The Issue Whether Winter Haven Hospital should be authorized for a Level II, neonatal intensive care service with 11 beds via the final inventory of NICU beds for District VI, to be published by the Department of Health and Rehabilitative Services. Whether Lakeland Regional Medical Center should be authorized for more than 14 Level II beds in the same final inventory. Whether University Community Hospital established its right to challenge the number of Level II NICU beds to be authorized for either hospital.
Findings Of Fact Description of the Parties Winter Haven is a 579-bed general hospital in Winter Haven, Florida. Since 1987, it has been authorized to operate 475 acute care, 80 short term psychiatric and 24 comprehensive medical rehabilitation beds. Lakeland is an 897-bed general hospital in Lakeland, Florida. Its licensed bed complement includes the following: 805 acute care, 54 psychiatric short term and 38 substance abuse short term beds. University is a 404-bed acute care hospital in Tampa, Florida. University is seeking a certificate of need for a 10-bed Level II NICU at its facility. In order to obtain the license, University proposes to convert 10 of its existing medical-surgical beds to a 10-bed NICU. HRS is the state agency charged with the duty of regulating tertiary services, including neonatal intensive care. The provision of Level II NICU services in HRS District VI is the subject of this proceeding. All three hospitals are located in the district. University's Standing to Intervene University does not have a program to provide neonatal intensive care services at the present time. However, as part of the hospital's long-range planning goals, it intends to develop a Women's Center, which will include a 10- bed Level II NICU. University applied for the Level II NICU service in the batching cycle of 1990, prior to the effective date of the NICU rule. At the close of evidence on April 15, 1991, the outcome of the application was still pending. Additionally, University filed a Letter of Intent and an application for a 10- bed Level II NICU in the first batching cycle of 1991. That application was also still pending during the evidentiary portion of these proceedings. University's attempt to secure a certificate of need for NICU beds are directly impacted by the number of NICU beds reacknowledged and validated in the District VI inventory of "grandfathered" NICU beds. The number of beds ultimately established by the inventory will directly affect the fixed need pool to be applied to all subsequent certificate of need batching cycles. The NICU Rule The NICU Rule promulgated by HRS went into effect on August 6, 1990. The preliminary inventory of authorized Level II and Level III providers in District VI was published August 24, 1990. According to this inventory, Lakeland was authorized to have 11 Level II NICU beds and Winter Haven was not allocated any Level II beds on the initial preliminary inventory. Winter Haven's Inclusion in a Revised Preliminary Inventory Published September 12, 1990 When the preliminary inventory of Level II NICU beds was published, Winter Haven advised HRS that it had been excluded. Documentation was transmitted to the agency to support Winter Haven's contention that it has continuously developed and now has a operating Level II neonatal intensive care unit based upon past authorization from the agency. The documentation supplied by Winter Haven included past authorizations from the agency, which were relied upon by the hospital before expenditures were made on construction of the NICU and the unit created, and before a personal service contract was entered into for a hospital-based neonatologist in April 1988. Reliance on the agency's approval of the expansion project began on July 9, 1985, and was continuously relied upon throughout the development and establishment of these services at Winter Haven. When the documentation was reviewed by HRS, the decision was made to amend the preliminary inventory to include 11 NICU beds at this hospital. The revised preliminary inventory that included these beds was published on September 12, 1990. HRS decided 11 was the appropriate number of Level II beds to place on the inventory for Winter Haven as the approved construction plans show an isolation room of four beds and a continuing care room with seven beds. The beds in these rooms were described on the plan as "neonatal intensive care centers" and "intensive care bassinets." During the approval period, the square footage for each bed satisfied the draft rules that proposed fifty square feet per each Level II NICU bed. The decision to include Winter Haven on the revised preliminary inventory does not comport with the grandfathering provisions of the NICU Rule. Winter Haven does not meet the threshold requirements specified in sub- subparagraphs 14.a, 14.b or 14.f of the rule