. J.K. and K.K. left EUCC and went to Publix to fill the prescriptions. K.K. asked the pharmacist if any medications would interfere with any of J.K.'s prescribed medications. Upon advice of the pharmacist that Levaquin was contraindicated with Tikosyn, K.K. declined to fill the prescription for Levaquin. On behalf of J.K., K.K. then called EUCC and asked for a different antibiotic that would not interact with Tikosyn. However, she was instructed to contact J.K.'s cardiologist. K.K. then contacted the cardiology staff of the V.A. Hospital in Wisconsin, who instructed K.K. to follow the advice of the pharmacist and (tell J.K.) not to take the Levaquin. K.K. called EUCC a second time to confirm whether J.K. had an infection and she was told that J.K. did not have an infection. Respondent recalls that he had a personal conversation with K.K. during a courtesy telephone call placed the next day (March 17, 2018). Respondent testified that during that call, he explained Levaquin was the drug of choice, other medications would not cover J.K.'s pneumonia, the potential interactions were very rare, and J.K. needed to take the Levaquin. By his own admission and his medical records, Respondent did not provide J.K. or K.K. with any specific alternative antibiotics and insisted that J.K. needed to take the Levaquin. K.K. disputes that Dr. Im spoke with her or J.K. at any point after the March 16, 2018, visit. She clearly recalled that she spoke with a woman each time she spoke with staff at Dr. Im’s office. Overall, J.K. and K.K. clearly and convincingly testified that Respondent never advised them of the risks of using Levaquin with Tikosyn or provided any alternatives to the Levaquin. Expert Testimony Petitioner offered the testimony of Dr. Anthony Davis, who testified as an expert. Dr. Davis has been licensed as an osteopathic physician in Florida since 1995. Dr. Davis attended Kirksville College of Osteopathic Medicine and completed an internship in family practice. He has been board certified in family medicine by the American Board of Osteopathic Family Physicians since 2001, and board certified in emergency medicine by the American Association of Physician Specialists since July 2003. He is also affiliated with professional organizations including the American College of Family Practice and Florida Osteopathic Medical Association. Dr. Davis was accepted as an expert in emergency and family medicine. Dr. Davis relied upon his work experience, his training, and his review of the medical records for J.K. to render his opinion regarding the standard of care related to treating J.K. The standard of care requires an osteopathic physician treating a patient similar to J.K. to: (1) provide and document their justification for why Levaquin was the appropriate drug of choice; (2) note the patient’s acknowledgment that there are interactions with Tikosyn; (3) ensure the patient understands the risks and benefits of combining Tikosyn and Levaquin; (4) explain to the patient that there are limited alternatives to Levaquin; and (5) provide the reason for prescribing a potentially dangerous drug. Levaquin is a medication that comes with a black box warning that requires physicians to counsel patients on the risks associated. When a drug is designated as contraindicated and has a category X for interaction, the standard of care requires that the physician clearly explains to the patient why they are using the drug and defend how it is going to be safe. Tr., p. 70. Dr. Davis opined there were multiple treatment options available for J.K., such as supportive care or an antibiotic with a lower risk of interaction with J.K.'s existing medication. Moreover, Dr. Davis testified that there were safer alternatives to Levaquin that would effectively treat pneumonia, such as doxycycline, if J.K. actually had pneumonia and an antibiotic was necessary. Respondent provided literature from the Infectious Diseases Society of America related to community-acquired pneumonia in an attempt to prove that X-Ray or other imaging techniques are required for the diagnosis of pneumonia and to support his claim that Levaquin was the drug of choice for J.K. However, Dr. Davis credibly pointed out that the article, published in 2007, is no longer accurate.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board of Osteopathic Medicine enter a Final Order as follows: Finding that John Joseph Im, D.O., violated section 459.015(1)(x), by committing medical malpractice, as defined in section 456.50, as alleged in the Administrative Complaint; Issue a letter of concern against Respondent’s license to practice osteopathic medicine; Requiring completion of a prescribing practices course; and Imposing an administrative fine of $2,500. DONE AND ENTERED this 16th day of December, 2019, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN 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 16th day of December, 2019.
