Findings Of Fact The Respondent, Jayaprakash Kamath, M.D., is a licensed physician in the State of Florida, having license ME 0036704. He is board certified in internal medicine and gastroenterology. He has had no prior complaints of any kind against him since he began practicing medicine in Florida in 1980, and he has a reputation for being a competent and caring physician. On the morning of August 1, 1988, while making rounds at Morton Plant Hospital in Clearwater, Florida, the Respondent was paged by one of his partners, Belur Sreenath, M.D. The Respondent returned the call and was asked to see a patient whom Sreenath had just accepted and admitted on a 23-hour basis at Morton Plant. Sreenath reported that the patient was a referral from the Morton Plant emergency room. The patient's regular physician was on vacation, and the regular physician's on-call cover had recommended to the emergency room physician that the patient be referred to the Respondent and Sreenath to treat the patient for diagnosed fecal impaction. It was reported to the Respondent, through Sreenath, that the patient had come into the emergency room at about five in the morning complaining of abdominal pain and constipation. The emergency room physician, Jerry Julius Chase, M.D., had three X-rays done and had done his own "wet reads" of the X-rays before sending them to the radiology department for a definitive interpretation. According to Chase, the X-rays showed "much fecal matter, no obstruction." Chase did not mention any other significant findings. Chase's preliminary diagnosis was "fecal impaction." Sreenath also reported that he (Sreenath) had ordered enemas for the patient. Soon after the Respondent received the call from his partner, the Respondent called Chase, who was still in the emergency room and still had the X-rays. Chase confirmed what Sreenath had told the Respondent, again not mentioning any other significant findings. After talking to Chase, the Respondent visited the patient in his hospital room. By this time it was about 10:00 a.m. The Respondent took a history from the patient, examined the patient, and read the patient's chart. The chart included the results of lab work and the "ER sheet," which included the emergency room physician's diagnosis of abdominal pain and impaction and the results of his "wet-read" of the X-rays, but it did not yet include a report from the radiology department or the X-rays themselves. The Respondent did not contact the radiology department for a definitive interpretation of the X-rays or obtain the X-rays for his own review. By the time the Respondent saw the patient, the patient already had one enema and seemed to be responding to the treatment. Based on the information he had, the Respondent made a diagnosis of fecal impaction, confirmed his partner's orders for enemas for the patient, and added a stool softener. The nursing staff was ordered to monitor the patient's progress. The patient continued to respond satisfactorily to treatment during the day. Between ten and eleven in the evening of August 1, 1988, the patient complained of some abdominal pain or cramping (symptoms that are consistent with a diagnosis of fecal impaction and enema treatments) and the nurses on duty contacted the Respondent's partner, who was on call. Sreenath ordered a combination of demerol and vistaril as an analgesic. One small dose was enough to relieve the patient's pain, and the patient slept through most of the night. He ate 80% of his breakfast the next morning and was not complaining of pain or asking to see a doctor. At approximately 9:15 a.m. on August 2, 1988, a nurse telephoned the Respondent for a decision whether the patient was being discharged or was being admitted as an inpatient. The Respondent still had not seen the patient's X- rays, seen or had reported to him the radiology report on them, or spoken to the radiologist. On questioning, the nurse reported the patient's status to the Respondent. The nurse's report satisfied the Respondent that the patient was responding to the treatment for fecal impaction and could be discharged. The nurse was given orders to have arrangements made for the patient to see his regular physician within a week and to instruct the patient on symptoms to report if they occurred between discharge and seeing his regular physician. In accordance with the Respondent's telephone instructions, the patient was discharged at approximately 9:30 a.m. on August 2, 1988. Although there were no clinical signs or symptoms of it during the patient's stay at Morton Plant, the patient had a large aortic aneurysm, approximately eight centimeters in diameter, in his abdomen just below the renal arteries. The aneurysm was readily apparent on the X-rays, yet Chase did not report it to either the Respondent or to his partner, Sreenath. The radiologist either did not contact Dr. Chase to point out to him that the report of Chases's "wet read" of the X-rays omitted the aneurysm or, if he did, Chase did not relay this information to the Respondent or his partner. The radiologist's written report, stating that the X-rays revealed the large aneurysm, was sent to Chase, not to the Respondent, and Chase did not relay the information in it to the Respondent or his partner. If the Respondent had known about the aneurysm, he would have considered the aneurysm to be the patient's most serious medical concern. He might not have accepted the patient or, if he did, he probably would have brought a vascular surgeon into the case and had the vascular surgeon, or perhaps a cardiologist, closely monitor the patient for possible leaking or dissecting or rupture of the aneurysm. The Respondent also would have had to give consideration to whether the aneurysm was a cause of the patient's abdominal pain. In addition to treating the aneurysm as the patient's most serious medical concern, giving consideration to whether the aneurysm was a cause of the patient's abdominal pain, the Respondent would have had to give consideration to altering his diagnosis for the patient had he reviewed the X-rays or the radiologist report, or had spoken with the radiologist. In addition to showing the existence of the aneurysm, the X-rays indicated that the patient technically may not have been impacted. (The gas pattern was non-specific.) With respect to this patient, the Respondent practiced medicine below that level of care, skill and treatment which is recognized by a reasonably prudent similar physicians as being acceptable under similar conditions and circumstances (below the standard of care) in that he did not either personally review the X-rays on the patient, read or have reported to him the contents of the radiologist's report, or talk to the radiologist. Instead, he relied totally on the emergency room physician's "wet read." As a result, the Respondent's diagnosis of "fecal impaction" may not have been correct, and he did not give proper consideration to the aneurysm. However, except for the failure regarding the X-rays, the DPR otherwise did not prove that it was below the standard of care for the Respondent, who was treating the patient for fecal impaction, to discharge the patient without seeing him on the morning of August 2, 1988, based on the nurse's report to the Respondent. Although it was below the standard of care for the Respondent not to either read the X-rays himself or obtain the radiologist's definitive interpretation, it was reasonable for the Respondent to expect that the emergency room physician would have told him, and noted in the "ER sheet," that the patient he was being referred had an aneurysm of the kind and size of the one the patient had in this case. Even if the emergency doctor had not initially communicated to the Respondent the existence of the aneurysm, either directly or through the "ER sheet," it was reasonable for the Respondent to expect that, in the normal course, the radiologist reviewing the X-rays would have noted that, according to the "ER sheet," the ER doctor "missed" the aneurysm and would have contacted the ER physician to bring this to his attention, and that the ER doctor then would have contacted the Respondent to advise him of the omission. The patient did not experience abdominal pain after his discharge from Morton Plant, but he began to experience back and groin pain. The aneurysm was becoming symptomatic. The patient's symptoms markedly worsened in the early morning hours of August 4, 1988. The patient's wife had him taken to the emergency room at HCA New Port Richey Hospital at approximately half past midnight. The patient was confused, and was complaining of pain in the back and groin area. His blood sugars were three times normal. He was diagnosed preliminarily in the emergency room as having out-of-control diabetes and confusion and as being near sycope. No X-rays were taken in the emergency room at New Port Richey Hospital, and no information was obtained from Morton Plant Hospital. Because the patient and his wife did not know about the aneurysm, they were unable to report it when the emergency room physician took the patient's history. The patient was admitted to New Port Richey Hospital at approximately 2:30 a.m. on August 4, 1988. However, the admitting physician did not see the patient or order diagnostic medical imaging at that time. The admitting physician saw the patient at approximately 9:00 a.m., and ordered X-rays and a CAT scan. Before the X-rays or CT scan were taken, at approximately ten o'clock, the patient suffered an acute hypotensive event while in his hospital room. An emergency abdominal sonogram was ordered, and it was determined that the patient was suffering from the rupture of the abdominal aortic aneurysm (the same one that was evident on the X-rays taken at Morton Plant). Surgery was attempted to resect the ruptured aneurysm. The patient was a poor candidate for surgery of that kind due to his age and other health factors. The patient died on August 6, 1988. If the patient knew of the aneurysm, it is likely that his treatment on August 4, 1988, would have been far different. First, when the aneurysm became symptomatic, they probably would have contacted the vascular surgeon, who would have been on the case already, either immediately or on arrival at the emergency room. The aneurysm would have been closely monitored from the time of arrival at the hospital, and the vascular surgeon would have been prepared for surgery when indicated. 2/ At the very least, the patient and his wife probably would have reported the aneurysm during the taking of a history in the emergency room at HCA New Port Richey Hospital, and the emergency room surgeon could have immediately taken appropriate steps, such as contacting a vascular surgeon and immediately ordering appropriate diagnostic medical imaging. 3/ The Respondent did not dictate admission notes for the patient until August 17, 1988. The Respondent did not dictate discharge notes. The DPR did not prove that it was below the standard of care for the Respondent to delay the dictation of admission notes or for him not to prepare a discharge summary for a patient in the hospital on a 23-hour basis. The DPR also did not prove that the Respondent failed to keep written medical records justifying the course of treatment of the patient.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Board of Medicine enter a final order: (1) finding the Respondent, Jayaprakash Kamath, M.D., guilty of one count of violating Section 458.331(1)(t), but dismissing the other count of the Administrative Complaint; reprimanding him; and (3) fining him $2,000. RECOMMENDED this 27th day of July, 1992, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 27th day of July, 1992.
The Issue The issue to be determined in this proceeding is whether Respondent, Babak Saadatmand, M.D. (Respondent or Dr. Saadatmand), has violated section 458.331(1)(m) and (t), Florida Statutes (2013), as alleged in the Administrative Complaint.
Findings Of Fact Based upon the testimony and documentary evidence presented at hearing, the demeanor and credibility of the witnesses, and the entire record of this proceeding, the following findings of fact are made: The Parties Petitioner, the Department of Health, is the agency charged with the regulation of the practice of medicine pursuant to chapters 20, 456, and 458, Florida Statutes. Respondent, Babak Saadatmand, M.D., is a medical doctor licensed by the Board of Medicine. Dr. Saadatmand holds Florida license number ME 114656. Respondent graduated from the University of Maryland, College of Medicine, in 1988, and completed his residency at Case Western Reserve. He then completed a residency in emergency medicine at Cook County Hospital in Chicago, Illinois. Respondent was board-certified in internal medicine, but no longer holds that certification because at the time it was due for renewal, he was no longer eligible because his practice was devoted to emergency medicine as opposed to internal medicine. He remains board-certified in emergency medicine. Respondent has held positions that required him to supervise residents and give lectures at Yale University, New York College of Medicine, and Indiana University. Dr. Saadatmand chose to practice emergency medicine as a traveling physician for the last three years, because of the financial benefits available by doing so while he gained additional experience in emergency medicine. However, he has since or now accepted a position as the assistant program director of the emergency medicine residency program at Jackson Memorial Hospital in Miami, Florida, where his job responsibilities will include the supervision of residents. Dr. Saadatmand holds a medical license in several other states in addition to Florida, and has not been disciplined in any state where he is licensed. Dr. Saadatmand’s Treatment of R.D. In June and July of 2014, Respondent was working as a traveling physician at Parrish Medical Center in Titusville, Florida. While most of his assignments in various emergency facilities have been six months long, the assignment at Parrish Medical Center was for approximately one month. Respondent treated patient R.D. on June 27, 2014, at Parrish Medical Center emergency room. R.D. was accompanied by his wife, C.D. R.D. was a 52-year-old male when he presented to Parrish Medical Center. He had a history of T-cell lymphoma and had been treated for his cancer through the Space Coast Cancer Center. Just days before his presentation to the emergency room on June 27, 2014, he had been cleared to return to his place of employment. However, on June 27, 2014, R.D.’s supervisor called R.D.’s wife, C.D., and asked her to come get R.D. as he was too ill to be at work. R.D. arrived at Parrish Medical Center in the early afternoon, and was triaged by a nurse at approximately 2:13 p.m. The notes from the triage nurse’s assessment recorded, among other things, R.D.’s vital signs upon arrival; his chief complaint, including its duration and intensity; a brief medical history; a list of his current medications; and a drug/alcohol use history. Registered Nurse Sharon Craddock was the emergency room nurse who completed the initial assessment, or triage assessment, of R.D.’s condition. According to her triage notes in the Parrish Medical Center records, R.D.’s chief complaint upon arrival was constipation, which was described as constipation for three days, with bilateral abdominal pain. The pain was described as aching, pressure, shooting, and throbbing, and R.D.’s pain level was reported in Ms. Craddock’s notes as being an eight on a ten-point scale. Her description of his abdomen was “soft, non-tender, round, and obese.” Nurses are directed to record the pain level reported by the patient, and not to alter the pain level based on the nurse’s observation.1/ R.D.’s vital signs were taken upon his arrival at Parrish Medical Center and were recorded in the electronic medical records as follows: temperature, 98.4F; pulse, 127H; respiration, 20; blood pressure, 120/70; and pulse oximeter, 95. The only abnormal reading reflected in R.D.’s vital signs was his pulse, which was above 100, considered to be the upper limit of normal. R.D. reported that he had a medical history which included T-cell lymphoma and that he did not smoke or drink. His current medications were listed as aspirin, Zyrtec, Amaryl, Metformin, Prilosec, Percocet, Pravastatin, and a multivitamin. The Percocet dosage was listed as one tablet, three times daily, as needed for pain. Ms. Craddock also recorded a nursing note for R.D. at 3:37 p.m., and she was in the room when Respondent first went in to see R.D. Ms. Craddock’s nursing note indicates, “Pt with a hx of stomach CA with a recent ‘clean bill of health’ presents with ABD pain and constipation. Occasionally takes Percocet for pain. Wife at BS. Pt. sleepy, states he normally takes a nap this time of day. Pending MD eval with orders.” The Parrish Medical Center chart documents that R.D. was calm, cooperative, and asleep at 15:37 hours (3:37 p.m.). This presentation is generally inconsistent with a patient who is in severe abdominal pain. Dr. Saadatmand saw R.D. at approximately 3:56 p.m. Consistent with the custom at Parrish Medical Center, he worked with a scribe who took Respondent’s dictation for notes during his visit with the patient, and then loaded those notes into the electronic medical record. Respondent would then have the opportunity to review the notes as transcribed and direct the scribe to make any necessary changes. Dr. Saadatmand’s notes indicate that R.D. presented with abdominal pain, and was experiencing moderate pain that was constant with cramping. The description of R.D.’s pain as moderate was based upon Dr. Saadatmand’s observation of R.D. The chief complaint listed was constipation. Dr. Saadatmand took a history from R.D., who reported that he had been diagnosed with gastric lymphoma in 2013, and was treated with radiation and chemotherapy. R.D. and his wife, C.D., reported to Respondent that they feared his cancer might be returning, as his current symptoms were similar to those he experienced when his cancer was first diagnosed. He had returned to Space Coast Cancer Center for some additional screening two to three weeks before the emergency room visit, which included a CT of the abdomen and an upper and lower endoscopy. R.D. and his wife both believed that the results of the screening were normal. Respondent recorded this conversation in the electronic medical record as “[R.D.] had a recent follow up with Dr. Rylander and had normal EGD and colonoscopy. [R.D.] had recent CT scan with cancer center.” Space Coast Cancer Center does not use Parrish Medical Center to perform its CT scans or other testing, so the results of the recent CT scan were not available for Respondent to view. Respondent believed that R.D. and C.D. had followed the directions of R.D.’s oncologists, and R.D. had been a compliant patient. Respondent asked R.D. about his use of Percocet. He did not ask how much he was taking, but how often and whether the use had changed. He considered the answer to this question to be important, because a change in the use could indicate a change in R.D.’s pain intensity. R.D. did not report any change in the amount that he was taking, which was generally an “every other day thing for him.” Respondent testified that, given that the type of Percocet that R.D. was prescribed was an extra-strength as opposed to a standard version of Percocet, it was highly likely that R.D. would suffer from opioid-induced constipation. R.D. reported to Respondent that he had not attempted any laxatives. R.D. also denied having any nausea or surgical history. The lack of a surgical history is significant because patients with a recent surgical history and abdominal pain may be experiencing complications related to the surgery, which would account for the patient’s pain. There is no reference to R.D.’s diabetes in either the nursing triage notes or Dr. Saadatmand’s notes. The only reference in the past medical history is the report of cancer. The list of medications R.D. was taking at home includes Metformin HCI. No evidence was presented to establish whether Metformin is a drug prescribed only for diabetes or whether it is an accepted treatment for other conditions. Moreover, there is no evidence presented to establish how Respondent was to know that R.D. was diabetic if R.D. did not report the condition. In addition to taking R.D.’s medical history, Respondent performed a review of systems and a physical examination, including palpation of his abdomen. In his chart, the electronic medical record states under “review of systems,” “All systems: Reviewed and negative except as stated.” Under the category “Gastrointestinal,” the record indicates “Reports: Abdominal pain, Constipation. Denies: Nausea, vomiting, Diarrhea.” In the physical examination section of the electronic medical record, it is noted that R.D. was alert and in mild distress. The cardiovascular examination indicates that R.D. had a regular rate, normal rhythm, and normal heart sounds, with no systolic or diastolic murmur. With respect to his abdominal exam, Respondent indicated, “Present: Soft, normal bowel sounds. Absent: Guarding, Rebound, Rigid.” The notation that the abdomen was soft with normal bowel sounds is another way of noting that the abdomen is non-tender. Because R.D. was tachycardic upon presentation to the emergency room, Dr. Saadatmand noted R.D.’s anxiety about the possibility of his cancer returning, and checked his pulse a second time. When Respondent checked R.D.’s pulse, it had slowed to 90, which is within a normal range. In light of R.D.’s normal vital signs, normal abdominal examination, and the length of his pain and constipation, Respondent determined that the most likely cause for Respondent’s pain was constipation, and communicated that determination to R.D. and C.D. He asked whether R.D. had used a laxative and was told he had not. Dr. Saadatmand told R.D. and his wife that the pain medication that he took could be a source for