deems necessary for grandfathering to occur. During the years in which the NICU Rule was created, HRS did not consider the possibility that some hospitals might have progressed in the development stage of Level II NICU beds to such a level that the promulgated rule would contradict prior agency approvals reasonably relied upon by these hospitals. Before Winter Haven's beds were placed on the revised preliminary inventory, HRS permitted Alachua General Hospital's Level II NICU beds to be placed on the inventory based upon a CON exemption letter and construction plans approved prior to October 1, 1987. There have been no challenges to this decision, therefore, Alachua General can continue these services without a certificate of need as a grandfathered facility. Like Winter Haven, Alachua General did not comport with the grandfathering provisions of the NICU Rule. The decision to place Level II beds on the inventory was based on the approval of construction plans obtained through the licensure process at HRS in effect prior to October 1, 1987. HRS created the construction plans exception to the rule to acknowledge pre-existing bed authorizations not covered by the NICU Rule. Lakeland's Increase to 16 Level II Beds in the Revised Preliminary Inventory Published October 12, 1990 Lakeland was issued a CON exemption by HRS for 16 "Level II neonatal intensive care beds" in a letter dated March 12, 1985. This letter allowed Lakeland to re-designate 16 medical/surgical beds as Level II neonatal intensive care beds. On May 20, 1986, HRS approved Lakeland's construction plans for a 14- bed, Level II NICU. Lakeland did not rely on its opportunity to re-designate all 16 beds as Level II NICU beds when it established its NICU pursuant to the CON exemption. Lakeland was providing Level II NICU services prior to October 1, 1987, and continuously since then under the direction of a neonatologist or group of neonatologists, who were providing 24-hour coverage and who were either board-certified or board-eligible in neonatal-perinatal medicine as the various terms are defined in the NICU Rule. In its 1989 Neonatal Intensive Care Survey response to HRS, Lakeland erroneously underreported its Level II patient days from October 1, 1987 through September 20, 1988. The number reported was different than the 4,412 Level II neonatal intensive care services patient days reported separately to the Hospital Cost Containment Board for the same period, based upon audited data. A third review of the data revealed Lakeland provided, 4,414 Level II patient days in 1987-1988 reporting period for the 1989 survey. Pursuant to the formula set forth in sub-subparagraph 14.c of the NICU Rule, Lakeland should be authorized for 15 Level II beds on the final inventory which lists the established NICU beds that meet the grandfathering provisions of the rule. The inclusion of 16 Level II NICU beds on the revised preliminary inventory published October 12, 1990, went beyond the bed numbers allowed by rule.
Recommendation Based upon the foregoing, it is recommended: A Final Order be entered which excludes Winter Haven from the inventory which lists authorized neonatal intensive care services based on the provisions of sub-subparagraphs 14.a. through 14.g. of the NICU Rule. A Final Order be entered reducing Lakeland's inventory to 15 Level II NICU beds. RECOMMENDED this 6th day of August, 1991, in Tallahassee, Florida. VERONICA E. DONNELLY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of August, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 90-7682 and 90-7683 Lakeland Regional Medical Center's proposed findings of fact are addressed as follows: Accepted. See Preliminary Statement. Accepted. See HO #8, #11, #17 and #22. Accepted. Accepted. Accepted. First two sentences accepted. The rest of the paragraph is rejected. Argumentative. Accepted. Accepted. Accepted. Rejected. Irrelevant. Accepted. See Conclusions of Law. Accepted. Accepted. Accepted. Accepted. Accepted. See HO #13. Rejected. Contrary to law. See Conclusions of Law. Accept the first two sentences. Reject the next sentence. Speculative. The next two sentences accepted. The last sentence is rejected. Contrary to fact. See HO #12. Rejected. Irrelevant. Accept first three sentences. See HO #10. Reject fourth sentence. Incompetent legal conclusion. 21. Rejected. Irrelevant. 22. Rejected. Speculative. 23. Accepted. 24. Accepted. 25. Accepted. 26. Accepted. 27. Accepted. 28. Rejected. Cumulative. 29. Rejected. Irrelevant. 30. Rejected. Irrelevant. 31. Rejected. Irrelevant. 32. Accepted. 33. Rejected. Cumulative. 34. Accepted. See HO #11 and #12. 35. Accepted. See HO #12. 36. Rejected. Contrary to fact. 37. Rejected. Irrelevant. 38. Rejected. Improper summary of testimony. Irrelevant. 39. Accepted. 40. Rejected. Contrary to fact. 41. Rejected. Irrelevant. 