The Issue An amended administrative complaint, dated July 31, 1989, alleges various violations of Chapter 459, F.S., by Respondent. Counts V, VI and VII, relating to Respondent's treatment of patient, R.C., were voluntarily dismissed by Petitioner at the commencement of the hearing. The following allegations are left at issue: That Respondent violated Section 459.015(1)(u), and (y), F.S., by prescribing Percodan and Ritalin, controlled substances, to his wife, G.I., inappropriately or in excessive quantities. That in the treatment of his wife, Respondent failed to practice osteopathic medicine with that level of care, skill and treatment which is recognized by a reasonably prudent similar osteopathic physician as being acceptable under similar conditions and circumstances, in violation of Section 459.015(1)(y), F.S. That Respondent violated Section 459.015(1)(p), F.S., by failing to keep medical records justifying the course of treatment of G.I.; and that of his mother, M.I., for whom he prescribed Demerol.
Findings Of Fact Respondent, Donald Iafornaro, D.O., is and has been at all times material to the allegations of the amended administrative complaint, a licensed physician in the State of Florida, with license number OS 0001794. Dr. Iafornaro has a limited osteopathic practice which he conducts from his home at 1802 North Lakemont, Winter Park, Florida. He has about fifty patients, and also treats his large family, including his wife, mother, eleven children and grandchildren. G.I. has been a patient of Dr. Iafornaro for approximately 25 years -- since 1973, as his wife, and prior to that, from 1964, along with the rest of her family in Cleveland, Ohio. Mrs. Iafornaro has had a demanding job caring for the Iafornaro children, her mother-in-law, the house and pets, and has recently been her husband's only staff in his practice. Between May 1985, and April 1987, her husband treated her for a variety of medical problems, including severe allergies, sleep apnea (a mechanical difficulty in breathing during deep sleep), depression, fatigue, a chronic fracture of the foot bone (a fracture which failed to heal), spinal stenosis, an unstable hip, ulcers, angina and various gynecological complaints Between May 1, 1985, and April 11, 1987, Dr. Iafornaro prescribed the following drugs, among others, to his wife: 2,720 tablets of Percodan 900 tablets of Ritalin Percodan is the product name for oxycodone hydrochloride, and Ritalin is the product name for methylphenidate hydrochloride. Both are Schedule II controlled substances and are legend drugs as defined in Section 465.003(7), F.S. With the concurrence of the parties, official recognition was taken of the Physician's Desk Reference (PDR) for the years 1984-1987. Petitioner also presented the testimony of two osteopathic physicians practicing in Dr. Iafornaro's community. The evidence from these authorities established that the prescriptions of Percodan and Ritalin for G.I. were inappropriate or in excessive quantities. Dr. Iafornaro felt that Ritalin was necessary to counteract the sedative effect of the antihistamines his wife had to take for her many allergies. He also prescribed the Ritalin for her depression. Ritalin is a mild central nervous system stimulant. It is indicated for attention deficit disorders (primarily in children) and narcolepsy. It should not be used for severe depression or for the prevention or treatment of normal fatigue. The PDR warns of drug dependence. Ritalin is also contraindicated in patients, such as G.I., who have exhibited anxiety, tension, depression and agitation. Ritalin may cause reactions such as skin rashes, a common complaint of this patient, but a problem which Dr. Iafornaro attributed to her multiple allergies. The Percodan was prescribed by Dr. Iafornaro for his wife's pain in her foot and for other pain in her low back and in her wrist. The PDR warns that Percodan may be habit forming. It contains aspirin, which can aggravate ulcers. It is indicated for relief of moderate to moderately severe pain; it is a depressant; it can cause apnea and respiratory depression in an overdose. Mrs. Iafornaro's statement that she used only about a half a tablet a day is inconsistent with the volume of the drugs prescribed for her over the relevant period. Dr. Iafornaro produced all of his medical records for G.I. for the relevant period. He claims they are incomplete because he also makes notes on odds and ends, writes on the back of a medical journal and keeps a lot of records in his head. (Iafornaro Deposition, p.15) The medical records produced by Dr. Iafornaro do not justify his course of treatment,for this patient, and particularly fail to explain the long-term volume of drugs that he was prescribing. Dr. Iafornaro claims that the probable cause panel previously reviewed his records and found them acceptable. The records