his constipation, and that it would be prudent to try a laxative and see if that produced results before considering any further diagnostic tests. Respondent did not order any lab tests for patient R.D. on June 27, 2014, because his vital signs and abdominal examination were normal. He did not order an EKG for R.D. because there were no symptoms to indicate a cardiac issue. Respondent also did not order a CT scan of the abdomen or pelvis for patient R.D. on June 27, 2014. He felt that, in terms of R.D.’s concern about cancer recurrence, there were tests available to R.D.’s oncologist that would be more useful in detecting any recurrence of R.D.’s cancer that are not available through an emergency room visit. For example, a PET scan would be the most helpful, but is not something that Respondent could order through the emergency room because it is not considered an emergent study. The Department has not alleged, and the evidence did not demonstrate, that R.D. suffered from any emergency condition that additional testing would have revealed and that went undetected by Dr. Saadatmand. Respondent did order a prescription-strength laxative, i.e., Golytely, for R.D., which is a laxative commonly used to treat constipation and to prepare patients for a colonoscopy. Dr. Saadatmand communicated his recommendation to R.D. and C.D., who seemed relieved that the problem might be limited to constipation. He also advised them to return to the emergency room should R.D.’s symptoms get worse or if he developed a fever, because those developments would indicate a change in his condition. R.D. received discharge instructions that are consistent with Dr. Saadatmand’s discussion with R.D. and his wife. The discharge instructions referred R.D. to his primary care physician, noted the prescription for Golytely, and provided information related to the community health navigator. The Patient Visit Information sheet received by R.D. specifically noted that the patient was acknowledging receipt of the instructions provided, and stated, “I understand that I have had EMERGENCY TREATMENT ONLY and that I may be released before all my medical problems are known and treated. Emergency medical care is not intended to be a substitute for complete medical care. My Emergency Department diagnosis is preliminary and may change after complete medical care is received. I will arrange for follow-up care.” R.D. also received printed materials about constipation and how to address the problem. These instructions stated that the patient should contact his or her primary care provider if the constipation gets worse, the patient starts to vomit, or has questions or concerns about his or her condition or care. It also instructed the patient to return to the emergency room if he or she had blood in his or her bowel movements or had a fever and abdominal pain with the constipation. R.D. signed the acknowledgment that he had read and understood the instructions given to him by his caregivers. The acknowledgment specifically referenced the instructions regarding constipation. The written instructions are consistent with the verbal advice provided by Respondent. R.D.’s Subsequent Treatment Unfortunately, R.D.’s symptoms did not improve. He developed a fever and his pain level increased significantly. As stated by his wife, his pain the following day was “way worse” than when he saw Dr. Saadatmand. After a call to her niece, a nurse that worked in the emergency room at Parrish Medical Center, C.D. took R.D. back to the hospital on June 28, 2014, at approximately 6:30 p.m. At that point, he had a heart rate of 125, a temperature of 101.6 degrees, and tenderness in the lower left quadrant of his abdomen. Testing indicated that R.D. had intra-abdominal masses and small collections of extra-luminal gas that suggested the possibility of a contained micro-perforation. There is no allegation in the Administrative Complaint that the micro- perforation existed at the time R.D. saw Respondent. R.D. died on August 23, 2014, as a result of end-stage T-cell lymphoma. The Expert Witnesses The Department presented the expert testimony of Annie Akkara, M.D. Dr. Akkara is board-certified in emergency medicine and has been licensed to practice medicine in Florida for approximately nine years. All of her practice has been in the greater Orlando area in the Florida hospital system. She worked full-time for one year when she first moved to Florida, and since that time approximately 80 percent of her practice has involved reviewing medical charts for Veracode Associates, to determine whether diagnostic codes are fully supported in the medical records. She takes emergency room shifts on an as-needed basis, and has supervisory responsibility over patient extenders, such as nurses and physicians’ assistants, but not over other physicians. Dr. Akkara has never served on any committee for a medical staff at a hospital or helped develop protocols for an emergency room, and has not conducted any type of medical research. Although her position requires her to review electronic medical records, she was not familiar with the program used by Parrish Medical Center. Dr. Akkara reviewed the medical records for the emergency room visits for both June 27 and 28, 2014, as well as the records from the inpatient admission after the June 28 visit. She also reviewed the expert witness reports of Drs. Orban and Smoak. Dr. Saadatmand presented the expert testimony of David Orban, M.D. Dr. Orban practices emergency medicine in the Tampa area. He attended medical school at St. Louis University and completed residencies in orthopedics and emergency medicine. Dr. Orban has been licensed to practice medicine in Florida since 1982 and has been board-certified in emergency medicine since 1981. Before he practiced in Florida, Dr. Orban served as an instructor in surgery at the Washington University School of Medicine, and from 1970 through 1983, was an assistant professor of medicine at the University of California, Los Angeles (UCLA). In that position, he supervised residents in the emergency medicine program and helped to develop the program’s curriculum. Dr. Orban left UCLA in 1983 and moved to Florida, in order to help establish the emergency medicine residency program at the University of Florida. Currently, Dr. Orban is the director of emergency medicine for the University of South Florida (USF), College of Medicine, and the Medical Director Emeritus for the Tampa General Hospital Emergency Room. The USF emergency medicine residency program is a competitive program which receives approximately 1,200 applications each year for ten residency positions. Dr. Orban continues to spend approximately 20-24 hours each week practicing in the emergency room, in addition to his teaching responsibilities. He both sees patients on his own and supervises residents who are seeing patients. He has extensive experience in evaluating non-traumatic abdominal pain in the emergency room.2/ Allegations Related to the Standard of Care Dr. Akkara testified that in her opinion, Dr. Saadatmand’s care and treatment departed from the standard of care in a variety of ways. She agreed that Respondent assessed R.D.’s abdomen, but believed that he erred in not specifically documenting that the abdomen was not tender. In this case, the patient record specifically states, “Abdominal exam: Present: Soft, Normal bowel sounds. Absent: Guarding, Rebound, Rigid.” In Dr. Akkara’s view, the notes should have been more specific, and she found fault with the fact that the notes did not use the words “tender” or “non-tender.” Dr. Orban, on the other hand, noted that Respondent specifically documented the absence of guarding, rigidity and rebound tenderness, and described the abdomen as “soft, with normal bowel sounds.” Dr. Orban testified that assessing an abdomen for guarding, rigidity, and rebound are all forms of checking for abdominal tenderness. He did not hesitate to interpret Respondent’s medical records for R.D. as reflecting a normal exam, meaning no tenderness was discovered. Dr. Orban’s opinion is supported by the differences in the medical records from R.D.’s June 27 and 28 emergency room visits, and what options are provided in the electronic medical record when a positive finding for tenderness is chosen. Dr. Orban’s testimony is credited. The Administrative Complaint alleges and Dr. Akkara opined that Respondent departed from the appropriate standard of care by failing to obtain a complete set of normal vital signs before R.D. was discharged from the hospital. The only vital sign that was ever abnormal during R.D.’s June 27 visit was his heart rate, which upon arrival was 127. Respondent rechecked R.D.’s heart rate when he examined him, and upon re-examination it was 90, well within normal limits. Dr. Orban did not believe that the standard of care required the physician, as opposed to possibly supportive staff, to obtain a complete set of vital signs prior to ordering a patient’s discharge. The evidence established that while there is sometimes a nursing standard in emergency rooms requiring a nurse to obtain a second set of vital signs before a patient is discharged, there is no corresponding standard that requires the physician to repeat all of the vitals as well. Dr. Akkara admitted that while she attempts to get a complete set of vital signs before she discharges a patient, she does not always succeed in doing so. The evidence did not demonstrate a departure from the standard of care for not obtaining a second set of vital signs prior to discharge, especially where, as here, all of R.D.’s vital signs were normal when he arrived at the emergency room, except for his heart rate, and Dr. Saadatmand did, in fact, re-assess R.D.’s heart rate prior to discharge. The Administrative Complaint alleges that Respondent fell below the standard of care by not ordering routine lab work for R.D. The Administrative Complaint does not allege what purpose the routine lab work would serve in the emergency treatment of R.D. Dr. Akkara testified that routine lab work should have been completed before discharge, and that it was a departure from the standard of care not to do so. She stated that the labs were necessary to assess white blood cell count, glucose levels, and kidney function, and in those cases where tenderness was noted in the upper right quadrant of the abdomen, also could indicate issues with the patient’s liver enzymes. Dr. Akkara acknowledged, however, that it is possible for a CBC (complete blood count) to be frequently misleading in patients with abdominal pain, and is often normal with patients with appendicitis. Blood work often cannot distinguish between serious and benign abdominal conditions, and Dr. Akkara admitted that with respect to R.D., given the records from the subsequent admission, any results from a CBC ordered on June 27 would not have altered the treatment of the patient or changed his ultimate outcome. Dr. Orban testified that in the majority of cases where a CBC is ordered in the emergency room, it is not helpful. Ordering a CBC is helpful where a patient has a fever because it would help identify infection, or where a patient appears anemic. Other than those instances, it is not all that useful and is over-utilized. A chemistry panel measures a patient’s serum levels for things like sodium, creatinine, and glucose. Dr. Orban testified that, even with a diabetic patient, unless the patient is experiencing vomiting, mental status changes, blurred vision, frequent urination, or other symptoms associated with diabetes, a blood chemistry panel would not be helpful for assessing a patient with non-traumatic abdominal pain. Records for R.D.’s June 28 visit (the day after Respondent saw R.D.) note that he was diabetic, while the June 27 records do not. However, it was not established that either R.D. or his wife ever told anyone, whether nursing staff or Dr. Saadatmand, that he was diabetic. There is no testimony that his prescription for Metformin was to treat diabetes, as opposed to some other condition, and there was no evidence to indicate that diabetes is the only condition for which Metformin can be prescribed. Dr. Akkara repeatedly referred to R.D.’s diabetes as a basis for her opinions, but never identified the records that formed a basis for her knowledge of R.D.’s diabetic condition. The evidence presented does not establish that ordering a blood chemistry or CBC was required by the appropriate standard of care related to the care and treatment of R.D. in the emergency room on June 27, 2016. Dr. Akkara also testified that Respondent departed from the standard of care by failing to obtain a CT scan of the abdomen and pelvis. Her opinion is based, at least in part, on her belief that Respondent failed to document that R.D.’s abdomen was non-tender. She agreed with Dr. Orban that if a patient has no abdominal tenderness, then a CT scan is probably not warranted. In addition, Dr. Orban testified credibly that over the last ten years, there has been a trend toward over-utilization of CT scans, with the concomitant increased risk of radiation- induced cancer. In this case, R.D. had reported having a CT scan just weeks before this emergency room visit. His abdomen was not tender. In a case such as this one, where the patient presents with non-traumatic abdominal pain and a normal abdominal examination and no fever, a CT scan is not warranted. Dr. Orban’s testimony is credited. There is not clear and convincing evidence to establish that the standard of care required Respondent to order a CT scan under the circumstances presented in this case. Dr. Akkara testified that Respondent also violated the standard of care by not ordering an EKG for R.D. However, she acknowledged that R.D. did not present with any cardiac-related symptoms and denied chest pain. The purpose of an EKG is to explore any cardiac-related symptoms, and R.D. did not present with any. Dr. Akkara did not provide any protocols that dictate when an EKG should be ordered. Dr. Akkara also acknowledged that ordering an EKG would have no impact on the care provided to R.D., and that a patient does not need an EKG just because he or she walks in the emergency room with tachycardia.3/ The Department did not establish that the failure to order an EKG violated the applicable standard of care in this case. The Department also has charged Respondent with failing to arrange for follow-up care and failing to discuss follow-up care, as well as reasons for R.D. to return to the emergency room, if necessary. However, as noted in paragraphs 32-34, Dr. Saadatmand discussed follow-up care with R.D. and told him what circumstances would require a return visit to the emergency room. Dr. Akkara acknowledged that the discharge instructions given to R.D. were adequate. As stated by Dr. Orban, the role of an emergency room physician with regard to the assessment of patients is to identify emergency situations and treat them. Emergency situations are those that are acute, rapidly decompensating, and that require either medical or surgical intervention, with most likely a hospital admission for more definitive care. It is not the emergency physician’s responsibility to manage a patient’s chronic conditions. It is routine to advise patients with non- acute conditions to follow up with their established physicians and to provide written instructions to that effect. Dr. Saadatmand’s actions in providing instructions, both in terms of follow-up and possible return to the emergency room, were consistent with the standard of care. Finally, the Administrative Complaint finds fault with Dr. Saadatmand for not conducting another abdominal examination and not re-assessing R.D.’s vital signs prior to discharge. As noted previously, the only vital sign that was abnormal when R.D. arrived was his heart rate. Respondent did re-assess R.D.’s heart rate prior to discharge, and it was normal. With respect to a second examination of Respondent’s abdomen, the Department did not establish that one was necessary. Here, Respondent’s initial examination was normal, and there was a reasonable explanation for his discomfort that Respondent believed needed to be addressed before going any further. Dr. Akkara offered no protocol or other authority other than her own clinical experience to support the opinion that serial examinations of the abdomen were required. On the other hand, Dr. Orban testified that where, as here, where the first examination was normal and there was no fever or vomiting, no second examination would be required.4/ Dr. Orban’s testimony is credited. In summary, the Department did not establish that Respondent violated the applicable standard of care in his care and treatment of R.D. Further, his medical records, while not perfect, justify the course of treatment provided in this case.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board of Medicine enter a final order dismissing the Administrative Complaint. DONE AND ENTERED this 5th day of December, 2016, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON 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 5th day of December, 2016.
Findings Of Fact At all times material hereto, Respondent has been licensed to practice medicine in the State of Florida, having been issued license number ME-0027913, and was employed by the Norton Seminole Medical Group in Pinellas County, Florida. Respondent has been licensed in Florida since 1976. At approximately 3:50 p.m. on November 1, 1983, a 31 year old white male, with the initials R. L., arrived at the emergency room of Lake Seminole Hospital, Seminole, Florida, and was examined by the emergency room physician on duty. R. L. complained of substernal mid-chest pain radiating to his back, which had begun the night before. He was agitated and exhibited a great deal of emotional stress. The emergency room physician on duty treated R. L. for suspected cardiac pathology, placed him on a cardiac monitor, inserted a heparin lock into a vein, and ordered lab work which included a chest x-ray, electrocardiogram, electrolytes, cardiac enzymes, CBC (complete blood count), blood sugar, creatinine and BUN (blood urea nitrogen). These were appropriate tests under the circumstances. When the Respondent came on duty in the emergency room at 7:00 p.m., all lab work had been completed, except for the cardiac enzymes. The emergency room physician who had been on duty when R. L. appeared at the emergency room briefed Respondent about R. L.'s medical history, condition while in the emergency room, and the test results which had been received. After the cardiac enzyme values were received, Respondent reviewed R. L.'s medical history and lab test results, which he determined to be normal, and discharged R. L. at approximately 7:35 p.m. on November 1, 1983, with instructions that he see his family physician the next morning. Respondent's discharge diagnosis for R. L. was atypical chest pain secondary to anxiety. At approximately 11:21 p.m. on November 1, 1983, R. L. expired from cardiopulmonary arrest at the emergency room of Metropolitan Hospital, Pinellas Park, Florida. The autopsy report notes extensive coronary artery disease, but makes no mention of acute myocardial infarction. It was not established by clear and convincing evidence that R. L. suffered an acute myocardial infarction. There is conflicting expert testimony from Steven R Newman, M.D., and Stephen J. Dresnick, M.D., concerning whether Respondent should have admitted R. L. to Lake Seminole Hospital instead of discharging him from the emergency room, and also whether his E.K.G. taken at the emergency room was normal. Drs. Newman and Dresnick are experts in the care and treatment of patients in an emergency room, but their testimony was received by deposition instead of through live testimony at hearing. Thus, based upon this conflict in testimony, and the fact that the demeanor of these witnesses cannot be assessed, it is found that it was not established by clear and convincing evidence that Respondent failed to practice medicine with that level of care and skill which is recognized by a reasonably prudent similar physician as being acceptable under similar conditions and circumstances when he discharged R. L., and evaluated the tests which were administered to the patient while in the emergency room as within normal limits. A patient who appears at a hospital emergency room with unstable angina, such as R. L., does not necessarily require admission to the hospital. While serial electrocardiograms and serial cardiac enzymes are called for with patients whose symptoms of cardiac discomfort warrant hospitalization, these procedures are not usually and customarily performed in an emergency room. Therefore, since it was not established that Respondent should have admitted R. L. to the hospital as an in-patient, it was also not established that he failed to exercise the required level of skill and care by failing to order such serial tests while R. L. was in the emergency room. Although the emergency room physician on duty when R. L. arrived at the emergency room at approximately 3:50 p.m. on November 1, 1983, was initially responsible for obtaining a patient history and ordering the tests which were performed, when Respondent came on duty at 7:00 p.m. and took over this case, he was also responsible for insuring that his medical records concerning his evaluation and treatment of R. L., as well as his decision to discharge the patient, were full and complete. Respondent failed to document his review and findings based upon the lab tests and chest x-ray which had been completed, as well as the patient's medical history, and the specific reason or basis for his decision to discharge R. L. Respondent relied almost completely on the medical records compiled by the emergency room physician who was initially on duty when R. L. arrived at the emergency room, and made no significant additions to those records while the patient was under his care, or which would justify his course of treatment, including discharge, of this patient.