42. Accept all but last sentence which is a distinction without substance. See HO #12, #15 and #16. 43. Accepted. See Conclusions of Law. 44. Accepted. 45A. Accepted. 45B. Accepted. 45C. Accepted. 45D. Accepted. 45E. Accepted. 45F. Rejected. Irrelevant. 46A. Accepted. 46B. Rejected. Irrelevant. 47. Rejected. Not evidence. Rejected. Irrelevant to resolution of material fact dispute. Accepted. See HO #17 and #19. Accepted. See HO #22. Accepted. See HO #21. Department of Health and Rehabilitative Services' proposed findings of fact are addressed as follows: Accepted. See HO #12 and Preliminary Statement. Accepted. See Preliminary Statement. Accepted. See Preliminary Statement. Accepted. See HO #8. Accepted. See HO #12 and #22. Accepted. See HO #17. Accepted. See HO #10. Accepted. Accept all but last sentence. See HO #16. The last sentence is improper Conclusion of Law. Winter Haven Hospital's proposed findings of fact are addressed as follows: Accepted. See HO #1. Accepted. See HO #2. Accepted. See HO #3. Accepted. See HO #4. Accepted. See HO #10. Accepted. See HO #8. Accepted. Accepted. See Preliminary Statement. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Rejected. Irrelevant. Accepted. See Preliminary Statement. Accepted. Accepted. Accepted. See HO #14. Accepted. Accepted. Accepted. See HO #15. Rejected. Improper Conclusion of Law. Accepted. Accepted. Accepted. Accepted. Rejected under current definition. Accepted to the extent the room provided many aspects of Level II care. Accepted. Accepted. Rejected. Contrary to fact. Accepted. Accepted. See HO #10. Rejected. Irrelevant. Rejected. Irrelevant. Accepted. See HO #10. Accepted. See HO #10. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. See HO #12. Accepted. Accepted. Accepted. Accepted. Accepted. Rejected. Improper Conclusion of Law. Accepted. Rejected. Speculative. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. See HO #10. Accepted. Accepted. See HO #15 and #16. Accepted. Accepted. Accepted. Accepted. See HO #11 and #12. Rejected. Improper Conclusion of Law. Rejected. Improper Conclusion of Law. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. See HO #18. Accepted. See HO #21. Rejected. Improper Conclusion of Law. Rejected. Improper Conclusion of Law. See HO #23 - #26. Accepted. Rejected. Contrary to fact. See HO #7. Accepted. Rejected. Incorrect legal conclusion. Accepted. Rejected. Insufficient foundation provided for the opinion to assist Hearing Officer as to weight and sufficiency. Accepted. Accepted. University Community Hospital's proposed findings of fact are addressed as follows: Accepted. See Preliminary Statement. Accepted. Accepted. Accepted. See HO #8. Accepted. See HO #12 and #22. Accepted. See Preliminary Statement. Accepted. See HO #4. Accepted. Accepted. Accepted. Accepted. See HO #5. Accepted. See HO #6 and #7. Accepted. Accepted. See HO #7. Accepted. See HO #7. Accepted. Accepted. Rejected. Speculative. Accepted. Accepted. Accepted. Accepted. Accepted. Rejected. Irrelevant. Rejected. This opinion was rejected by the Hearing Officer as an improper legal conclusion. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. See HO #11 and #12. Accepted. Accepted. Accepted. Accepted. Accepted. Rejected. Contrary to fact. Rejected. Contrary to fact. See HO #12. Rejected. See HO #12. Rejected. Contrary to fact. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. See HO #10. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. See HO #22. Accepted. Accepted. Accepted. Accepted. Accepted. See HO #21. Accepted. COPIES FURNISHED: John H. Parker, Jr., Esquire PARKER HUDSON RAINES & DOBBS 1200 Carnegie Building 133 Carnegie Way Atlanta, Georgia 30303 John M. Knight, Esquire PARKER HUDSON RAINES & DOBBS 118 North Gadsden Street Tallahassee, Florida 32301 Richard A. Patterson, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Drive - Suite 103 Tallahassee, Florida 32308 Patricia A. Renovitch, Esquire OERTEL HOFFMAN FERNANDEZ & COLE, P.A. Post Office Box 6507 Tallahassee, Florida 32314-6507 Cynthia S. Tunnicliff, Esquire CARLTON FIELDS WARD EMMANUEL SMITH & CUTLER, P.A. 215 South Monroe Street - Suite 410 Tallahassee, Florida 32301 R. S. Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Slye, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue Whether Trustees of Mease Hospital, Inc., d/b/a Mease Hospital Dunedin ("Mease") is entitled to be included on the Neonatal Intensive Care Unit ("NICU") inventory, as authorized to provide Level III NICU services in five (5) Level III beds in Department of Health and Rehabilitative Services ("HRS") District 5. Whether All Children's established its standing to intervene in Case No. 90-6255, as an existing provider of Level III NICU services in HRS District 5. Whether Morton Plant established is standing to intervene in the consolidated cases, as an existing provider of Level II NICU services in HRS District 5.