were produced in response to charges that he had violated certain terms of an earlier disciplinary action. The issue was resolved with a "no probable cause" finding. That finding, in 1983, was for a different time period than the period at issue in this proceeding. Dr. Iafornaro provided records to the panel covering a limited period in 1983 when he was treating his wife for her foot fracture, a slip and fall accident and other acute conditions. The 1983 records, in contrast to those at issue here, describe the condition and his treatment. The later records provide copious listings of a variety of prescriptions, including the Percodan and Ritalin, with scant examination results, explanation of the condition being treated, or diagnoses of the complaints. Complete written medical records are an essential element of prudent osteopathic practice, particularly when, as here, the physician is treating his family and his objectivity may be questioned. Between January 5, 1987, and March 1, 1987, Dr. Iafornaro prescribed 200 50 mg Demerol tablets to his 84 year old mother, M.I. Demerol is a product name for meperidine hydrocloride, a Schedule II controlled substance, and a legend drug as defined in Section 465.003(7), F.S. The basis for the prescriptions was an episode of right upper quadrant pain felt to be of gallbladder origin. It is cheaper to purchase Demerol tablets by the 100. After M.I. took a few of the first prescription of 100, she lost the bottle and Dr. Iafornaro replaced it with another prescription. The medical records make no mention of the lost prescription, but they marginally justify the use of this drug for the limited period in issue and for the purpose intended. A previous disciplinary case involving allegations of Dr. Iafornaro's improper prescriptions and record-keeping practices was resolved with a stipulation for his one-year probation with conditions. The stipulation was approved by the Board of Osteopathic Medical Examiners in a Final Order entered on December 28, 1982. (DPR Cases #0010979, 0014467, and 0015303)
Recommendation Based on the foregoing, it is hereby, RECOMMENDED That the Department of Professional Regulation, Board of Osteopathic Medical Examiners enter a Final Order which finds Donald Iafornaro, D.O., guilty of having violated the provision of Subsection 459.015(i)(p), (u) and (y), F.S. and imposing the following penalties: Suspension of license for 90 days and until such time as he appears before the Board of Osteopathic Medical Examiners and establishes that he has taken and passed the examination conducted by the National Board of Examiners for Osteopathic Physicians and Surgeons or the Special Purpose Examination (SPEX) of the Federation of State Medical Boards, as designated by the Board of Osteopathic Medical Examiners in its final order; Upon reinstatement that his license be placed on probation for two years subject to such terms and conditions deemed appropriate by the Board, including, but not limited to, restriction of practice, direct or indirect supervision of practice or prescribing of controlled substances and required additional continuing education; That he be permanently restricted from prescribing controlled substances to family members, unless under direct supervision of another osteopathic physician; That a reprimand be imposed; That a fine of $2,000. be imposed. DONE AND RECOMMENDED this 23rd day of February, 1990, in Tallahassee, Leon County, Florida. MARY CLARK 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 23rd day of February, 1990. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 88-5277 The following constitute specific rulings on the findings of fact proposed by the parties. Petitioner's Proposed Findings Rejected as unnecessary. Adopted in paragraph 1. 3.-5. Adopted in paragraph 5. Adopted in paragraphs 6, 8 and 10. Some blood pressure monitoring is found in the records however. Adopted in paragraph 6. Adopted as a conclusion of law and in paragraph 6. Adopted in paragraph 12. Adopted in paragraph 15. Adopted in paragraph 16. Rejected as contrary to the weight of evidence. Adopted in substance in paragraph 19. Respondent's Proposed Findings Rejected as unnecessary. Adopted in paragraph l. Adopted in part in paragraphs 7-10, otherwise rejected as unnecessary. 4.-6. Rejected as contrary to the weight of evidence. 7.&8. Adopted in paragraphs 15, 17 and 18. 9. Rejected as immaterial. COPIES FURNISHED: Bruce D. Lamb, Esquire Dept. of Professional Regulation 730 S. Sterling Street Tampa, FL 33609 Sam Murrell, Jr., Esquire P.O. Box 1749 Orlando, FL 32802 Kenneth D. Easley, General Counsel Dept. of Professional Regulation 1940 N. Monroe St., Suite 60 Tallahassee, FL 32399-0792 Rod Presnell Executive Director Osteopathic Medical Examiners Dept. of Professional Regulation 1940 N. Monroe St., Suite 60 Tallahassee, FL 32399-0792