Recommendation Based upon the foregoing, it is recommended that the Board of Medicine enter a Final Order reprimanding Respondent for his violation of Section 458.331(1)(m), Florida Statutes, and placing him on probation for a period of six months from the entry of the Final Order in this case, conditioned upon his complying with such reasonable terms and conditions as the Board may impose, including review and verification of the completeness of medical records prepared by the Respondent while on probation. DONE AND ENTERED this 5th day of July, 1990 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 5th day of July, 1990. APPENDIX (DOAH CASE NO. 89-6874) Rulings on the Department's Proposed Findings of Fact: 1-2. Adopted in Finding of Fact 1. 3-4. Adopted in Finding of Fact 2. 5-6. Adopted in Finding of Fact 3. 7. Adopted in Finding of Fact 4. 8-9. Rejected in Finding of Fact 5. 10. Rejected in Finding of Fact 4. 11-12 Rejected in Finding of Fact 6. 13. Adopted in part in Finding of Fact Rejected in Findings 5 and 6. 7, but otherwise Rulings on the Respondent's Proposed Findings of Fact: Adopted in Finding of Fact 1. Adopted in Finding of Fact 2. Adopted in Findings of Fact 2 and 3. 4-5. Adopted in Finding of Fact 2. 6. Adopted in Finding of Fact 3. 7-9. Adopted in Finding of Fact 4. Rejected in Finding of Fact 5. Rejected in Finding of Fact 7. 12-13. Adopted in Finding of Fact 6. Adopted in part in Finding of Fact 2, but otherwise Rejected in Finding of Fact 5. Adopted in Finding of Fact 5. Rejected in Finding of Fact 7. COPIES FURNISHED: Andrea Bateman, Esquire Kevin F. Dugan, Esquire 1940 North Monroe Street Wittner Centre West Suite 60 Suite 103 Tallahassee, FL 32399-0792 5999 Central Avenue St. Petersburg, FL 33710 Kenneth E. Easley, Esquire General Counsel 1940 North Monroe Street Suite 60 Tallahassee, FL 32399-0792 Dorothy Faircloth Executive Director Board of Medicine Northwood Centre 1940 North Monroe Street Tallahassee, FL 32399-0792
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
The Issue The issue is whether respondent's license as a physician should be disciplined for the reasons cited in the administrative complaint filed on December 21, 1992.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Respondent, Kenneth Aung-Din, is a licensed medical doctor having been issued license number ME 0051923 by petitioner, Agency for Health Care Administration, Board of Medicine (Board). He is board certified in emergency medicine having received his certification in 1994. When the events herein occurred, respondent was an emergency room physician at Memorial Medical Center (MMC) in Jacksonville, Florida. On the evening of February 21, 1991, V. P., a thirty-five year old female who was then eight months pregnant, presented herself to the MMC emergency room complaining of lower abdominal discomfort, difficulty urinating, and a five-hour history of nausea and vomiting. After being examined and treated by respondent, and diagnosed as having a urinary tract infection, the patient was released the same evening. Less than an hour later, however, the patient went into labor and delivered a new born. On December 21, 1992, the Board issued a two-count administrative complaint charging that, while treating V. P., respondent failed to practice medicine with that level of care, skill, and treatment which a reasonably prudent similar physician recognizes as acceptable under similar conditions and circumstances in that he "failed to obtain fetal heart tones, determine fetal position, and ausculatate for fetal heart tones with a doppler that was available to him in the ER when he examined (the) patient, who was a high risk near term obstetrical patient." The complaint further alleges that respondent failed to keep written medical records justifying the course of treatment of V. P., "including, but not limited to, patient histories; examination results; test results; records of drugs prescribed, dispensed, or administered; and reports of consultations and hospitalizations." Respondent denied all material allegations and requested this hearing to contest these charges. Did respondent deviate from the standard of care? On presentment to the emergency room nurse around 8:53 p.m. on February 21, 1991, V. P. complained of generalized abdominal pain and pressure since around 3:30 p.m. that day, with nausea and two episodes of vomiting. She also complained that she was unable to urinate since approximately 2:30 p.m. An additional complaint was allegedly made by the patient, but it is not a part of the nurse's notes and thus is hearsay in nature. The patient further disclosed that this was her second pregnancy. After recording in her notes the patient's complaints, the nurse, on her own volition, conducted a nitrozine test which was negative. It later came to light that the test was improperly conducted by the nurse, but respondent was never told this fact. Respondent first observed the patient around 9:08 p.m. and recalled that she "was obviously in discomfort." Based on V. P.'s complaints, respondent initially suspected that she might be in preterm labor. After obtaining a patient history, respondent palpitated V. P.'s abdomen for any pain, tenderness, abnormalities or contractions. Although V. P. was eight months pregnant, she was nontender and exhibited no signs of active labor. The patient also denied that she was having contractions. Based on V. P.'s primary complaint of urinary retention, respondent asked the nurse to insert a Foley catheter in V. P.'s bladder. Before the nurse did so, V. P. was able to urinate on her own accord. Even so, respondent ordered a catheter inserted around 9:30 p.m. to empty any residual in the bladder. This procedure yielded approximately 200cc. of urine which was used for a urinalysis test. By now, having urinated at least once, and having her bladder emptied, V. P.'s pain and discomfort had gone away, and she appeared to be "totally comfortable and with no complaints." After seeing the results of the nitrozine test around 9:55 p.m., respondent conducted a pelvic examination. Still considering the possibility of preterm labor, respondent inserted a vaginal speculum into the patient to see if there was any bleeding or fluid. Neither was present, and a manual examination of the patient revealed that the opening to her cervix was thick and closed. A patient in preterm labor would generally present signs of bleeding or fluid, and the cervix would have begun to open and "thin out." Given these findings, and the fact that V. P. was exhibiting no signs of labor or discomfort, it was reasonable for respondent to conclude that V. P. was not in preterm labor. The results of the urinalysis were reviewed by respondent around twenty minutes before the patient's discharge. By that time, she had voluntarily urinated at least three times since first arriving at the emergency room. The test results revealed 1+ protein, trace ketones, and 0-2 white and red blood cells. Also, they indicated that a sterile (uncontaminated) specimen had been taken, and that trace bacteria were present. Because trace bacteria, if not treated, can lead to "a very significant" urinary tract infection, and V. P. had previously experienced abdominal "pressure" and an inability to urinate, both signs of an infection, respondent prescribed Ampicillin, an antibiotic, on the assumption V. P. had a urinary tract infection. This diagnosis is not unusual for pregnant women, and even petitioner's expert agreed that V. P. had presented some of the "classical signs" of a urinary tract infection. After having observed the patient for almost two hours, during which time V. P. exhibited no objective clinical signs of active labor, respondent discharged the patient around 10:50 p.m. In doing so, respondent relied not only on the above observations, but also upon the results of his pelvic and abdominal evaluations, the urinalysis test results, and the fact that all of V. P.'s complaints (pain, nausea and vomiting) had been resolved. It was also reasonable to conclude that had the patient been in preterm labor, her symptoms would have progressed, rather than abated, during the two hours she was in the emergency room. At the time of discharge, respondent gave V. P. instructions to make a follow-up visit that week with her primary physician at University Medical Center (UMC), and if her condition did not improve during the interim, to return to MCC or call the "emergency department right away for further assistance." She was also given a prescription for an antibiotic for the urinary tract infection. Just prior to leaving the hospital, V. P. urinated one last time and allegedly told the nurse that she had started "spotting." Even if V. P. actually reported this critical fact, the nurse failed to disclose this to respondent, and he cannot be faulted for the nurse's omission. Had respondent known, or even suspected, that she had just begun bleeding, he would have sent her upstairs to the obstetrical wing for further observation. The complaint levels a number of criticisms at respondent's conduct which, if true, indicate that he failed to meet the appropriate standard of care. In addressing these criticisms, it should be noted that petitioner's own expert agreed that, at best, this was "a difficult case," and one that all emergency room physicians "hate to see." The complaint characterizes V. P. as a "high risk near term obstetrical patient." The use of the term "high risk" is based principally on the fact that an ultrasound conducted at UMC on February 19, 1991, revealed that the fetus was in a breech position. But respondent was never told this fact, and even petitioner's expert conceded that without this information, it was reasonable for respondent to consider V. P. as a normal risk pregnancy. The complaint first alleges that respondent "failed to assess the status of the fetus by neglecting to auscultate for fetal heart tones with a doppler that was available to him in the Emergency Department." A doppler is a device used to listen for fetal heart tones and, while not as effective as other monitoring devices, is nonetheless useful in detecting fetal distress or preterm labor. Here, respondent did not assess the status of V. P.'s fetus because her pain and discomfort had disappeared after her urinary tension was resolved, and she no longer exhibited any signs, clinical or otherwise, of preterm labor. At the same time, while doppler machines were available in emergency rooms, including MMC, during the early 1990's when this incident occurred, it was not prevailing protocol for emergency room physicians to automatically conduct fetus monitoring for what they perceived to be normal risk pregnancies. While the standard for emergency room physicians has subsequently changed, and fetal heart tones are now routinely monitored on all pregnant women twenty weeks and above, respondent did not deviate from the prevailing standard of care in February 1991 by failing to use a doppler. The complaint next alleges that a prudent physician "would have telephoned (V. P.'s) treating physician from UMC, or the obstetrician- gynecologist on call in order to properly assess (her) condition." As to calling V. P.'s treating physician, however, the more persuasive evidence shows that it would have been imprudent to attempt to contact V. P.'s primary treating physician because she had been treated by an unknown resident at another hospital, and at that hour of the night the chance of speaking with that resident was highly improbable. Then, too, since her complaints had been resolved, there was no need to contact another physician. As to respondent's failure to obtain a specialist consultation, the more persuasive evidence shows that the diagnosis of urinary tract infection was reasonable under the circumstances, and after the patient exhibited no signs of distress for at least an hour and a half, her discharge was appropriate. While it is true, as petitioner suggests, that the initial complaints by V. P. of pressure, nausea, vomiting and abdominal pains can be signs of preterm labor, these complaints were resolved after the catheter was inserted, and there were no corroborating indications of labor. Then, too, based on the information at hand, respondent reasonably concluded that V. P. was a normal risk pregnancy. Finally, later inquiry disclosed that during her first pregnancy, V. P. was in labor for only fifteen minutes, a remarkably short period of time. Respondent was not aware of this fact at the time of treatment. As it turned out, V. P. experienced another remarkably short period of labor on the evening of February 21, 1991. In summary, the more persuasive evidence supports a finding that, while treating V. P. in February 1991, respondent practiced medicine with that level of care, skill and treatment which was recognized by a reasonably prudent similar physician as being acceptable under similar conditions and circumstances. C. Adequacy of Medical Records The complaint generally alleges that respondent failed to keep written medical records justifying the course of treatment of the patient. In the history section of his notes for patient V. P., which have been made a part of this record, respondent made the following recordations: 2110 - 35-year old white female, eight months pregnant; complaining of unable to urinate; dysuria; feels like pressure; denies vaginal bleeding; no contractions; Under the physical examination portion of his notes, respondent reported as follows: white female, well developed, awake, alert, times 3. Abdomen, pregnant uterus equals 8 months; nontender. Pelvic - zero blood; oz thick and closed. Late entry - 2/26/91, Nitrozine Test performed, which was negative. Finally, under his diagnostic impressions and discharge instructions, respondent wrote as follows: UTI (urinary tract infection) Ampicillin 250 mg, q.i.d., for 7 times. Tylenol if needed. Follow up, UMC this week. Return if any problems. In responding to the charge that his notes were inadequate or incomplete, respondent agreed that the diagnostic impressions section would have been more accurate and complete if he had written "urinary retention- resolved/UTI" rather than "UTI" alone. This is because urinary retention was a secondary diagnosis which was resolved during the patient's visit. In this respect, the records are not adequate. In addition, because the records fail to note that V. P.'s symptoms of abdominal pain and pressure were resolved, they lack completeness. In all other respects, they are found to be adequate.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Board of Medicine enter a final order finding respondent guilty of violating Section 458.331(1)(m), Florida Statutes, as described above, and that he be given a reprimand. Count I should be dismissed. DONE AND ENTERED this 1st day of October, 1996, in Tallahassee, Florida. DONALD R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 1st day of October, 1996. COPIES FURNISHED: Dr. Marm Harris, Executive Director Board of Medicine 1940 North Monroe Street Tallahassee, Florida 32399-0770 Kevin W. Crews, Esquire Agency for Health Care Administration Post Office Box 14229 Tallahassee, Florida 32317-4229 W. Jerry Foster, Esquire 1342 Timberlane Road, Suite 101-A Tallahassee, Florida 32312-1775 Jerome W. Hoffman, Esquire Agency for Health Care Administration Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403
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 The Respondent is a state agency which initiated a proceeding with the filing of an Administrative Complaint against Marc Richman, D.O. The said complaint was assigned to the Division of Administrative Hearings pursuant to a request for Administrative Hearing pursuant to Chapter 120 and was assigned Division of Administrative Hearing Case Number 88-5258. On June 24, 1989, the Department of Professional Regulations issued a notice of voluntary dismissal in the above captioned proceeding and dismissed all charges against Marc Richman, D.O., in that case. Marc Richman, D.O. is a prevailing small business party within the meaning of Section 57.111(3)(c) and (d). The amount of attorney's fees and cost sought by the Petitioner in the Petition for Attorney's Fees is reasonable for the Representation of Marc Richman, D.O., in the defense of the Administrative Complaint through the date of issuance of the Notice of Dismissal. The Department of Professional Regulation maintains that the proceeds (sic) above-captioned were substantially justified at the time the Administrative Complaint was initiated by the state agency in that it maintains that there existed a reasonable basis in law and fact at the time of the filing of the Administrative Complaint. This position is disputed by the Petitioner, Marc Richman, D.O. The request for attorney's fees in the amount of $8,572.00 and costs of $563.96 for a total of $9,225.96 is reasonable for the representation of Petitioner throughout the instant proceeding. These proceedings were initiated by the filing of a complaint on September 16, 1986 with the Department of Professional Regulation (DPR), Petitioner in Case 88-5258, by the parents of G.H. who died October 18, 1984. G.H. was a long time patient of Dr. Jaffee, D.O. who called in Dr. Richman, an orthopedic surgeon to consult and perform an arthodesis on the left ankle of G.H. to relieve constant pain. G.H. was a 34 year old male accountant who had suffered from juvenile rheumatoid arthritis since the age of 4. Although badly crippled he was able to lead a relatively independent life. As a result of his malady G.H. had for years taken steroid and corticosteroid medications. These medications depress the body's immune system and the ability to fight off infections. Accordingly, G.H. was at more than normal risk anytime he was exposed to infectious diseases. After Petitioner explained the procedure and the risks to G.H., the latter elected to have Petitioner perform the arthodesis. This operation consists of grafting bone into the ankle to stabilize that joint. The donor site chosen for the bone to graft to the ankle was the crest of the left ilium of the patient. This operation was successfully performed on August 2, 1984 at Metropolitan General Hospital, Pinellas Park, Florida. In the hospital on August 9, 1984, while G.H. was being adjusted in his bed, he felt a pop in his left hip and a large hematoma developed over the wound at the donor site. It is not unusual for hematomas to develop over surgical wounds but it is important that such conditions be closely watched because hematomas are a fertile field for an infection. The hematoma on G.H.'s hip showed no evidence of infection and G.H. was discharged from the hospital August 12, 1984 and sent home. Arrangements were made by Petitioner for Robert's Home Health Services, Inc. of Pinellas Park to send a nurse 3 times per week to check on G.H., take his vital signs, dress his wounds and attend to any other medical needs he may have. Verbal reports were made by the nurse to Richman reporting the condition of G.H. While being helped from his wheel chair into bed by his parents on or about August 15, 1984, G.H. apparently fell and caused additional bleeding of the wound on the left hip. On August 16, 1984 the nurse reported to Richman the additional bleeding and she was directed to have G.H. taken to the hospital to be seen by Richman. On August 16, 1984, Petitioner examined the wound, noted the reports that the hematoma was neither inflamed nor more tender, and that G.H.'s temperature had remained normal since the hematoma developed. He sent G.H. back home without further tests. The classic signs and symptoms of infection are redness, swelling, heat and pain. Redness of the skin due to intense hyperemia, is seen only in infections of the skin itself. Swelling accompanies infection unless the infection is confined to the bone which cannot swell. Heat results from hyperemia and may be detected even in the absence of redness. Pain is the most universal sign of infection. Along with pain goes tenderness, or pain to the touch, which is greatest over the area of maximal involvement. (Exhibit 12, Principals of Surgery, Fourth Edition). The hematoma on G.H.'s left hip between its inception and September 13, 1984 never exhibited any sign of infection. On September 6, 1984, G.H. reported to the visiting nurse that he had a pain in his stomach and didn't feel well. The nurse described this as having flu-like symptoms. This was reported to Petitioner and the nurse received no additional orders. On the nurse's next visit on September 10, 1984, G.H. reported his abdomen was still hurting and he didn't feel good. At this time his temperature was elevated at 101. The nurse called Dr. Jaffee's office and was told to have the patient admitted to Metropolitan Hospital. Upon admission to the hospital on September 10, 1984, G.H. was nauseous, vomiting, and had a high fever (103). He had no complaints regarding his ankle or iliac crest and the hematoma had decreased greatly. On September 13, 1984, while G.H. continued showing signs of infection (high fever) Petitioner operated on G.H. to remove the hematoma. At this time aerobic and anaerobic cultures were obtained. Forty-eight and seventy-two hours later these cultures had grown no infectious substance. Further studies and tests revealed that G.H. had bleeding ulcers and surgery was required to patch the ulcers. At this time the spleen was also removed. Following this surgery G.H. was more debilitated and with the precarious condition of his immune system he continued to go down hill until he expired on September 18, 1984. Cause of death was cardiac pulmonary arrest caused by candida septicemia. During the initial stage of the investigation, which was initiated some two years after the death of G.H., the investigator interviewed the parents of G.H., who had filed the complaint, and assembled the medical records including those kept by the home health agency. The parents contended that when the hematoma was removed by Dr. Richman he told the parents that he had found infection at that site. Dr. Richman denies making any such statement to the parents of G.H. and the medical records support the conclusion that there was no infection in the hematoma on September 13, when the hematoma was excised. The parents complained of the treatment that G.H. received from Drs. Jaffee and Richman as well as Roberts Home Health Services. Accordingly the investigation started with both Jaffee and Richman charged with malpractice by the parents of G.H. The investigator selected an orthopedic surgeon, Dr. Richard M. Couch, D.O., from DPR's consulting list and forwarded to him on January 7, 1987, the patient records of G.H. and requested he review those records and give his opinion on whether Drs. Jaffee and Richman diagnoses and treatment of G.H. was appropriate. In this letter (Exhibit 1) the investigator advised Dr. Couch that following surgery a hematoma developed, that after G.H.'s discharge from the hospital the hematoma ruptured and that G.H. was taken back to the emergency room where Dr. Richman saw the patient but found nothing significant about the hematoma. He also told Dr. Couch that when Richman cleaned out the hematoma he advised the family (of G.H.) that infection was found, and that, after this G.H. started internal bleeding which ultimately resulted in the patient's death. Dr. Couch responded to this request with two letters, the first of February 16, 1987 and a second on March 6, 1987. In his first letter Dr. Couch concluded that the iliac wound began draining on or about August 14, 1984 and cultures of this wound were not secured until after G.H.'s hospitalization on September 10, 1984. Since the hematoma was a post-operative complication he opined that Richman failed to adhere to certain tenets regarding wound care in this situation. However, Dr. Couch suggested the records be referred to an internist who reviewed the treatment provided by Dr. Jaffee. In his second letter Dr. Couch opined that Richman was at fault for not incising, debriding and draining the hematoma when it developed and for not taking cultures when Richman saw G.H. in the emergency room on later dates. He also found Richman at fault for not referring G.H. to a consultant in infectious diseases. A letter similar to the letter sent to Dr. Couch was sent by the investigator to Neal B. Tytler, Jr., D.O., an internist. Although the investigator contends he submitted the records maintained by Roberts Home Health Services in this case to Dr. Tytler it is obvious that before he submitted his report on June 5, 1987, Dr. Tytler had not read those records and was concerned regarding the absence of medical records during the period between G.H.'s discharge from the hospital on August 12, 1984, and his readmission on September 10, 1984. In his report Dr. Tytler carefully noted G.H.'s long term medication for juvenile rheumatoid arthritis and the serious side effects, viz depression of the immune system, which results from long-term steroid therapy. Recognizing the risk to G.H. from any surgery Dr. Tytler questioned the wisdom of the arthodesis but recognized that this was more of an orthopedic problem than an internal medicine problem. From the records received, Dr. Tytler concluded that G.H. developed a hematoma after his departure from the hospital and before September 6, 1984. Significantly, Dr. Tytler reported "Of concern to me is the apparent lack of records to document the events which transpired between August 12, 1984 and September 10, 1984. In this one month period an abscess formed at the surgical site and led to disastrous consequences. Unfortunately it can only be inferred that the first recognition of any problem occurred on September 6, 1984, when the patient developed `flu-like symptoms'. He was not examined and no one perceived that his problems were serious." When the probable cause panel met on June 25, 1988 to consider the charges against Drs. Jaffee and Richman, no probable cause was found as to Jaffee. One of the two members of the probable cause panel disclosed at the opening of the panel meeting that he knew Dr. Richman socially and that Richman had been his treating physician for a finger injury. He was excused from further participation and the hearing was tabled regarding Dr. Richman. At a subsequent panel meeting by telephone conference call, after a substitute lay panel member was selected and had been furnished the medical records, a vote was taken to find probable cause. The excerpt from those proceedings (Exhibit 8) shows that the DPR attorney opened the conference call by stating that Richman was charged with medical conduct falling below acceptable minimal standards and "at the last probable cause panel meeting you voted to find probable cause, and asked that administrative complaint be issued. At this time the Department recommends that you do find probable cause to believe that this violation exists." Following receipt of this erroneous information regarding the previous probable cause panel meeting, the Chairman, Mr. Wheeler, stated that after reviewing the entire file he believes probable cause exists to file an Administrative Complaint. Dr. Barker concurred. The case against Dr. Richman began to unravel when the deposition of Dr. Tytler was taken on February 24, 1989. Prior to taking this deposition Dr. Tytler had been provided records from Metropolitan General Hospital, records from Roberts Home Health Services and a copy of the Administrative Complaint. In response to questions regarding the treatment of G.H. as afforded by Dr. Richman, Dr. Tytler stated that a review of all medical records clearly demonstrated that after the hematoma developed at the donor site for the transplant no indication of infection ever appeared; that considering the medical history of G.H. and his high susceptibility to infection it would be more dangerous to the patient to evacuate the hematoma and risk additional infection than it would to continue to observe the hematoma and let it cure itself; that the cultures taken on September 13, 1984, when the hematoma was evacuated clearly and unequivocally demonstrated that the hip wound was not the source of the infection that ultimately led to the demise of G.H.; and that the treatment rendered by Petitioner was in all respects in conformance with required medical standards and procedures. Dr. Tytler further opined that treating an immune compromised patient with antibiotics without a specific infection in mind "could lead to the very scenario that caused his (G.H.) death", namely secondary infection. Further, with respect to the contention of Dr. Couch regarding the failure of Petitioner to take cultures at the hematoma site before September 10, 1984, Dr. Tytler opined that indiscriminate taking of cultures when no evidence of infection is present could result in a positive culture unrelated to the wound but which the doctor would be called upon to treat. This could invite a major change in therapy and an inappropriate prescribing of an antibiotic. Following the deposition of Dr. Tytler, DPR referred the medical records to another orthopedic physician and this doctor concurred with the opinion of Dr. Tytler that Dr. Richman's treatment of G.H. was not below minimally acceptable standards, that no malpractice was involved and that the treatment was in accordance with acceptable medical standards. The Department then dismissed the Administrative Complaint. In his deposition the physician member of the probable cause panel, James H. Barker, D.O., emphasized that his conclusion that probable cause existed to go forward with the Administrative Complaint was significantly influenced by the fact that no culture was done at the hematoma site. From his subsequent testimony it is clear that Dr. Barker was unaware, when he voted to find probable cause, that the culture taken from the hematoma site on September 13, 1984 was negative. The record clearly shows this to be a fact. As stated by Dr. Tytler in his testimony "hematoma yes; infection no." Dr. Barker was also concerned, and perhaps rightly so, that any time that someone goes in for an elective procedure and he dies "that alone makes you think there may be probable cause here." However, there must be factual evidence to support a finding of probable cause and here there was no such evidence.