Findings Of Fact On September 14, 1990, Mease a 278-bed acute care hospital, located in Dunnedin, Florida, timely challenged the inventory of neonatal intensive care beds published for District 5 (Pasco and Pinellas Counties) by HRS. The preliminary inventory, published on August 24, 1990, authorized five (5) Level II and no Level III beds at Mease. All Children's is a 168-bed specialty children's hospital, which has a 24-bed Level III NICU, located in St. Petersburg, Florida, in Pinellas County. Morton Plant is a 750-bed acute care hospital with Level II NICU beds, located in Clearwater, Florida, in Pinellas County. Of the 2,670 babies delivered at Morton Plant in 1990, 598 came from the Mease area; 569 of the 2,670 were classified as not normal or in need of some NICU services, and 148 of the 569 not-normal newborns came from the Mease service area. HRS is the department with responsibility for promulgating NICU rules pursuant to legislation passed in May 1987, effective in October 1987. See, Section 381.702(20) and 381.706(1)(a), (e), (h), and (m), Florida Statutes (1989). The NICU rule became final in August 1990, and included a "grandfather" provision for providers of NICU services prior to October 1, 1987, to avoid any disruption in the availability of NICU services. The grandfather provision includes, as one of three tests for determining if NICU services were offered prior to October 1, 1987, the requirement that 50% of the neonates admitted to Level II and III units from October 1, 1986 through September 30, 1987, were classified in Diagnostic Related Groups (DRGs) 385, 386, 387 or 388. See, Florida Administrative Code, Rule 10-5.042(14)(f) (2)(b) (III). In August 1987, HRS, in preparation for the promulgation of the NICU rule, mailed surveys to various hospitals, including Mease, requesting information about the provision of NICU services at those hospitals. Using the Guidelines for Perinatal Care to distinguish the level of services it was providing, Mease responded to the August 1987 survey by reporting that it had three (3) Level II beds and no Level III beds. In response to the survey questions, Mease also reported that its NICU services began on April 1, 1987, coinciding with the time that a neonatologist, Mary Newport, M.D., joined the staff at Mease. In March 1987, Board Certified Neonatologist Mary Newport began providing 24-hour coverage at Mease, receiving final approval for active staff privileges in early May 1987, so that Mease could treat rather than transfer sick neonates. Mease resubmitted the August 1987 survey in February 1989, reporting that it had increased from three to six Level II beds, after October 1, 1987, and from one to four Level III beds beginning on October 1, 1987, although such changes required certificate of need ("CON") approval effective October 1, 1987. HRS sent out a second survey in April 1989, to which Mease responded that it currently had six Level II beds and no Level III services, under the more stringent requirements included within the proposed rule as compared to the Guidelines for Perinatal Care standards used in the first survey. In August 1989, Mease resubmitted the second survey and reported a current total of six Level II beds and four Level III beds of which three Level II beds and one Level III bed were operating on September 30, 1987. Mease, in the August resubmittal of the second survey, also reported that 37 neonates were admitted to the Level III bed for 63 patient days and that a total of 188 neonates were admitted to both Level II and Level III beds, from October 1, 1986 through September 30, 1987. Of the 188 neonates admitted to Level II and Level III beds from October 1, 1986 through September 30, 1987, Mease claimed that 87 of those had DRG's 385, 386, 387 or 388. On September 10, 1990, Mease submitted documentation to HRS showing that from October 1, 1986 through September 30, 1987, NICU admissions totaled 122 patients, of which 77 were in DRGs 385, 386, 387 or 388. Subsequently, Mease claimed to have had 18 fewer admissions. On December 18, 1990, Mease claimed to have had 107 NICU patients, of which 69 were in DRGs 385, 386, 387 or 388. At the final hearing, Mease claimed that its review of the available records of 1512 of the 1520 deliveries from October 1, 1986 through September 30, 1987, showed that, when diagnoses and codes were changed retrospectively, there were 126 NICU admissions, of which 74 were in DRGs 385, 386, 387, and 388. The number of neonates in intensive care and the number of neonates in the specified DRGs asserted by Mease are both unreliable. There is no credible evidence to support Mease's claim that it started offering NICU services upon the arrival of Dr. Newport on the courtesy staff on March 28, 1987, or upon her becoming a member of the active staff in early May, 1987. Credible expert testimony was presented that a time lag occurs between the arrival on staff of a neonatologist and the initiation of NICU services. In fact, Dr. Newport testified that after she arrived at Mease, she tried out various rented equipment and evaluated it before making purchases, and altered the locations of the nurseries. The Mease Perinatal Committee Agenda dated May 26, 1987 included an item "Task Force for Development of Level II Facility." Even assuming arguendo that Mease did establish NICU services on April 1, 1987, as reported to HRS in response to the first HRS survey, a substantial number of the neonates Mease claimed to have served in its NICU were, in fact, discharged from Mease prior to April 1, 1987. 1/ Mease has failed to submit documentation that it had neonatal intensive care services from October 1, 1986 through September 30, 1987. Mease has failed to submit documentation that it admitted 126 neonates to intensive care services from October 1, 1986 through September 30, 1987. Mease has failed to submit documentation that 74 neonates were classified into DRGs 385, 386, 387 or 388. Credible expert testimony supports the conclusion that retrospective changes in diagnoses are not reliable, in view of the fact that observation of a patient, not just the patient's record, is significant in making a diagnosis. Mease reported to the Health Care Cost Containment Board that it had no revenue from the operation of a NICU from October 1, 1986 to September 30, 1987.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered: Including Mease on the final inventory as an authorized Level II neonatal intensive care unit with five beds, based on the Summary Recommended Order of April 9, 1991, entered without objection; and Excluding Mease from the final inventory as an authorized provider of Level III neonatal intensive care services. DONE and ENTERED this 1st day of November, 1991, at Tallahassee, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of November, 1991.