The Issue Whether the Agency for Health Care Administration (AHCA or Agency) was entitled to change the rating of Gulf Coast Convalescent Center (Gulf Coast) from Standard to Conditional.
Findings Of Fact Gulf Coast is a nursing home located in Panama City, Florida, which is duly licensed under Chapter 400, Part II, Florida Statutes. AHCA is the state agency which licenses and regulates nursing homes in the state. As such, it is required to evaluate nursing homes in Florida, pursuant to Section 400.23(8), Florida Statutes. AHCA evaluates all Florida nursing homes at least every 15 months and assigns a rating of Standard or Conditional to each licensee. In addition to its regulatory duties under Florida law, the Agency is the state "survey agency" which, on behalf of the federal government, monitors nursing homes which receive Medicaid or Medicare funds. Ms. Bonnie Cile Baxter is employed by AHCA in the Division of Managed Care and Health Quality Assurance, Area Two. She is a registered nurse specialist and a graduate of the Florida State University School of Nursing. She has been a registered nurse for 27 years. She currently conducts surveys of nursing homes as required by state and federal law in AHCA's Area Two. Ms. Baxter visited Gulf Coast while conducting a licensure survey report. The survey began on March 13, 2000, and ended on March 15, 2000. As a result of the survey, a Statement of Deficiencies was issued on March 15, 2000. This report is referred to as a TAG 314. The report alleged Class II deficiencies. A Class II deficiency occurs when the outcome of the resident care directly affects the health, safety, or security of the resident. The TAG 314, set forth on a "2567" form, entered into evidence as Petitioner's Exhibit 1, is, in effect, the charging document. The residents to be checked were determined off-site by AHCA, prior to the survey. The information used to make these decisions was provided by the facility. The focus of the survey was pressure sores and nutrition and the four residents who were observed are referred to as Residents 16, 26, 22, and 15. Resident 16 Resident 16 was approximately 75 years of age. Ms. Baxter observed Resident 16 on March 13, 2000 at 9:00 a.m. Ms. Baxter observed that Resident 16 had a stage IV pressure sore. Pressure sores are evaluated in stages, beginning with stage I; a stage IV is the worst stage. A stage IV pressure sore may be open or closed, and it involves more than just the outer skin. A stage IV pressure sore involves severe damage to tissue. When evaluating the treatment of a resident with pressure sores, the evaluator observes the assessment and care plan and determines whether nutritional considerations have been addressed. The plan is evaluated to determine if it is sufficiently aggressive. What is implemented depends on the resident's need and the resident's desire. If the resident is incompetent to determine what care the resident wishes to accept, then a guardian may make the determination. Resident 16 was unable to make cognitive choices. Kimberly Roland, the Special Services Director at Gulf Coast at the time of the survey tried to contact Developmental Services of the Department of Children and Family Services with regard to a care plan for Resident 16 but the Agency asserted that it did not get involved with medical decisions. Ms. Baxter also tried, unsuccessfully, to determine who was authorized to make medical decisions on behalf of Resident 16. Resident 16 had been admitted to Gulf Coast on September 16, 1999. Facility staff noted that Resident 16 was first observed with a stage I pressure ulcer on February 1, 2000. The care plan developed by the facility in the case of Resident 16 did not facially address the pressure sore problem because it lacked specificity. Excellent nutrition serves to prevent pressure sores and to promote their healing. During the period subsequent to February 1, 2000, Resident 16 was without dentures, and this negatively affected her ability to ingest the type of foods which would address Patient 16's nutritional needs. There were discrepancies in Exhibit's 5, 7, and 8. Exhibit 5, which memorialized a one-time visit with a physician from Bay Psychiatric Services on February 12, 2000, indicated that Resident 16 did not exhibit symptoms of tardive dyskinesia, yet Exhibit 7 indicates that Resident 16 could not wear dentures because of involuntary movements related to tarsive dyskenesia on February 23, 2000. Exhibit 8, nurses' notes, indicate the presence of tardive dyskenesia involving movements of the tongue and body on January 27, 2000. Petitioner's Exhibit F demonstrated that Resident 16 had tardive dyskenesia symptoms, which resulted from long-time Mellaril use. The symptoms reported included involuntary movements of the tongue, which precluded the use of dentures. These involuntary movements were present on September 19, 1999. Mr. Gilliland, a licensed practical nurse with many years' experience working in nursing homes, stated he noticed that Resident 16 manifested involuntary movements of the tongue and body in December, 1999. If a person has tardive dyskenesia, it may preclude the utilization of dentures. The disappearance of Resident 16's dentures indicated a deficiency in security procedures but even if Resident 16 had dentures available, Resident 16 could not masticate hard food. Resident 16 had been on a mechanical soft diet prior to January 20, 2000. Subsequently, when Resident 16 no longer had the ability to masticate food, Resident 16 was put on a pureed diet. Resident 16's condition was the subject of an "at risk" meeting by the facility staff on February 15, 2000. Subsequently, Resident 16's nutritional needs were addressed with an enhanced diet. Resident 16 was provided with multi- vitamins and milkshakes twice a day in addition to other food. From February to March 2000, Resident 16 lost weight. The facility staff's efforts to provide Resident 16 with proper nutrition were appropriate under the circumstances. The first pressure sore on Resident 16 was found on February 1, 2000, and it was already a stage II without drainage. On February 18, 2000, the sore had advanced to a stage III and an additional pressure ulcer had formed on Resident 16's hip. This latter ulcer was also a stage II. By February 25, 2000, the ulcer on the hip changed to stage III and there was some draining. Subsequent to the inception of the ulcers, Resident 16 had been placed on a pressure reduction mattress. On March 3, 2000, more frequent turning was ordered by her attending physician. Mr. Gilliland observed that Resident 16 was mentally incapable of decision-making. Mr. Gilliland spent a lot of time with Resident 16. He was emotionally attached to Resident 16 who, to him, ". . . was like a little child." He spent a lot of time with Resident 16, kept Resident 16 clean and dry, and turned her frequently. At the time of the survey, the representatives of the state insisted that Resident 16 be fed through a tube. Dr. Haslam, Resident 16's physician, would not have ordered tube feeding had not the surveyors insisted that it be done. Resident 16 objected when Mr. Gilliland put the feeding tube in her nose. Resident 16 removed the tube. Mr. Gilliland put the tube in three or four times. Each time, Resident 16 removed it. When Dr. Haslam was informed of this, he told Mr. Gilliland that he could discontinue using the feeding tube. Resident 16 ate until two days before she died. When Resident 16 was admitted to Gulf Coast on September 3, 1999, Resident 16 could ambulate with assistance and was incontinent of bladder and bowel. By the time of the survey, Resident 16 could not walk at all and was bladder and bowel incontinent. At the time of the survey, and for several months before the survey, Resident 16 was bowel and bladder incontinent, had impaired mobility, and was an insulin-dependent diabetic. Resident 16 had occlusion of the arteries and veins of her lower extremities, which resulted in poor circulation. These are high-risk conditions for pressure wounds. Resident 26 Resident 26 was admitted to Gulf Coast on June 7, 1998. Resident 26 required extensive care with daily living activities and was approximately 83 years old at the time of the survey. On August 14, 1999, a stage I pressure sore was observed on the coccyx of Resident 26. By August 20, 1999, the pressure sore had become a stage II. By October 1999, the pressure sore on the coccyx had become a stage IV, and pressure sores had developed on the Resident 26's knee and on the left heel. Both of these sores were diagnosed as stage II. By November 11, 1999, the pressure sore on the coccyx was causing pain to Resident 26. It was determined on November 16, 1999, that the wound on the coccyx was infected with methicellin- resistant staphylococcus aureus (MRSA). MRSA is a type of infection that is resistant to antibiotics. It is communicable, and it is imperative that it be controlled. Vancomycin is the antibiotic of choice when treating MRSA. Resident 26 was administered Vancomycin and procedures were instituted to determine its effectiveness. The facility's staff determined that it would be best if a PICC line was installed in Resident 26. A PICC line is a method for administering antibiotics intravenously. In the case of Resident 26, records which tracked the status of the MRSA, were inadequate. Resident 26 refused to allow the PICC line to be placed. There is no indication whether Resident 26 refused Vancomycin administered in some other manner. On November 19, 1999, Dr. Ernest Haslam was notified of Resident 26’s refusal to allow installation of the PICC line. This information was not available at the time of the survey. At the time of the survey there were no documents indicating that the infection was being properly tracked or that there was an adequate treatment plan. The care plan for the treatment of Resident 26's pressure sores addressed providing proper nutrition, which included dietary supplements and pressure-relieving devices. Resident 26 was offered a feeding tube but Resident 26 declined. The implementation of the feeding tube was discussed by Resident 26's doctor with Resident 26's family and together they decided not to use it. The nutrition provided for Resident 26 was acceptable under the circumstances. Resident 26 was, at the time of the survey, and for several months before the survey, incontinent of both bowel and bladder. Resident 26's rheumatoid arthritis was so severe that Resident 26 was required to ingest anti-neoplastic drugs, which can kill cells. Resident 26 was admitted with a diagnosis of failure to thrive. Resident 26 was required to take Prednisone, which can contribute to the formation of pressure sores. Resident 26's albumin level was high, and a high albumin level promotes the formation of pressure sores. Resident 26 had a living will and had provided instructions not to resuscitate and resisted necessary treatment. These factors put Resident 26 at a high risk for pressure sores. Resident 22 Resident 22 was 67 years of age upon admission to Gulf Coast on May 12, 1999. Resident 22 had an open surgical wound on the hip upon admission, along with a fractured hip and gastrointestinal bleeding. Resident 22 also was anemic and had cardiovascular disease. On July 7, 1999, Resident 22 had a stage II pressure sore on the right heel, which had been present on admission. On September 2, 1999, it was noted that the left hip was infected and antibiotics were administered. On October 13, 1999, it was noted that Resident 22 had a stage III pressure sore on the right heel and a stage II open area on the right lateral foot. Poor nutrition was not a contributing factor with regard to Resident 22's pressure sores. On May 29, 1999, bilateral profo boots were prescribed for Resident 22, to be used for positioning of the feet while in bed. Dr. Osama Elshazly ordered the use of the profo boots. The use of profo boots was not included in the plan of care. Dr. Elshazly discontinued the use of the boots on January 1, 2000. There was speculation among the facility staff that the profo boots may have contributed to the pressure sores. Resident 22, at the time of the survey, and for several months before the survey, had pressure sore risk factors of diabetes mellitus, end-stage renal disease, coronary artery disease and arteriosclerosis obliterans. This latter condition means that the circulation in Resident 22's lower extremities was poor. Resident 15 Resident 15 is 87 years of age. Resident 15 was admitted to Gulf Coast on September 13, 1994. Upon admission, Resident 15 had ingrown toenails, a deformed left hammer toe, and other medical conditions involving the feet. Resident 15 required extensive assistance from staff in the activities of daily living and received nutritional support in the form of tube feeding. On December 17, 1999, Resident 15 was admitted to the Bay Medical Center due to a cerebrovascular accident, which is commonly referred to as a "stroke." Resident 15 was returned to Gulf Coast on December 23, 1999. After the cerebrovascular accident, Resident 15 was even less mobile and suffered a decline both mentally and medically. On March 1, 2000, Resident 15 was noted as having a pressure sore on her left bunion. Staff informed Ms. Baxter that they believed it occurred because Resident 15 had limited mobility. Resident 15, at the time of the survey and for several months before the survey, had pressure sore risk factors of bowel and bladder incontinence, congestive heart failure, and peripheral vascular disease. Resident 15 was a noninsulin- dependent diabetic.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order finding Petitioner not guilty of the alleged deficiencies and reinstating Petitioner's license rating to Standard as of March 15, 2000. DONE AND ENTERED this 27th day of December, 2000, in Tallahassee, Leon County, Florida. HARRY L. HOOPER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of December, 2000. COPIES FURNISHED: Christine T. Messana, Esquire Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Donna H. Stinson, Esquire Broad and Cassel 215 South Monroe Street, Suite 400 Post Office Box 11300 Tallahassee, Florida 32302 Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308 Ruben J. King-Shaw, Jr., Director Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3116 Tallahassee, Florida 32308
Findings Of Fact Background Manasota applied for a Certificate of Need to construct a 100-bed osteopathic acute care hospital in Sarasota County, (District VIII). Manasota did not specifically designate a site in its application and indeed has not obtained a site for its proposed hospital as yet. It intends to locate its facility in the southern part of Sarasota County, near the interchange of I- 75 and Jacaranda Boulevard. There are three existing acute care hospitals serving south Sarasota County. Memorial, which is a 788-bed acute care hospital located in the southerly portion of the City of Sarasota; Venice, which is a 312-bed acute care hospital located in Venice; and Englewood Community Hospital (ECH) which is a brand new 100-bed acute care hospital located in Englewood, also in southern Sarasota County, immediately south of the City of Venice. ECH opened its facility in early November, 1985. The proposed location of the Applicant Manasota is in the vicinity of the southerly environs of Venice, and is within the primary service areas of these existing hospitals. The Parties Venice Hospital is a not-for-profit, general, acute care hospital. It has 312 licensed beds, of which 6 are OB beds and 32 are intensive care beds. In fiscal year 1983, it enjoyed an 89.5% average annual occupancy. That occupancy declined to 83.5% in 1984 and the next fiscal year (1985) it dropped to 71%. The hospital's occupancy rate in fiscal year 1986 will decline to approximately 55.8%. That figure includes consideration of the impact of the November, 1985 opening of the Englewood Hospital but not the projected impact of Manasota. Venice's primary service area is the southerly portion of Sarasota County and northern Charlotte County, generally co-extensive with that proposed by Manasota. Memorial is a 788-bed, publicly owned, acute care hospital. Its primary service area is Sarasota County. Its publicly elected board requires it to maintain at least a 2% operating margin (profit) in order to maintain sufficient working capital and a sufficiently favorable bond rating so that its debt financing can be obtained at optimum cost. In 1984, Memorial obtained a 6.5% operating margin, but in 1985, that margin declined to approximately 2%, due to reduced utilization. Due to declines in utilization, only 590 of its licensed beds were in service in October, 1985. Memorial's total patient days for 1985 were the lowest it has experienced since 1973. Memorial is a full-service acute care hospital, offering services including obstetrics, psychiatric services, pediatrics, emergency care, cardiac catheterization and open heart surgery, neo-natal intensive care and ambulatory surgery. ECH is a 100-bed, full-service, acute care hospital located in Englewood, immediately south of Venice, in Sarasota County. It will open in November, 1985, and thus has not yet had an opportunity to obtain patients, adequate utilization, and a favorable operating experience. Its primary service area is southern Sarasota County and northern Charlotte County, substantially the same as that of Venice and that proposed by the Applicant. ECH has osteopathic physicians on its staff and provides manipulative therapy to patients of osteopathic physicians, as do the other two existing hospitals. The chief of ECH's medical staff is an osteopath. Manasota seeks approval for construction of a 100-bed osteopathic teaching hospital in southern Sarasota County in the immediate environs of Venice. The hospital would provide medical surgical services, ICU/CCU, a 24-hour physician staffed emergency room, outpatient surgery, a pharmacy, clinical laboratory, x-ray and other surgical and diagnostic services such as radiography, cardio-pulmonary and ultra-sonography. Manasota projects opening the facility in 1988 with 92 medical surgical beds and 8 intensive care beds. The hospital would be owned by Manasota, but will be operated and managed as a subsidiary of AmeriHealth, Inc., a Florida corporation. Ninety-two per cent of Manasota's stock has been purchased by AmeriHealth Systems, Inc., which is a wholly owned subsidiary of AmeriHealth Holdings, Inc., which in turn is a wholly-owned subsidiary of AmeriHealth, Inc. AmeriHealth Inc. is a publicly-held, Florida corporation. Manasota proposes to treat patients in accordance with the principles of osteopathy, supported by osteopathic specialists. Manasota will have an open medical staff, meaning it will have allopathic and osteopathic physicians on its staff. It maintains that management and control of the facility will be by osteopaths or those "sympathetic" to the osteopathic school of medicine. Although two of the four present members of Manasota's Board of Directors are osteopathic physicians, the chief executive officer of AmeriHealth, Inc., Mr. White established that in the near future that parent entity will nominate a new board of directors. Manasota proposes to affiliate with the Southeastern College of Osteopathic Medicine in Miami as an osteopathic teaching hospital and seek accreditation by the American Osteopathic Association. The facility would be located adjacent to or east of I-75 in southern Sarasota County, a minimum distance of five miles from existing hospitals. The primary service area would be southern Sarasota County (Census Tracts 20- 27). The secondary service area would include northern Sarasota County and northern Charlotte County, as well as the remainder of HRS District VIII, purportedly within a 30-60 minute driving time. In this connection, however, it is noted that osteopathic acute care hospitals have been held to be regional in nature and Manasota's health planning witness, Mr. Konrad, established that a two-hour driving time access standard is appropriate for osteopathic hospitals. District VIII is not, by rule, divided into subdistricts for health planning and CON review purposes. See, South Dade Osteopathic Medical Center v. Department of Health and Rehabilitative Services, DOAH Case No. 84-0750, Final Order at 7 FALR 5681 (November 14, 1985); Community Hospital of Collier, Inc. v. Department of Health and Rehabilitative Services, et al. and Naples Community Hospital v. Department of Health and Rehabilitative Services, et al., DOAH Case Nos. 84- 0744, 84-0907 and 84-0909 (consolidated), (Recommended Order August 16, 1985), p. 39. Although there are no operating osteopathic acute care hospitals in District VIII at the time of hearing, Gulf Coast Hospital has been approved by Final Order for a CON for 60 osteopathic beds and will be located approximately 68 miles and less than two hours driving time from the proposed location of the Manasota facility. Demoqraphics of the Proposed Service Area Sarasota County ranks second in the state in the percentage of its population which is 65 years of age or older. Projections show that by 1990 approximately 31% of its population will be 65 years of age or older, and 14% of the population will be 75 years of age or older. It will, at that time, rank first in the state as to the percentage of its population in excess of 74 years of age. Between 1980 and 1985, Sarasota County, which comprises most of the applicant's primary service area, increased in population approximately 40,000 persons. The county is expected to grow by an additional 43,000 persons between 1985 and 1990. Southern Sarasota County (above census tracts), between 1980 and 1985, grew by approximately 28,000 persons. Between 1985 and 1990, the southern portion of the county, will increase by an additional 33,000 persons, for growth rates of 33% and 32% respectively. Between 1980 and 1985, the population of southern Sarasota County in the 65 to 74 age group grew by about 5,000 persons, as did the population of the 75 and older age group. Between 1985 and 1990 it is projected that Sarasota County residents between the ages of 65 and 74 will increase by 5,700 persons and those in the county age 75 and older will increase by approximately 6,000 persons. Northern Charlotte County, adjacent to the southern Sarasota County primary service area of the applicant, increased by approximately 16,000 persons between 1980 and 1985. This same area is projected to increase by an additional 17,000 persons between 1985 and 1990. Approximately 7,000 of those additional persons will be 65 years of age or older. Much of the population growth in Sarasota County is due to in-migration from other areas. Approximately 43% of the immigrants to Sarasota County come from the midwestern area of the United States. This is somewhat significant because the greatest percentage of osteopathic medical schools and osteopathic physicians and acute care facilities are located in what is generally described as the midwestern United States. It may be expected that elderly immigrants from those areas might have somewhat more of a predisposition to use osteopathic acute care facilities and physicians in Sarasota County. It has not been proven, however, what percentage of the population growth of Sarasota County is attributable to in-migration from all areas of the state and nation. It has thus been demonstrated that the primary service area of the applicant has experienced significant population growth since 1980, but that that population growth will continue at the same or a lesser rate between 1985 and the horizon year of 1990. Indeed, it was established that the population growth rate of elderly persons age 65 and older, who tend to use acute care hospital services more intensively than other age cohorts of the population, will actually decline between the years 1985 and 1990. It has also been proven that between 1980 and 1985 (especially since 1983), the utilization rate for Sarasota County hospitals and District VIII hospitals as a whole, has declined markedly and will continue to do so through 1990, in spite of and counter to the population growth. This is a result of such factors as the advent of "DRG" methods of medic re reimbursement, professional review organizations and consequent shifts in the provision of many health care services to an "outpatient" basis. These changes in the Medicare reimbursement system, of course, are directly related to the segment of the population aged 65 and older, which provide the majority of all acute care hospital admissions from the general population. Because the population growth rate will decline for the age 65 and older age group, the trend of declining occupancy and utilization in the face of population growth will continue through l990 The Need for the Facilities Section 381.494(6)(c)(1), Florida Statutes. HRS has not adopted, by rule, a bed need methodology for determining need for osteopathic acute care hospitals. The normal bed need determination methodology embodied in Rule 10- 5.11(23), Florida Administrative Code, is not used for determination of bed need and need for osteopathic facilities because Section 381.494(2), Florida Statutes, requires that need for osteopathic facilities be determined separately from general acute care facilities. South Dade Osteopathic, supra at 5684. Thus, osteopathic bed need must be determined by development of agency policy in light of the general statutory criteria contained in Section 381.494(2), Florida Statutes, and Subsection (6) of that provision. HRS policy has been to consider whether the proposed facility will be osteopathic; whether a demonstrated need exists for additional osteopathic acute care beds; and whether similar services or facilities exist and are available in the area where the proposed facility is to be located. The court in Gulf Coast Hospital, Inc. v. Department of Health and Rehabilitative Services, 424 So.2d 86, 90 (Fla. 1st DCA 1982) defined "osteopathic facilities" as those maintained for the purpose of: . the cure and treatment of patients in accordance with the principles of osteopathy, the teaching and the study of osteopathic medicine, and the association in practice of doctors of osteopathy, including osteopathic specialists, with support from staff personnel suitably trained in the principles and philosophy of osteopathy. The management and control of the facility so as to actively further all of the above activities rather than to merely tolerate them, must be in the hands of osteopaths or those sympathetic to that school of medicine. Manasota has proposed in its application to construct and operate a 100-bed osteopathic acute care facility with patients being treated in accordance with the principles of osteopathy in a facility meeting the above definition. The preponderant evidence reveals however, that Manasota is not truly an "osteopathic" applicant. AmeriHealth's president, Mr. White, established that AmeriHealth would soon be appointing its own board of directors for Manasota, with no assurance given that osteopathic membership would be retained. None of the officers, directors or shareholders of AmeriHealth have any experience in ownership or operation of osteopathic facilities. Mr. White established that the proposed hospital would have an open staff, but it was not shown what percentage of the staff would be osteopaths and what percentage would be M.D.'s. Mr. White intends to staff the hospital from the existing medical community in Sarasota County. There would be no recruitment of physicians from outside that area unless it became impossible to staff the hospital with Sarasota County doctors. Mr. White would seek advice from "the medical community here" in establishing needed specialties and credentials. AmeriHealth intends to assure the viability of the proposed hospital by following the practice it employed at its Richmond Hospital of obtaining physicians in the community as investors in the hospital. It was not shown, however, what percentage of the investor-physicians the Applicant seeks would be D.O.'s and what percentage would be M.D.'s. In this connection, Dr. Fred Miller, M.D., testifying for Manasota, established that the promoters of the project intend that the staff physicians would be existing physicians in the Venice area. There are six or seven D.O.'s in the Venice area, and approximately 120 M.D.'s. In this regard, Dr. Norman Ross attended a meeting at Dr. Miller's office concerning organization of Manasota. All the doctors at the meeting were M.D.'s, except for the two D.O.'s who had an ownership interest in Manasota. Mr. White assured the physicians attending the meeting that the source of physicians for the new hospital would be physicians who had already developed practices in the Venice area who could "swing their admissions" to the new hospital. Dr. Ross was also assured that the vast majority of the staff physicians would be M.D.'s. Dr. Navarro attended this or a similar meeting and, was assured by a promoter and owner of Manasota that there would not be a heavy influx of osteopaths to town because they intended to get investor-physicians in the community to staff and support the hospital. When Dr. Navarro questioned Dr. Oliva, D.O., one of the directors of Manasota, concerning how he would build an osteopathic hospital without osteopaths, Dr. Oliva explained that "the rules did not require them to have a majority of osteopaths." The intent to staff the hospital largely with M.D.'s is borne out by the fact that the promoters of the hospital offered limited partnerships in the facility to Venice area M.D.'s first. Since Manasota's own witness, Dr. Snyder, D.O., showed that it would take 50 to 75 physicians to staff such a hospital, and since Manasota's principals see no need to recruit physicians from other areas, and have primarily sought support from M.D.'s who make up 95% of the physician population in the county, it is quite unlikely that the project would actually operate as an osteopathic hospital. In this regard, the four Sarasota osteopaths testifying for existing hospitals would definitely not use the proposed facility and feel it is not needed. The preponderant evidence thus establishes that the vast majority of staff physicians will be M.D.'s. The proposed facility has been promoted primarily to M.D.'s and the majority of Sarasota County D.O.'s testifying will not use the facility. Thus, Manasota has not demonstrated it is controlled or in the hands of osteopaths or those sympathetic to that school of medicine. It has not shown it can meet the definition of an osteopathic facility even as described by some of its own medical experts. Dr. Oliva, Dr. Lewis, Dr. Kudelko and Dr. David Lowery, (D.O.'s) opined that the majority of the medical staff and department heads would have to be osteopaths for it to truly be an osteopathic facility. This will clearly not be the case at Manasota. Manasota proposes to be accredited by the American Osteopathic Association (AOA), but also proposes to be accredited by the association which accredits allopathic facilities. The AOA accreditation manual requires osteopathic hospitals to identify themselves as such on buildings and letterheads, unless they are of mixed staff. Manasota proposes a mixed M.D. and D.O. staff. Likewise, nothing in the AOA accreditation requirements mandates any particular composition of the governing board or the medical staff. The Applicant has thus not proven that it will meet any record definition of an "osteopathic" hospital, nor that it will operate as such. Assuming arguendo that it would be osteopathic, the question of whether a demonstrated need exists for additional osteopathic acute care beds and an osteopathic acute care facility and the question of whether similar services or facilities exist and are available in the area of the proposed facility must be addressed. In this connection, although there are no osteopathic facilities currently operating in District VIII, Gulf Coast Osteopathic Hospital has had its Certificate of Need approved by final order of HRS for 60 beds with its request for 120 beds being currently on appeal. It will be located in Lee County, some 68 miles from the approximate location of the applicant. Mr. Konrad, having established that osteopathic hospitals are regional in nature, and that a two-hour travel time more or less is appropriate as a standard for access to an osteopathic facility, the service areas of Gulf Coast and Manasota will overlap. It is therefore found that an osteopathic acute care facility is legally in existence and will be operationally available for osteopathic physicians and patients in District VIII and Sarasota County in the near future. Over-bedded, under-utilized acute care facilities are available represented by existing hospitals whose need for more patients is discussed elsewhere in this Recommended Order. It is undisputed amongst the parties that there is no difference between the way allopathic and osteopathic physicians and hospitals practice in terms of the health care services rendered their patients, except for the emphasis, in the osteopathic realm, of manipulation therapy for patients and the increased emphasis on a holistic view of patients by osteopathic physicians in terms of determining a proper treatment regimen. In any event, acute care patients can be fungibly treated in osteopathic or allopathic hospitals by either osteopathic or allopathic physicians. It is thus found that the services rendered by the existing allopathic facilities are like and similar services to those proposed by the applicant. There was no testimony establishing that patients wishing osteopathic care from osteopathic physicians are not receiving it. Indeed, Drs. Furci and Nestor, osteopathic physicians in Sarasota, and Dr. Chirillo, who practice in southern Sarasota County, established that doctors are currently able to treat their patients with adequate quality of care, in an osteopathic manner, in existing hospitals. Sarasota County has a significant population of 20 osteopathic physicians. Their patients desiring osteopathic acute care services are currently receiving them despite the lack of an operating osteopathic hospital. Indeed, many of those physicians could accept more patients in their practices. Some close their offices at noon due to lack of patients. The number of osteopathic physicians per 1,000 persons in the District VIII population, when compared to the state and national averages for osteopaths per 1,000 population, reveals that there is no shortage of osteopathic physicians in District VIII. A number of the osteopaths practicing in Sarasota County testified on behalf of Manasota. Doctors James and Donald Blem and Dr. Chirillo are osteopaths practicing in southern Sarasota County and northern Charlotte County. Dr. James Them supports the application in that he would prefer to practice in an osteopathic hospital with osteopathic specialists on staff with whom he could consult. He prefers the continuity of care available if he had a situation where he could refer his patients upon admission to an osteopathic specialist, rather than having to refer patients to allopathic specialists. He also supports the teaching aspect of the Manasota application. Dr. Chirillo supported the application of Manasota essentially because it would be a teaching hospital and he feels that there is a need to train osteopathic physicians, but acknowledged that no additional acute care beds are needed in Sarasota County and District VIII. Dr. Donald Them supported the hospital's application for similar reasons. None of the three doctors would transfer all their patient admissions to the Manasota Hospital, should it be built, however. Indeed, Dr. James Them did not feel some of his patients would want to go to the Manasota facility because of the travel distances involved. Drs. Them and Chirillo are on the staff of Venice Hospital, and have no difficulty in getting their patients admitted to that hospital. They have full privileges and can practice osteopathic medicine there, including manipulation therapy. They know of no patients in Sarasota County going without acute care services because there is not an osteopathic hospital in the county. The osteopathic physicians in the county have no trouble getting staff privileges at existing facilities and each is generally practicing as he chooses without restriction, other than specialization. Osteopaths will practice with allopathic physicians at Englewood Community Hospital. Three osteopaths are on its charter Medical staff. One of these was chosen as the president elect of the ECH medical staff. The osteopaths at that facility are being provided with any needed equipment. Drs. Furci, Bipman, Yonkers, and Nestor, osteopaths testifying for the existing hospitals, all feel that they can treat their patients in a proper osteopathic manner. All are on the staffs of Doctors or Memorial Hospitals in Sarasota. They believe osteopaths in the area have enough acute care beds for their patients and there are always empty beds. All found no need for any additional beds, osteopathic or allopathic. In the words of Dr. Mervin Lipman, D.O., of Sarasota, "we don't need any more hospital beds period. We are up to our ears in hospital beds today." In short, the low utilization of acute care hospitals in the district and the county, among other factors, reveals that there are available, accessible mixed staff hospitals to serve the needs of patients of allopathic or osteopathic doctors. Manasota's proposal is, in part, consistent with the 1985-87 state health plan. That plan states at Volume 2, Pages 22 and 23: in short, the dynamic nature of health care calls for a planning approach which attends to overall development patterns rather than viewing specific health problems in isolation. Three interrelated policy guides were adopted as part of the 1985-87 State Health Plan: A holistic concept of health is espoused which views man's well-being as a function of the complementary interaction of mind, body, and environment. The holistic concept of health places emphasis on promotion of well- being and prevention of illness. The resources available for organized health care activities are limited and must, therefore, be utilized to their greatest effect. Given a holistic concept of health and finite health resources, priority should be placed on increasing resources for effective health promotion and primary care while containing total health care costs. In that Manasota proposes to be an osteopathic teaching hospital and the osteopathic philosophy comports with the holistic concept of health espoused above, the Manasota proposal is consistent in part with the 1985-87 State Health Plan. Neither the state nor the District VIII Health Plans specifically address need for osteopathic beds and for osteopathic hospitals and services, but rather treat all acute care services, osteopathic or allopathic, together. The State Health Plan emphasizes the growing problem and societal expense caused by excess acute care beds in the state, and states that "the combined effect of ambulatory surgery, HMO's, DRG's and other innovations could reduce acute fewer acute care beds will be needed state-wide than existed in 1984. Mr. Konrad, Manasota's own expert health planning witness, conceded that that projection may be accurate and would apply equally to allopathic and osteopathic facilities. Goal no. 3 at page 83 of the state health plan states the policy that efficient utilization of acute care services should be promoted. Objective 3.1 of that goal expresses the intent that all non federal hospitals, considered together, should attain an average occupancy rate of at least 80 per cent by 1989. District VIII currently has a district-wide occupancy rate for the last six months of 1985 of only 63.9%. Thus, approval of an additional acute care hospital would not conform with objective 3.1 of the state health plan, and, given the declining occupancy and use rates, even if the Manasota application were not approved, District VIII will not be in compliance with this objective by 1989. Due to the continuing decrease in patient days, decrease in average length of stay and decrease in admissions projected to 1989, the occupancy rate for 1989 for District VIII is likely to be less than 69%. The Department of Health and Rehabilitative Services (HRS) has not adopted a rule setting forth an osteopathic acute care bed need methodology. The policy of HRS, in this case at least, is to use the so-called "Wellington Methodology" in determining osteopathic bed need. Ms. Dudek, the sole HRS witness, collected data for this methodology from a number of·a 33 sources. She used data concerning numbers of admissions by osteopathic physicians from July, 1984 through June, 1985, and the total number of patient days by osteopathic physicians from the local health councils in Broward, Dade, Duval, Volusia, Hillsborough, Orange and Pinellas Counties. Those counties were chosen because they contain osteopathic hospitals. Ms. Dudek considers such data important when reviewing applications for acute care osteopathic beds in areas like District VIII where no such facilities exist. The department ascertained the number of licensed osteopathic physicians residing in District VIII from the Department of Professional Regulation, and used the latest population projection issued by the Governor's Office. This data was used in three formulas, the results of which were then averaged to determine the department's position as to osteopathic acute care bed need for District VIII in the horizon year of 1990. HRS used these three formulas because, by Ms. Dudek's admission, it felt no single formula was best. The first of the formulas is population based. It multiplies the number of osteopathic admissions to hospitals per 1,000 population, multiplied times the projected 1990 population for District VIII. It then multiplies that number by the average length of stay per osteopathic admission and divides the result by 365 days, further dividing that result by 80 per cent utilization to project the total number of osteopathic beds supposedly needed in 1990. Shown mathematically, that formula is as follows: [8.6 x (907, 804/1,000) 6.9]/[365 x .80] = 184 beds. The second formula is termed "physician based" and multiplies the admission rate per osteopathic physician by the number of osteopathic physicians licensed in District VIII. It then multiplies that number by the average length of stay per admission and divides the result by 365 days, once again divided by 80% utilization, to project the number of osteopathic beds putatively needed in 1990. That formula is depicted mathematically as follows: [53.1 x 67 x 6.9]/[365 x .80] = 84 beds. The third formula, also physician based, multiplies the number of osteopathic physicians in District VIII times the number of patient days per osteopathic physician (taken from the counties from which data was collected, not District VIII), divides the resulting number by 365 days; and then multiplies that by 80% utilization to project the number of beds needed in 1990. That formula is depicted mathematically as follows: [67 x369.2]/[365 x .80] = 85 beds. The Department averaged the results of these three formulas to arrive at its position that there is a gross osteopathic acute care bed need for 1990 of 118 beds. It then subtracts the 60 beds already approved for Gulf Coast Hospital, by Final Order, for a net need of 58 osteopathic beds. Formulas 2 and 3 above are essentially identical in that they are composed of the same variables and produce the same effective result, absent rounding of numbers. It is thus apparent that it is not truly valid to include both formulas 2 and 3 in the averaging calculation since they contain the same information. They would improperly weight the result (and HRS' position) in favor of the physician-based data. This is especially true in light of the fact that HRS concedes itself that no single formula used is more accurate than the other. If the results of the population based formula number 1 is averaged with only one of the other methods, the result is a gross osteopathic bed need for District VIII of 134 beds for 1990. When the 60 beds already approved for Gulf Coast Hospital are subtracted from this total, a net osteopathic bed need for 1990 of 74 beds results. Ms. Dudek acknowledged that, in reaching the agency's position she espoused at hearing, she had not considered the other applicable statutory criteria, but merely employed her "need methodology" to determine bed need results. She acknowledged however, that her data itself showed that admissions- at osteopathic facilities in the counties she surveyed were declining. Further, in employing her formula she did not determine how many physicians were available and would actually use the facility in the Sarasota County service area, nor how many of their osteopathic patients would be admitted to existing hospitals as opposed to the Applicant' s. Her formula assumed that the osteopaths would send all their patients to an osteopathic facility in District VIII. Indeed, a number of the physicians who would seek to become staff numbers at Manasota also testified that they would not necessarily refer all their patient admissions to that facility. The D.O. specialists who expressed a desire to become staff members would admit few patients because they would not have primary care practices. The evidence establishes that osteopaths as close as the City of Sarasota would not seek to use this facility. It is thus illogical to assume that physicians further away in District VIII would attempt to use it. Ms. Dudek also apparently assumed that the data regarding admissions per osteopathic physician and per one-thousand population obtained from other areas of the state would automatically apply in the service area involved in this application. There was no proof that that would be the case. Further, her formulas take into account the optimal 80% occupancy rate which the record clearly reflects does not prevail in District VIII. The average occupancy for District VIII acute care facilities is substantially less than that and will decline through 1990. In short, there is no basis in fact to support some of the HRS assumptions with regard to its bed need methodology since some of those assumptions were not shown to apply to District VIII and since it did not include in its assumptions certain data regarding osteopathic admissions which was available for District VIII. Since its formula assumptions are thus flawed and since HRS did not evaluate the remaining statutory criteria, its conclusion that there should be approval of a 60-bed osteopathic hospital (or any other number of beds) is rejected. Testifying on behalf of Manasota, Mr. Thomas Konrad, an expert in health planning, opined that a need exists for the Manasota project. Mr. Konrad believes there is no acceptable mathematical need calculation for osteopathic beds, but feels it reasonable that the district, with two large population centers in Lee County and Sarasota Counties, could support two osteopathic hospitals. He based this on his general proposition that osteopathic acute care facilities should be placed in populous areas with high acute care utilization rates based upon the age characteristics of the population. Sarasota has a relatively large population base and will be the 14th most populous county in the state in 1990, with a large percentage of elderly persons who utilize acute care services at a higher rate than the general population. Mr. Konrad performed a "reality check" to test the efficacy of his position by calculating the osteopathic acute care bed to population ratios for the populous counties in which osteopathic hospitals are located, which have similar demographic characteristics to Sarasota County. His analysis showed that the state-wide osteopathic hospital bed to population ratio is .313 beds per 1,000 population. If the 100-bed Manasota facility were approved, the ratio for Sarasota County would be .351 beds per 1,000 population. Mr. Konrad acknowledged that he has never before employed the osteopathic bed to population test used in this case. The test contains a fallacy in that Mr. Konrad did not adjust the bed to population ratio by any occupancy standard, but rather his approach necessarily embodies the assumption that either the beds are needed in those counties he surveyed, merely because they are in existence or approved, or alternatively, he failed to consider the occupancy rates in those counties vis-a- vis the present or projected occupancy rates in Sarasota County and District VIII. It is apparent from his testimony that he did not take into account the recent occupancy rates and trends for osteopathic hospitals in the counties included in his analysis. In fact, the osteopathic hospitals in the surveyed counties experienced a collective occupancy rate of approximately 43 per cent, rather than the optimal 80%, in 1984, which represented a 10% decrease since 1982. Between 1983 and 1985 the patient days per osteopathic physician in those counties decreased by almost 28%. The test used by Mr. Konrad does not present a true picture of need for District VIII since it does not take into account whether the figures upon which it is based represent excess osteopathic bed capacity and does not take into account the utilization rates in those counties, much less the presently existing and projected utilization rate for Sarasota County and District VIII as that might relate to an appropriate bed to population rates. The utilization rate at Gulf Coast is unknown because it has not had an opportunity to get into operation and the utilization rate at the allopathic hospitals which are like, existing facilities and services, is substantially lower than 80% and declining. Manasota will admittedly compete for the same declining patient day pool with those existing allopathic facilities. Thus, Mr. Konrad's general opinion that the two populous centers of District VIII involved could support two minimum-sized osteopathic hospitals, as tested by his osteopathic bed to population ratio method of analysis, was not established to be a valid test for osteopathic acute care bed need for District VIII and Sarasota County. In light of this and in consideration of the other above findings, there has been shown to be no need for additional osteopathic (or other) acute care beds or facilities in Sarasota County or District VIII. Availability, Quality of Care, Efficiency, Appropriateness, Accessibility, Extent of Utilization and Adequacy of Like and Existing Health Care Facilities in the District There presently are no acute care osteopathic hospitals operating in District VIII nor do any have dedicated portions of their facilities devoted solely to the practice of osteopathic medicine, although each of the acute care hospitals involved have varying numbers of osteopaths on their staffs. Gulf Coast Hospital, however, will construct and operate its approved facility in the immediate future and thus, at least 60 osteopathic beds are approved and not yet utilized as available osteopathic services in the district. Gulf Coast Hospital has not had the opportunity to get into operation, attain its market share and a favorable utilization experience so as to become available as yet. Given that Gulf Coast will be constructed 68 miles from Manasota in Lee County, much closer than the two-hour regional travel time standard established above, it is obvious that an osteopathic acute care hospital will soon be available and accessible to District VIII patients. Osteopathic acute care services are presently available in District VIII, notwithstanding the fact that the Gulf Coast facility is not yet open. Sarasota County osteopathic physicians have staff privileges at area hospitals and by their own testimony, are able to treat their patients in a fully osteopathic manner at existing Sarasota County acute care facilities. Venice Hospital is supportive of the practice of osteopathic medicine. Dr. James Them, D.O., is on the staff at Venice with full privileges and has no difficulty in getting his patients admitted. He can practice osteopathic medicine there in an unimpeded way, including the use of manipulation tables provided by the hospital. He acknowledged that the patients in Sarasota County are not denied acute care services because of the lack of an osteopathic hospital. Drs. Donald Them, D.O., and Joseph Chirillo, D.O., of the Venice staff are of a similar opinion. The other area D.O.'s testifying are able to treat their patients in a proper osteopathic manner at existing facilities and they would not seek staff privileges at Manasota. Although several osteopaths testified that they desired the availability of osteopathic specialists in an osteopathic facility to render consultation and referral of their patients with attendant continuity of care more facile, and to avoid, in some instances, duplication of tests in the referral process with allopaths, they did not demonstrate that their patients suffer from any lack of adequate care in existing facilities. The advent of the Manasota facility would not necessarily alleviate this "physician inconvenience" purportedly caused by referring patients to allopathic specialists, inasmuch as Manasota will be a mixed staff hospital, such that many of the specialists on its staff are likely to be allopathic physicians anyway. All of the Sarasota County osteopathic physicians can handle additional patients and have had osteopathic patients adequately cared for in existing facilities, at which they have full privileges. Osteopathic physicians have no difficulty gaining staff privileges and admitting patients at existing facilities. Indeed, at the new Englewood facility, three osteopaths are on the staff and one was chosen by his peers as president-elect of the medical staff. Osteopaths at Englewood will be provided with any needed equipment. In short, with the advent of the 100-bed Englewood facility, the 60-120 bed Gulf Coast facility, together with the existing hospitals which have substantial unused capacity, osteopaths practicing in Sarasota, Charlotte County, and District VIII have enough beds between now and 1990 for their patients at facilities at which they may freely practice osteopathic medicine. These like and similar services are available because both allopathic and osteopathic physicians and hospitals draw from the same limited patient pool. There is no essential difference between the way allopathic and osteopathic primary care physicians, surgeons, and specialists practice in terms of the services rendered acute care hospital patients. The primary difference only lies in the use of manipulative therapy, with attendant manipulation tables which are used in the osteopathic setting. This service is already available at the existing hospitals. The difference in philosophy between osteopathic and allopathic practice is manifested more at the out-patient primary care level. At the primary treating physician level the patient is looked at holistically in the sense that, in addition to treating the illness or condition the patient is presented with, the osteopath seeks to ascertain and correct causes of the illness rooted in other systems of the body or the patient's environment or family circumstance. The allopathic physician tends to be oriented toward treating the specific problem by dealing with the involved bodily system only. There is, at any rate, very little difference in the way allopathic and osteopathic physicians practice at the acute care hospital level, in caring for their patients. Thus, all persons desiring osteopathic acute care services are able to receive them in District VIII, despite the lack of an additional osteopathic hospital. In view of the number of osteopaths per thousand population in District VIII, as compared to state and national averages in evidence, there is no shortage of osteopathic physicians in District VIII. Given the low utilization of existing acute care hospitals in the district and in Sarasota County, including Gulf Coast, which has not had the opportunity to fill any of its beds, there are like, existing, available, accessible, mixed staff hospitals in Sarasota County and in District VIII providing adequate acute care services, including osteopathic of the type proposed. The quality of existing hospitals in the district has not been placed at issue. No testimony or evidence concerning quality of care about Memorial or Doctors Hospitals has been adduced. The Englewood Hospital, as of the time of the hearing, had not yet opened. Dr. Raymond McDearmott, M.D., was presented to criticize quality of care at the Venice Hospital. Dr. McDearmott, however, did not have admitting privileges and was limited in his experience to working in the emergency room at Venice. He has been engaged in a dispute with Venice's administration concerning his operation of the emergency room, which may culminate in litigation. This adversarial attitude toward Venice, together with his failure to describe specific instances of inadequate care, entitles his testimony to scant consideration. There is no competent evidence to indicate that existing hospitals are not providing adequate quality care. Likewise, the efficiency of existing facilities was largely not addressed, with the exception of Venice Hospital. Manasota contended that Venice Hospital was not operating efficiently because of an alleged excessive amount of administrative expenses. That contention was predicated upon data submitted to the Hospital Cost Containment Board by Venice Hospital which was reported by the board and indicated that administrative expenses at Venice exceeded those of other hospitals in the cost containment board "reporting group" of which Venice is a member. It was established, however, that that information had either been filed with or reported by the Hospital Cost Containment Board in error, and that indeed, the error was corrected on the Board's own volition. The administrative expenses at Venice Hospital for the reporting period in question, were at approximately the mid-point for hospitals-in its reporting group. Thus, it has not been established that Venice or any of the other hospitals in Sarasota County or District VIII, are operating inefficiently, aside from their problems with under-utilization and unused capacity. It has also been proven that the existing hospitals are "like" facilities which are accessible. Indeed, 95% of the population of District VIII is within 20-miles or less of an existing acute care hospital. The Gulf Coast osteopathic facility will be well within the proven two hour accessibility standard for osteopathic hospitals, since it will be 68 miles from the proposed location of the Manasota facility. The existing hospitals are underutilized. There has been no showing that existing hospitals are inaccessible to residents of the county and the district. Concerning the issue of extent of utilization of like and existing facilities, witnesses Konrad, Beechey, Shanika, Zaretsky, Schwartz and Porter acknowledged the declining utilization of acute care hospitals in Sarasota County and District VIII, and the continuing nature of that decline. In District VIII, occupancy of acute care hospitals has decreased significantly from 1983 through 1985, such that the composite occupancy rate for the district was 67.2% in 1983, 60.9% in 1984 and 52.4% for 1985. The dramatic changes occurring in the health care industry since 1983 have caused the severe declines in inpatient utilization. The primary reason has been the change, beginning in 1983, to the Medicare prospective payment system as opposed to the former cost-based reimbursement system. The new system is otherwise known as the "DRG" system. Thus, Medicare reimbursement is now based on a Fla. rate reimbursement based upon the type of illness, diagnosis or treatment. The effect of this change has been to sharply decrease the average length of stay of Medicare patients in hospitals, as well as to decrease Medicare admissions. Medicare admissions are decreasing through increased emphasis on utilization review by professional review organizations mandated by the Medicare system. This results in more procedures, such as some surgery, being performed on an outpatient basis. Inpatient utilization concomitantly declines. These factors, coupled with the growth of home health services, and the imminent impact of preferred provider organizations (PPO's) and health maintenance organizations (HMO's) in Sarasota County and District VIII, have and will impact hospital occupancy rates significantly to an increasing degree. Mr. Conrad and Mr. Schwartz both showed that these factors which depress hospital utilization impact utilization of osteopathic and allopathic facilities in the same way. In fact, since osteopathic facilities have historically experienced higher average lengths of stay than allopathic facilities, the DRG method of prospective reimbursement has and will have a greater impact on osteopathic hospitals. Hospital utilization in District VIII is still declining. Even though the population is increasing significantly, hospital occupancy is decreasing. During 1980 the population of Sarasota County was 205,846 from which 292,500/ patient days were generated. In 1985 the projected population for Sarasota County was 242,875 and the projected number of patient days was down to 273,486. Thus, the population of the county increased by 37,000 during that five year period, yet the number of patient days decreased by approximately 19,000. Thus, the hospital use rate is decreasing more rapidly than the population is increasing, and it has not been shown that patient days will increase in relation to the population through the year 1990. The increasing influence of the above-mentioned alternatives to inpatient care will continue to cause a drop in the hospital use rate for Sarasota County in the future. Indeed, the 1985-87 state health plan, in evidence, predicts that the combined effect of outpatient surgery and other delivery systems will result in an additional 15 per cent decline in hospital admissions by 1989. The current decline in utilization rate in Sarasota County hospitals has not yet been affected by the advent of HMO's and PPO's, but those prepaid health insurance organizations are in the offing and will cause further declines in utilization. If present trends continue, as has been proven to be likely, and the Manasota Hospital application is approved with its proposed 100 beds, hospital occupancy in Sarasota County will decline to approximately 40% in 1990. Approval of the applicant's facility would result in occupancy rates as low as 35 to 38% for Venice, Englewood and Manasota Hospitals, since Manasota, with a large number of M.D.'s on its staff will draw its patients and patient days from the same pool as the existing hospitals and thus share an insufficient number of patients with them. In order for all hospitals in District VIII to operate at the optimum of 80% utilization, as many as 1,344 acute care beds would have to be eliminated from the existing licensed and approved beds. Even if no additional beds are approved, the most realistic projection of hospital utilization in District VIII for 1990 is 44.6%. The average occupancy for acute care beds in District VIII during 1983 averaged 67.2%. By 1985 the occupancy rate was down to 52.4%. Accordingly, in view of the significantly low district-wide and county occupancy and the continuing downward trend, the legislatively mandated goal of hospital cost containment underlying Section 381.494, Florida Statutes, will not be furthered by the approval of additional hospital facilities in District VIII and Sarasota County, including that proposed by Manasota. Manasota's Abilitv to Provide Qualitv CareSection 381.494(6)(C)(3), Florida Statutes Inasmuch as the Manasota facility has not been found needed for a variety of reasons enunciated herein, the issue of its ability to provide quality health care will not be addressed in depth. It is quite likely that Manasota, if it got into operation, overcoming the operational and legal impediments discussed herein, could provide quality health care. Its management team is made up of Mr. Gerald White and other former managers of Health Corporation of America, all of whom have substantial health care managerial expertise. The Availability of Alternative Sources of Care -Section 381.494(6) (c)4, Florida Statutes There are less costly, more efficient and appropriate alternatives to the proposed Manasota project for District VIII and Sarasota County. The existing acute care hospitals are like and existing facilities offering similar health care services which are severely under-utilized. The osteopaths testifying both for and against the Manasota application acknowledge that there are plenty of hospital beds to admit their patients in Sarasota County, and that they can be satisfactorily, osteopathically treated at existing hospitals. Those D.O.'s supporting the application of Manasota acknowledged that they will continue to send their patients to existing facilities as well. Thus the existing acute care hospitals (as well as the future Gulf Coast facility), are appropriate alternatives to the Manasota facility, and since they are greatly under-utilized, or in the case of ECH and Gulf Coast, not yet utilized, they need more patients and more revenue to become more efficient, enabling them to deliver health care services in a less costly manner the public. If Manasota's hospital were approved, utilization would decline still further, generating even more excess acute care capacity. Unused capacity has a significant fixed cost increment which will have to be borne by the health care consuming public. This is wholly aside from the capital expenditure in excess of fifteen million dollars needed to place the Manasota facility in operation. This would be an unnecessary cost for the consumers of District VIII to bear in view of the lack of need for it. Probable Economies in Service Derived from Joint or Shared Resources-Section 381.494(6)(c)5, Florida Statutes Manasota does not propose to operate joint, cooperative or shared health resources in conjunction with its proposed hospital. This criteria is not really at issue in this case and no party offered proof with regard thereto. Need in the District for Special Equipment and Services not Accessible in Adjoining Areas-Section 381.494(6)(c)6, Florida Statutes This criterion is not applicable in this proceeding. Manasota will not offer specialized equipment or services of a type not already available in Sarasota County or the district. The Need for Research and Educational Facilities Including Institutional and Community Training Programs for Practitioners and for Doctors of Osteopathy and Medicine at the Internship and Residency Training Level-Section 381.494(6)(c)7, Florida Statutes Manasota proposes an osteopathic teaching hospital. It called Dr. Arnold Melnick to testify regarding the need for additional osteopathic teaching hospitals in Florida. Dr. Melnick is the Dean of the Southeastern College of Osteopathic Medicine (SECOM) in North Miami Beach. He was accepted as an expert in the fields of medical education and osteopathic medicine. Dr. Melnick established that the emphasis in osteopathic medical education is to train general or family practitioners. This aspect of medical education and practice comports with the holistic philosophy of osteopathic medicine which emphasizes treatment of a patient by looking at the patient's entire physical and environmental circumstance, rather than being specific disease, condition or system oriented. Because of the emphasis on training for ability to diagnose and treat all aspects of a patient's medical circumstance, osteopaths tend to be in general practice and family practice rather than specializing such that approximately 87% of osteopaths are in general. Only 4% of the osteopathic profession are primary care specialists in the areas of pediatrics, obstetrics and internal medicine. Dr. Melnick established that because of the holistic philosophy, there is not a significant need for more osteopathic specialists. This is also the reason that internships for osteopaths are required to be one year "rotating" internships. Osteopathic interns in teaching hospitals must rotate for a month or more through each of a teaching hospital's medical departments, such as pediatrics, obstetrics, and the like so that their training will be designed to give them a broad knowledge of many areas of medical practice. Contrastingly, with allopathic internships, interns concentrate in the area of their chosen specialty with a view toward moving on toward a residency in that specialty. It is for this reason that osteopathic teaching hospitals must offer a sufficient number of different medical practice departments so that interns may be given broad training in all the medical practice fields they will be required to know to be competent general or family practitioners, in keeping with the osteopathic philosophy of medical practice. Thus, although osteopathic practice is characterized by a vast majority of family practitioners, specialists are required· to train osteopathic physicians. The AOA accreditation requirement dictates that certified osteopathic trainers must be present in the various departments. Dr. Melnick established that an osteopathic teaching hospital should not be smaller than l00 beds, must have at least three outstanding osteopathic internists, at least two osteopathic surgeons, an osteopathic pediatric specialist, as well as an obstetrics-gynecology specialist. Manasota presented testimony of osteopathic specialists consisting of a surgeon, a pathologist and an opthamologist from Suncoast Hospital in Largo, Florida who are willing to move to Sarasota County and become staff members if the hospital is built. Manasota, however, has not established that it will have the specialists required for an appropriate quality osteopathic teaching hospital. It did not show how it would obtain the required number of internal medicine specialists, surgeons, a pediatrician nor a specialist in obstetrics and gynecology. In fact, Manasota will not have an obstetrics department. Both Dr. Melnick and Mr. White established that a teaching hospital needs more FTE staff members than a non- teaching hospital. The proposed 3.4 FTE's will be less than necessary for a teaching hospital to adequately operate. There is currently a shortage of nurses and other technical staff employees in Sarasota County, as evidenced by the difficulty Venice has had hiring and retaining people in these positions due to the advent of the Englewood facility and its competing recruitment. There is a substantial likelihood that Manasota will have difficulty obtaining sufficient staff members to be a bona fide quality teaching hospital, especially since it proposes to hire osteopathically trained nurses and technicians. It did not establish where it intends to recruit them. In view of the fact that Manasota proposes to recruit its medical staff locally, it has failed to establish where it will obtain the required number of D.O. specialists as certified trainers for each of its departments. There are eight osteopathic teaching hospitals in Florida. The most recent graduating class from SECOM consisted of 40 osteopathic physicians. All of them were placed in suitable intern programs in and out of Florida. It was not shown that all of these 40 interns would have remained in Florida even had there been an additional osteopathic teaching hospital. The college will be graduating 100 osteopathic physicians per year by 1987. It was not established that all of the internships they will require must be at Florida hospitals. In this connection it was shown that a 100-bed osteopathic teaching hospital could accommodate eight interns, but only if that hospital was operating at 80% capacity. If the same hospital had only a 57% occupancy it could accommodate 5.7 interns. Thus by Manasota's own utilization projections it could accommodate only about five interns, even if it could obtain the required number of osteopathic specialists as trainers. Further, such interns typically receive stipends of from $18,000 to $20,000 per year. Although Manasota could obtain approximately $3,000 per year per intern from a grant program established by the legislature, it did not demonstrate in its financial evidence that it has provided for the necessity of $75,000 per year for intern salaries. In short, it has not been proven that Manasota genuinely can establish its facility as an osteopathic teaching hospital in accordance with Dean Melnick's own, requirements. Availabilitv of Resources, Manpower, Management Personnel and Funds for Operating and Capital Expenditures; Effects on Clinical Needs of Training in the District for Health Care Professionals; Accessibility to Schools in the District for Health Care Training; Alternative Uses of Resources for Other Health Services; Accessibility of the Facility to all Residents of the District; Section 381.494(6)(c)8, Florida Statutes In terms of manpower availability, the Applicant intends to have an open staff of M.D.'s and D.O.'s, purportedly recruited from the existing medical community in Sarasota County. Manasota will only seek to recruit physicians from outside that area if unable to staff the hospital from existing physicians with practices in Sarasota County who could "swing" their patients from existing hospitals to Manasota's facility, discussed above. The potential physician-investors, referenced above, were assured by Manasota's principals, that the vast majority of the 20 or 30 physicians needed to staff the facility would be M.D.'s from the Venice and Sarasota area. The doctors attending these promotional meetings were told there would not be a heavy influx of osteopathic physicians to Venice to staff the hospital. There are between 100 and ll0 M.D. physicians in the Venice area. There are 20 osteopathic physicians in Sarasota County. Three support the application and would seek privileges at Manasota, four of them would not and do not feel the hospital is needed. The remainder did not testify nor indicate any interest in staff privileges. The testimony of the osteopathic physicians from other areas (Dade City and Pinellas County), as well as Dr. Melnick, as found above, established that for a hospital to be osteopathic in philosophy and operation, at least 52% of its governing body should be osteopathic physicians, as well as the majority of its department heads and staff. Only four of these doctors expressed a desire to join Manasota's staff. There is therefore simply no competent, substantial evidence of record to establish that a majority of the staff physicians will be osteopathic physicians, nor that the majority of the department heads will be osteopaths. In fact, the evidence does not reflect clearly how many staff positions Manasota proposes to obtain to operate the hospital, nor that a sufficient number of M.D.'s and D.O.'s can be obtained locally in the face of the staff privileges offered at existing hospitals. If an influx of physicians will be required from outside areas to staff the hospital, while this might provide adequate physicians to staff the hospital, it would not serve to increase hospital utilization, they would bring no patients with them. In fact, with the utilization rate decreasing, the pool of patient days available to render the hospital and medical practices feasible is continuing to shrink and if more physicians are added to the Sarasota County market, health care costs can only rise as doctors and the hospitals must raise charges in order to render their practices financially feasible when there are not enough patients in relation to the number of doctors or beds available. Better alternative uses of the resources represented by the increased charges would involve not building such a facility in such a shrinking patient market, but rather allowing existing hospitals a chance to improve their utilization experience first with their already constructed and financed excess capacity. The 3.4 full time staff equivalents (FTE's) per occupied bed based upon witness Sucher's projections are insufficient to staff an acute care hospital such as this. Indeed, as shown by Mr. White, a teaching hospital may require up to 5.6 FTE's. A minimum of 3.8 FTE's per occupied beds would be needed to staff an acute care facility such as that proposed by Manasota as shown by Mr. Schwartz, and as a teaching hospital an even higher staff ratio would be necessary. If Manasota adjusted its FTE staff to meet only the minimum 3.8 FTE standard, its costs for staffing would be $450,000 more than that proposed in its pro forma expense statement. Indeed, if it actually proposes to be a teaching hospital, its staffing requirements and concomitant expense would increase on the order of one million dollars more than that proposed in its pro forma. In connection with this, the staff proposed to be needed in certain departments was understated. For instance, 16 to 18 employees would be needed to staff a laboratory in a 100-bed hospital and Manasota only allocated 8. Similarly, it only proposes to have 3 FTE's to staff its pharmacy. This is an insufficient number of employees to staff a pharmacy seven days a week, 24 hours a day as Manasota proposes to do. Finally, although Manasota proposes to have an osteopathically trained staff of nurses and other technicians, it did not demonstrate where it would be able to recruit such staff members trained in osteopathic principles of nursing and other disciplines. Thus the Applicant has not proven the availability of sufficient manpower and related resources to feasibly operate the project. The issue of availability of funds for capital and operating expenditures for accomplishment and operation of this project is treated with more specificity infra., however, it should be pointed out that Manasota has significantly understated land purchase, site development, working capital and other capital costs by more than two million dollars, and otherwise understated the magnitude of resources the project will require. Although the facility will be readily accessible to the population of south Sarasota County, in view of the above findings there is no accessibility difficulty for acute care patients, both allopathic and osteopathic, at the present time, in the county and District VIII, especially with the advent of the Gulf Coast Osteopathic Hospital and the recently opened Englewood facility. The considerations in the above statutory criteria regarding health care training and education needs are dealt with to the extent they are relevant in this proceeding in the findings concerning Manasota's proposed posture as an osteopathic teaching hospital. Financial Feasibility Mr. Randy Sucher and Dr. Elton Scott, testified as financial experts on behalf of Manasota. Mr. Sucher testified that the projected utilization of a proposed facility is the "cornerstone" of a financial feasibility study, and financial forecast. Mr. Sucher conceded that the financial feasibility study done in this case was much less detailed and thorough than had been done in his experience when he was employed by an accounting firm to perform feasibility studies for hospital clients, especially in the area of evaluating patient demand. Mr. Sucher largely relied on the demand and utilization study performed by Dr. Scott. The frailty in the study lies in the method employed by Dr. Scott to study demand and project utilization, which lacks specificity. He determined his position regarding patient demand for Manasota's project largely by attending meetings and interviewing physicians, most of whom are M.D.'s in Sarasota County. He then projected utilization by determining the admission rate per 1,000 population in south Sarasota County which is Manasota's primary service area. He arrived at a figure of 102 admissions per 1,000 population, determined by merely considering the admissions to Venice Hospital as reported in the 1983 hospital cost containment board data. He applied that admission figure to the population figures for south Sarasota County for 1985. He performed no patient origin studies for Venice Hospital, so it was not established whether all of those admissions originated from the same south Sarasota County origin area represented by his population figure. The results of his interviews with physicians do not indicate hat all the patients admitted by those physicians to Venice Hospital, came from the south Sarasota County service area proposed for Manasota. There is thus no way to determine from this record if the patient admission figures relied upon by Dr. Scott correlate with the actual admissions to Venice and from the relevant primary service area population. Thus, even though Dr. Scott's data showed 102 admissions for Venice per 1,OO0 population, when only looking at the census tract population areas for south Sarasota County, it was not established that those admissions were not drawn from a much larger population base representing more of Sarasota County and possibly north Charlotte County. If so, that would result in a much lower admissions per 1,000 population figure for Venice Hospital, as that relates to the number of patient admissions Manasota could expect to capture from Venice. Dr. Scott's utilization assumptions were not verified by any patient origin studies for Venice Hospital, which might show, for instance, that significant numbers of its admissions come from areas from which Memorial and Englewood will draw patients. Thus, the 22 per cent share of Venice's admissions that Scott opines Manasota will attract, have not been verified by a showing that those patients are from origin areas or physicians more likely to be attracted to Manasota as opposed to Venice, Englewood or Memorial, if Manasota is built. In this connection, no in-depth physician analysis study or market analysis study was done by Dr. Scott or Mr. Sucher. Instead, they relied upon general discussions at interviews with three local osteopathic physicians and 12 to 15 M.D.'s as well as three or four out-of-district D.O.'s and, according to Mr. Sucher,: "from that, we just kind-of got a composite feeling that we could generate 'x'." Dr. Scott and Mr. Sucher also relied in part upon a 1983 informal survey conducted by a Manasota shareholder of an indefinite number of Sarasota County physicians. Some of these, including the four Sarasota D.O.'s discussed above, now have privileges at other Sarasota area hospitals and will not admit patients to Manasota. The three D.O.'s who support the application will not refer all their patients to Manasota and the osteopathic physicians from the St. Petersburg area, who indicated a desire to join Manasota's staff, are not all "admitting physicians," some of them being specialists who only engage in hospital practice and would provide no patient admissions. As found above, Manasota did not prove that it could adequately staff the hospital with M.D.'s and D.O. s. If it obtains doctors from other areas, they will not have a local patient base from which the hospital can gain the admissions necessary to achieve a feasible revenue posture. Neither Dr. Scott or Mr. Sucher took into account the market share that Englewood would obtain, including its share of admissions from Venice Hospital. Englewood is a new, 100-bed acute care facility located in Sarasota County, closely proximate to the Manasota proposed location and to Venice's location. A significant portion of its staff physicians are located in Venice. The primary service areas of all three hospitals substantially overlap. It is not reasonable to conclude that Manasota will not compete with Englewood for patients, as well as with Venice. Thus, Dr. Scott and Mr. Sucher's estimate that 22% of its admissions could be obtained from the patient pool enjoyed by Venice at the present time, is over-stated as that relates to Manasota's projected patient utilization and revenue. All three hospitals will compete for the same pool of patients, as will Memorial. Englewood is likely to claim a substantial number of the patient admissions originating in this area, and thus it is unrealistic to ignore the market share that Englewood is likely to obtain. Manasota is not likely to realize the admissions it projects obtaining from the Venice area and thus its utilization will be significantly lower than projected, as will its revenues. Patient days will continue to drop through 1990 because the use rate is dropping more rapidly than the population is increasing. Manasota will thus have to obtain most of its patient days from the admissions enjoyed by existing hospitals, which already have low and declining utilization. It has simply not been established that Manasota will be able to capture sufficient patient days from them to ensure its financial feasibility. Assuming arguendo, that its utilization projections are accurate, the revenue and expense projections based thereon are inaccurate and not supportive of finanical feasibility. "Contractual adjustments" represent the differences between what the hospital charges and what is actually reimbursed by Medicare and other reimbursement schemes. The contractual adjustment represents a deduction from gross revenue. A significant issue was raised by all parties through their financial experts, concerning the portion of the contractual adjustment related to capital cost pass-through. Mr. Beachey, and other witnesses for existing hospitals, opined that capital cost pass-through, whereby a hospital is reimbursed for its cost of capital through the DRG reimbursement system, will be eliminated entirely phased out in steps such that the increment of DRG reimbursement represented by capital cost pass-through should be eliminated from Nanasota's revenue figures. Mr. Beachy feels the ultimate federal regulations enacted will call for a phased reduction in capital cost pass-through. All experts, both for the Applicant and the protestants, agreed that the capital cost pass-through is very likely to be reduced or eliminated in future years. The dispute amongst the experts concerned whether new facilities, either CON approved, under construction, or opening in the year the regulation becomes effective, will have their capital cost pass-through reimbursement entirely eliminated. Because all the opinions are based upon conjecture and speculation regarding what the Congress will do in this regard, they are rejected. The Applicant's pro forma statement of revenues (in evidence) is predicated, in part, upon the assumption that DRG Medicare reimbursement will increase five per cent a year through fiscal year 1989-1990. This assumption is rejected in favor of Mr. Beachey's expert testimony. Mr. Beachey established that the Medicare reimbursement increase for 1986 will only be one-half of one per cent, and that for 1987 one house of congress has agreed to a one half per cent increase in the reimbursement rate, and the other to a one per cent increase. While the ultimate 1987 rate is speculative, Mr. Beachey established that for that and future years it is not likely to be on the order or magnitude of 5%. Mr. Beachey, in an abundance of caution (favorable to the Applicant), opined that at best there might be a 3% annual increase in Medicare reimbursement after 1986, rather than the 5% postulated by the Applicant (even though the 1986 increase is only one-half per cent. His opinion is clothed with substantial probability of reliability and is accepted. The Applicant projects a 5% deduction to revenue for bad debts. Mr. Beachey established that this is more likely to be 8%. That was indeed the figure used by the Applicant in its own application, also in evidence. Mr. Sucher's pro forma statement also projected Manasota providing 3% Medicaid, while the application itself, in evidence, indicates Manasota will obtain 5% of its revenue based upon reimbursement for Medicaid care. These resulting contractual adjustments, which are deductions from revenue, coupled with the necessary adjustment for the increased increment for bad debt, which was established, reveal that, because of these adjustments alone, the Applicant will experience a loss of $414,000 for its first year of operation, and a $1,012,000 loss for the second year. These loss figures do not reflect Mr. Beachey's opinion that an increased number of FTE's are necessary over the 3.4 FTE's projected by Mr. Sucher, which would reduce revenue by $512,000, nor his opinion that declines in "capital cost pass-through" would reduce revenue by $700,000 the first year and $430,000 the second year. This latter opinion was rejected for the reasons mentioned above, and his opinion regarding the additional FTE staff required is rejected because of Mr. Beachey's lack of expertise regarding adequate staffing patterns and levels. The Applicant failed to account for indigency tax assessments of $155,000 and $188,000 for 1988-1990. That assessment is designed to enhance reimbursement for indigent care for hospitals in the state. Although Mr. Sucher and Dr. Scott opined that the amount of the assessment would be reimbursed, an accounting "wash," the preponderant, expert testimony reveals that there is no direct reimbursement payment related to the amount paid into that fund. In any event, the amounts of such possible reimbursements are not proven. Additionally, the Applicant did not account in its expenses for real estate taxes which will amount to $155,000 per year. These expense increases and concomitant revenue deductions are reflected in the above found loss figures. The Applicant will have to increase its charges by a substantial amount to offset these net losses. The revenues would have to be increased on the order of 36% the first-year of operation and 35.9% the second year. It is important to remember that only 26% of the Applicant's patient mix would be private paying or insurance reimbursed patients, who could absorb these increased charges. Concerning staff salaries and benefit expense, the Applicant proposes 3.4 FTE's per occupied bed. A number of the expert witnesses, both for the protestant hospitals and the Applicant, established that that is an insufficient level of staffing for a 100-bed hospital. Mr. Sucher acknowledged that he had no personal experience in determining staffing patterns and staffing a hospital, although in his capacity as an expert in hospital finance, he had dealt with the financial implications of staffing. Mr. Sucher admitted that his 3.4 FTE figure was a rough estimate, which primarily included only nursing and administrative staff, and did not take into account laboratory staff and other technical positions. Mr. White himself finds that teaching hospitals, require a range of from 3.7 to 5.6 FTE's per occupied bed. Mr. Schwartz established that the non-teaching hospitals in the area have a minimum of 3.8 FTE's per occupied bed which is the minimum accepted for a facility such as Manasota's. Indeed, the testimony of Dr. Melnick and Mr. White shows that a higher staffing rate would be needed since Manasota proposes to be an osteopathic teaching hospital. Thus, the appropriate staff ratio (and concomitant salary and benefit expense) for Manasota would have to be substantially higher than 3.8 FTE's per occupied bed. If the FTE ratio were, however, raised to the minimum level of 3.8 FTE's, the expense figure for salaries and benefits would increase by $450,000. Given Mr. White's, Mr. Schwartz's and Dr. Melnick's testimony that a higher level of staffing is needed at a teaching facility, this expense figure might be much higher. If, for example, a modest increase in staffing to account for Manasota's obligations as a teaching hospital operation necessitated a raise in the FTE ratio to only 4.2 FTE's per occupied bed, the total additional expense over that attributable to the projected 3.4 FTE's would be on the order of $900,000. Even that figure would be on the lower end of the range normal for teaching hospitals. These additional staffing expense adjustments would increase the above loss figures by a minimum of $450,000 and likely much more. In addition to the above understated expense items, the Applicant failed to account for payment of federal income tax. The Applicant also failed to provide for payment of insurance which Mr. Sucher acknowledged would cost between $400,000 and $600,000 per year. Payments for utility expense were also not accounted for and Mr. Sucher acknowledged those would cost approximately S300,000 per year. Payments for sales taxes and contract services such as laundry service, which will be a substantial expense, were not accounted for, nor were principal payments on the approximate 14 million dollar debt. The Applicant did not allow for marketing expenses, even though Mr. Sucher and Mr. White acknowledged that an aggressive marketing strategy would be used to obtain a feasible level of admissions. Mr. Sucher testified that a great deal of these expenses generally fell under the heading "supply and other" in the pro- forma statement but, in consideration of these and many other non-itemized expenses such as kitchen or food service, supply purchases, and drug purchases which were not depicted in the pro- forma statement as to amount, it was not established that the general category for supply and other expenses was sufficient to cover all of these expenditures. Capital Costs The Applicant has additionally understated some of the capital costs involved in the project. Foremost among these, as Mr. Sucher admitted, the proposed $15,587,000 capital cost attributable to the project did not include a required 1.5 million dollars in working capital. Manasota also included only $500,000 for land acquisition. One of the sites under consideration however, would cost approximately $1,250,000. Manasota's own witness regarding real estate values established that the required 7 to 10 acre site in south Sarasota County, would cost on the order of a million dollars, exclusive of real estate commissions, legal fees, and other preliminary site costs. Although Manasota has proposed to be an osteopathic hospital, no provision was made in its proposed equipment costs for manipulative therapy tables. Ms. Usher, Manasota's equipment expert, opined that such a table would cost from $150 to $8,000. Indeed, Dr. Snyder, D.O., established that equipping a department of manipulative therapy could cost as much as $100,000. The equipment list does not provide for other items of equipment normally present in operating an acute care hospital, such as an incinerator or two-way radio communication equipment. Some items, such as televisions and a computer system, are optional to some extent, and the record does not reflect whether some items such as a telephone system might be included in the overall capital costs for the facility, even though not listed on the equipment list. It is noteworthy, however, that Manasota has not provided for any expenditure for kitchen or dining room equipment, which could cost as much as $250,000 to $350,000. This unprovided for equipment is essential for functioning as an acute care hospital. The inclusion of these items would boost the capital costs of the project to approximately $17,837,000, without considering the cost of the osteopathic manipulation tables and unknown construction contingencies, dependent on site selection, such as acceleration and deceleration traffic lanes, extension of utility lines and service, and, potentially, a package sewage treatment plant. The contingency fund of $400,000 described by Mr. Henry, was not shown to be adequate to cover these costs. Short-Term Financial Feasibility Manasota retained Morgan, Schiff and Company, Inc. as its financial adviser and broker for this project approximately three months prior to hearing. Mr. Thaddeus Jaroszewicz represented that corporation in testifying regarding financiability of the project. Neither Mr. Jaroszewicz nor Morgan Schiff have participated in the financing of a health care facility prior. Mr. Jaroszewicz stated that it was necessary to have an understanding of the health care industry in which a client operates in order to evaluate the reasonableness of cash flow projections provided to him by the client. Although Mr. Jaroszewicz has some understanding of the economics of the health care industry, due to his lack of experience with health care clients, his expertise is somewhat limited. Given his experience in the financial markets, Mr. Jaroszewicz is confident he can raise the 90% debt financing, probably through banking institutions. However, he based his opinion on the financial projections provided him by Manasota, which for reasons expressed in the other findings herein, have been shown to be inaccurate in projecting financial feasibility. The capital costs, for reasons found herein, are understated as well, such that the true capital costs of the project will approach 18 million dollars, instead of $15,587,000 which Mr. Jaroszewicz assumed. All of these factors, coupled with the fact that AmeriHealth, Inc., through its purchase of Richmond Metropolitan Hospital, the pending purchase of Antauga Medical Center and Smith Hospitals in Alabama from HCA, the Savannahs Hospital Project in Indian River County, Florida, together with its pending half-million dollar lease of a facility in Lockhart, Texas, has committed all its resources and indeed is heavily "leveraged" in seeking to accomplish these purchases. AmeriHealth owes in excess of 11.3 million dollars on the 14 million dollar Richmond Hospital purchase. Regarding the HCA Alabama facilities purchase, AmeriHealth will assume 5 to 6 million dollars in HCA debt and incur new debt totaling 8 million dollars. Additionally, it will give 2.3 million dollars in subordinated notes back to HCA for the remainder of the financing. Upon completion of an expansion project at the Antauga Hospital there will be an additional 8 million dollars in debt assumed by AmeriHealth. The Savannahs Hospital Project in Indian River County will involve an additional 9.5 million dollars in debt. That financing has not closed. AmeriHealth is additionally involved in purchasing Ambulatory Surgical Centers which will cost $450,000 to $750,000 each. AmeriHealth's net worth is approximately 4.7 million dollars. As of September 11, 1985, the HCA acquisitions had not closed because AmeriHealth was unable to secure acceptable financing. Citibank, the proposed lender, was requiring strict liquidity requirements and capital expenditure requirements on AmeriHealth before it would finance the project. AmeriHealth found these requirements unworkable so that it was unable to close the HCA transaction and had to ask for extensions of time on the closing date. AmeriHealth has not yet been able to obtain acceptable financing for that purchase. AmeriHealth is thus a fledgling company which has leveraged all its assets. It will likely have substantial difficulty obtaining financing for the Manasota project. In view of the fact that Mr. Jaroszewicz had not had the benefit of doing his own analysis of the Applicant's proposed financial projections, and in view of the other evidence that has shown that revenues have been overstated and expenses and capital costs understated, it must be concluded that if a lender was aware of this negative cash posture, obtaining of satisfactory financing would be quite doubtful. In this regard it is understood that if a CON were actually granted financing might be arranged. It must be proven that the financial projections are indeed accurate and that indeed, the project will be financially feasible on a short and long term basis for that to happen, however. Such has simply not been proven to be the case. Special Needs of Health Maintenance Organizations (HMO's)-Section 381.494(6)(c)10, Florida Statutes This provision is not at issue in this proceeding. There is no evidence regarding special needs of HMO's. Needs and Circumstances of Entities Which Provide a Substantial Portion of Services to Individuals Not in the District or Adjacent Districts-Section 381.494(6)(c)11, Florida Statutes If Manasota were approved and could feasibly operate as a teaching hospital, it would be available to provide internship and residency programs to students from SECOM and other medical schools. Additionally, Manasota would be available to provide osteopathic health care services to individuals in adjacent districts. However, the preponderant evidence of record does not reveal that osteopathic health care services in adjacent districts are not already being met, especially given the under utilization of osteopathic hospitals in Pinellas and Hillsborough Counties, approximately an hour's drive to the north. Probable Impact of Project on Cost of Providing Health Services, Effects of Competition on Innovations in Financing and Delivery of Health Services which Foster Competition Section 381.494(6)(c)12, Florida Statutes. That portion of this criterion concerning innovations in financing and delivery of health services which foster competition, etc., is not truly at issue. There was no evidence to indicate that any innovations in financing and delivery of health services are proposed other than that Manasota proposes to be an osteopathic teaching hospital, and proposes to charge 10% lower rates. As found above, the Gulf Coast Osteopathic Hospital will be substantially less than two hour's travel time from Manasota's site, and thus Manasota will not truly be an innovative health service in the district. Even if Manasota were approved, it is highly unlikely, in view of the above findings, that it can deliver its health services more cost-effectively. The probable impact of the project on cost of health services and the effects of resultant competition on the supply of health services, must be addressed. In this regard, Memorial is a full-service, acute care hospital, competing for the pool of patients in the primary service areas of Venice, Englewood and the proposed Manasota facility. Memorial is licensed for 788 beds, but as of October, 1985, only 590 beds were in service and staffed, due to a steady decline in utilization. Memorial's total patient days for 1985 were the lowest it has experienced since 1973, 15% less than its peak year of 1982. Memorial would experience substantial adverse financial impact if the Manasota project were approved. Memorial, in 1984, obtained 1,458 patients from the south Sarasota County area, including the cities of Osprey, Venice, Nokomis and Northport, in the primary service area proposed by Manasota and also served by Venice and Englewood. If the Manasota Hospital is approved, Memorial will lose approximately half of those patients. This would result in a reduction of gross revenues of approximately $3,579,000 and a concomitant reduction in its net operating revenue margin of $1,382,000. A reduction of this magnitude would reduce Memorialt's overall operating margin to 1.2%. A 2% operating margin, which Memorial will experience for 1985, is the absolute minimum safe level at which a hospital can operate in a financially viable manner. With a 1.2% operating margin, Memorial will be unable to maintain necessary working capital, nor maintain favorable bond financing ratings with bond rating agencies. If its bond rating worsens, its cost of bonded indebtedness will correspondingly rise. In order for Memorial to maintain its 2% operating margin, it would have to increase prices by at least 2.6%. The only other alternative would be to raise its tax levy as a public hospital board by approximately 28%. Either eventuality would result in a significant increase in health care costs to the Sarasota County community. Venice Hospital has 312 licensed beds. Its average annual occupancy was 71% in 1985, but will decline to 55.8% for the 1986 fiscal year. The declining utilization will be caused by the continuing effects of the DRG reimbursement system, and the other factors enumerated above. The average length of stay and projected utilization at Venice will continue to decline at least until 1990. The 55.8% occupancy rate projected for 1986 includes only the impact on Venice's utilization of the opening of the ECH, not Manasota. Even so, its projected operating revenue for 1986 will be only $589,150. The patients that Manasota will obtain will come from the same pool of patients served by Venice and the declining utilization rate, even in the face of increasing population, reveals that there are not enough patients for Venice to operate cost-effectively, especially if Manasota is opened. The loss of patients to Manasota will cause a loss of gross revenues for Venice of $10,287,200, strictly from inpatient revenues, not taking into account outpatient losses. Venice has already laid off personnel and will have to continue to do so to compensate for revenue losses from the downturn in its utilization. Venice will have to close additional nursing units and beds and further reduce staff on account of the competitive effects of the ECH opening. Even after reducing a reasonable percentage of such variable costs, Venice will suffer a net operating revenue loss of approximately $4,020,119 if Manasota is opened. If this eventuality occurs, Venice will be forced to face either bankruptcy or likely closing of entire wings and drastic reductions of present services. This would diminish access to health care services in the area, and quite likely result in declination of quality care. Dr. Scott acknowledged that Manasota would take a significant number of patients from Venice, but minimized its effect by opining that Venice could make up for the loss by operating more efficiently, believing that its recent bond refinancing resulted in unnecessary additional financing costs to Venice, that Venice had an excessive amount of administrative expenses. The above findings reflect, however, that the bond refinancing did not result in any significant increase in debt cost to Venice, and yielded several million dollars more capital funds for Venice. Dr. Scott's figures for Venice's purportedly high administrative costs was shown by Mr. Shanika to be in error. Thus, if Manasota Hospital meets its own projections, which are over-stated, it will draw approximately 2,415 patients from Venice, causing it to operate at a loss, and destroying the feasibility of its programs and endangering its quality of care. Since Venice is already operating as a relatively efficient hospital, it cannot make up those losses by becoming more efficient. Venice's operating revenue would fall to the break even point if it only lost 309 patients. If Manasota drew anywhere near 2,415 patients from Venice, charges would have to be increased on the order of 40% to compensate for the loss. Englewood is a fledgling 100-bed acute care facility scheduled to open in November, 1985, and has thus not yet had an opportunity to obtain adequate utilization of its beds and services and to secure a positive operating ratio. Dr. Scott recognized the potential impact on Englewood of the Manasota opening, particularly with respect to physicians located in the Englewood area who might swing all or part of their admissions to Manasota. If any of Englewood's staff physicians, such as Dr. Chirillo, who testified in support of Manasota, swung all or part of their patient bases to Manasota, it would have a substantial deleterious effect on the patient days and revenue for Englewood. This would result in a diminution of service at Englewood or in some cases a discontinuance of certain services. Under present projections, Englewood will not realize profit for approximately 5 years, but if the Manasota facility is built, that time will be significantly extended. Manasota will have a significant adverse impact on Englewood's utilization and financial viability by taking patients away from it before it has an opportunity to reach a profitable operating situation. Englewood has already experienced problems in hiring sufficient qualified staff members. It has experienced counter offers to prospective staff members made by other hospitals, such that in order to obtain qualified staff, Englewood has had to raise the salaries it offers. If Manasota opened, the additional competition for staff members would likely cause salaries for staff to be bid upwards still further, as well as causing technically trained staff members to become even scarcer. This situation could cause significant cost increases to all facilities involved and to the health care consuming public. Manasota seeks to staff its facility largely with physicians in Sarasota County who could swing their admissions to the new hospital. There is only one pool of patients and patient days for the four contending facilities to divide amongst them, however. Osteopathic patients come from the same patient pool as those treated by M.D.'s, in that all are acute care patients. Since there is no unserved need for more acute care beds in Sarasota County, or District VIII, inpatient utilization of the three existing facilites will necessarily decrease by the advent of Manasota. Manasota also projects 1,200 outpatient surgeries its first year. These patients must come from Venice, Englewood or Memorial. These facilities depend on outpatient surgeries as an important source of revenue and profit which is used to offset areas of service which do not operate as favorably. The loss of these patients to Manasota by the existing facilities, which are already competing for a shrinking patient market in terms of declining patient days and utilization, will inevitably lead to higher patient charges and to shrinking availability of services. The cost to the community will be significant. Under- utilized facilities are more costly to the community. As utilization declines due to the above-found causes, future patients will be forced to absorb the cost of excess beds. The more patients who utilize a service which represents a capital expenditure, the lower the unit cost will be to the health care consumer. The construction of unneeded facilities, representing excess capacity, results in capital expenses borne by the public increasing at a greater rate than the numbers of patients or patient days from which off-setting revenues must come. The patients and the community will then have to bear a higher unit cost for health care services represented by this excess capacity. While Manasota contended, as partial justification for its facility, that there are a number of hospitals-in the state with occupancy rates in the low forty percentile range, which still generate significant profits, this point ignores the high cost the health consuming public must pay for 50 to 60% unused capacity at such hospitals. Hospitals can only reduce their variable costs attributable to unused bed capacity and typically, 40% of the costs of unused capacity are fixed costs which are not covered by any revenue and which cannot be reduced by staff and service reductions. Such fixed costs must be passed on to the public through higher rates and through the government reimbursement systems. Indeed, as established by Dr. Zaretsky, the cost of 100 excess beds to the Sarasota County community would amount to $3,674,349 in aggregate added annual costs, expressed in 1983 dollars. Even without the advent of the Manasota facility, there are already considerably more than 100 excess beds in Sarasota County. If the capital cost "pass through" scheme is eliminated in whole or in part, the hospitals would have to absorb or pass on to consumers more costs through inFla.ed rates and possible increases in Medicare and Medicaid reimbursement. To the extent that existing facilities are unable to raise charges sufficiently, they will have to absorb the differences, incur losses or cut back on services and quality of care. If a hospital is approved for an area that is not currently a monopoly, with existing hospitals already competing for patients, especially if the hospitals are operating below capacity, than the added competition is destructive. It dilutes the patient volume each hospital depends upon for adequate revenue coverage of costs. This results in inefficiency in the health care system since hospitals have fewer patients to spread the fixed costs among. Thus it has been established that approval of Manasota as an additional competitor in this market will result in significant added health care costs to the community. Cost and Methods of Construction, Etc.-Section 381.494(6)(c)13, Florida Statutes Aside from the capital cost understatements reflected in the above findings, the construction costs, methods of construction and provisions for energy conservation dictated by the south Florida environment where the hospital will be built, have been shown by the Applicant to be reasonable and appropriate. Because of the indefinite site location in the south Sarasota County area, however, the funds set aside in the pro forma of $35,000 for site preparation costs, and the $400,000 contingency fund related to construction, have not been established to be adequate to cover all site preparation work and such potential offsite construction costs as additional traffic lanes, signals and utility service extensions. Available, Less Costly, More Efficient Alternatives Section 381.494(6)(d)(1), Florida Statutes. There are available less costly, more efficient alternatives to the acute care inpatient services proposed by the Applicant. The existing inpatient facilities, including Gulf Coast Osteopathic Hospital, can or will provide, inpatient services similar to those proposed. The existing facilities are providing them in an appropriate, efficient manner to the extent they are able, given their under-utilization. Existing Facilities Are Being Used in an Appropriate, Efficient Manner-Section 381.494(6)(d)2, Florida Statutes It has not been established that existing inpatient facilities are being used in an efficient manner, in terms of adequate use of their present capacity. Rather, the record reflects that existing hospitals are under-utilized with the added health care costs and inefficiencies that entails, which Manasota would aggravate. Alternatives to New Construction such as Modernization and Sharing-Section 381.494(6)(d)3, Florida Statutes The Applicant has not established that alternatives to the proposed construction have been considered and implemented to the maximum extent possible. The existing facilities are viable alternatives to the proposed new construction, in that they have substantial amounts of unused capacity and can provide additional acute care services as needed without expansion. Many of the osteopathic physicians testifying acknowledged that their patients can be treated in an appropriate, efficient manner in existing facilities. Patients Will Experience Serious Problems Obtaining Inpatient osteopathic Care in the Absence of the Proposed Facility-Section 381.494 (6)(d)4, Florida Statutes. The Applicant has not established that patients will experience serious problems in obtaining inpatient care of the type proposed in the absence of Manasota. Osteopathic acute care services are available in District VIII, notwithstanding the absence of another identifiable osteopathic facility, for the reasons delineated above.
Recommendation Accordingly, having considered the foregoing Findings of Fact, Conclusions of Law, the competent, substantial evidence of record, the candor and demeanor ot the witnesses and the pleadings and arguments of the parties, it is, therefore RECOMMENDED: That the application of Manasota Osteopathic General Hospital, Inc. for a Certificate of Need authorizing establishment and operation of a 100-bed osteopathic teaching hospital in HRS District VIII and Sarasota County, Florida be DENIED. DONE and ENTERED this 26th day of June, 1986 in Tallahassee, Florida. P. MICHAEL RUFF, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of June, 1986. COPIES FURNISHED: John D. C. Newton, II, Esquire CARSON & LINN, P.A. 253 East Virginia Street Tallahassee, Florida 32301 William E. Williams, Esquire FULLER & JOHNSON, P.A. Post Office Box 1739 Tallahassee, Florida 32302 Robert A. Weiss, Esquire 118 North Gadsden Street Suite 101 Tallahassee, Florida 32301 Ken Davis, Esquire DAVIS, JUDKINS & SIMPSON Post Office Box 10368 Tallahassee, Florida 32302 E. G. Boone, Esquire Robert Klingbeil, Esquire Post Office Box 1596 Venice, Florida 34284 W. David Watkins, Esquire OERTEL & HOFFMAN, P.A. Post Office Box 6507 Tallahassee, Florida 32314-6507 Theodore C. Eastmore, Esquire WILLIAMS, PARKER, HARRISON, DIETZ & GETZEN Post Office Box 3258 Sarasota, Florida 33578 Harden King, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 William Page, Jr., Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES VENICE HOSPITAL, INC., Petitioner, vs. CASE NO. 85-0045 DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, and MANASOTA OSTEOPATHIC GENERAL HOSPITAL, INC., Respondents. / HCA OF FLORIDA, INC., d/b/a DOCTORS-HOSPITAL OF SARASOTA, Petitioner, vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, CASE NO. 85-0047 Respondent, and MANASOTA OSTEOPATHIC GENERAL HOSPITAL, INC. AND ENGLEWOOD COMMUNITY HOSPITAL, Intervenors. / DOCTORS' OSTEOPATHIC MEDICAL CENTER, INC. d/b/a GULF COAST HOSPITAL, INC., Petitioner, vs. CASE NO. 85-0050 DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Respondent. / SARASOTA COUNTY PUBLIC HOSPITAL BOARD d/b/a, MEMORIAL HOSPITAL, SARASOTA, Petitioner, vs. CASE NO. 85-0051 DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES and MANASOTA OSTEOPATHIC GENERAL HOSPITAL, Respondent. /