The Issue Whether Certificate of Need Application Number 9099, filed by Columbia/JFK Medical Center, L.P., d/b/a JFK Medical Center, to convert 20 skilled nursing beds to 20 acute care beds, meets the criteria for approval.
Findings Of Fact Columbia/JFK Medical Center, L.P., d/b/a JFK Medical Center (JFK) is the applicant for Certificate of Need (CON) Number 9099 to convert a 20-bed hospital-based skilled nursing unit (SNU) to 20 general acute care or medical/surgical beds. The construction cost is approximately $117,000, of the total project cost of $151,668. JFK is an affiliate of Columbia Hospital System (Columbia), the largest for-profit hospital chain in the United States. The Agency for Health Care Administration (AHCA) is the state agency which administers the CON program for health care services and facilities in Florida. JFK is a 343-bed hospital located in Atlantis, Florida, in Palm Beach County, AHCA District 9, Subdistrict 5. Pursuant to a previously approved CON, an additional 24 acute care beds are under construction at JFK, along with 12 CON-exempt observation beds, at a cost of approximately $4 million. In August 1998, JFK was allowed to convert 10 substance abuse beds to 10 acute care beds. Other acute care hospitals in District 9 include the Petitioners: St. Mary's Hospital, Inc. (St. Mary's), and Good Samaritan Hospital, Inc. (Good Samaritan), which are located in northern Palm Beach County, AHCA District 9, Subdistrict 4, approximately 11 and 9 miles, respectively, from JFK. The remaining hospitals in District 9, Subdistrict 5, in southern Palm Beach County, and their approximate distances from JFK are as follows: Wellington (8 miles), Bethesda (7 miles), West Boca (18 miles), Delray (12 miles), and Boca Raton Community (17 miles). JFK and Delray are both "cardiac" hospitals offering open heart surgery services, with active emergency rooms, and more elderly patients in their respective service areas. The parties stipulated to the following facts: JFK's CON application was submitted in the Agency for Health Care Administration ("AHCA") second hospital batching cycle in 1998, and was the only acute care bed application submitted from acute care bed District 9, Subdistrict 5. AHCA noticed its decision to approve JFK's CON 9099 by publication in Volume 25, Number 1, Florida Administrative Weekly, dated January 8, 1999. Good Samaritan and St. Mary's each timely filed a Petition for Formal Administrative Proceeding challenging approval of JFK's CON application. By Order dated March 17, 1999, the cases arising from those petitions were consolidated for the purposes of all future proceedings. JFK has the ability to provide quality care and has a record of providing quality of care. §408.035(1)((c), Fla. Stat. JFK's CON application, at Schedule 6 and otherwise, projects all necessary staff positions and adequate numbers of staff, and projects sufficient salary and related compensation. See, §408.035(1)(h). JFK has available the resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. See, §408.035(1)(h), Fla. Stat. JFK's CON application proposal is financially feasible in the immediate term. §408.035(1)(i), Fla. Stat. JFK's CON application proposal is financially feasible in the long term, except, Good Samaritan and St. Mary's contend as it relates to projected utilization. §408.035(1)(i), Fla. Stat. Schedules 9 and 10 and the architectural schematics in JFK's application are complete and satisfy all applicable CON application requirements. Schedule 1 in the application is complete, reasonable, and not at issue. JFK's proposed construction/renovation design, costs, and methods of construction/renovation are reasonable and satisfy all applicable requirements. See, §408.035(1)(m), Fla. Stat. JFK's CON application satisfies all minimum application content requirements in Section 408.037(1), Florida Statutes; except that Good Samaritan and St. Mary's contend that subsection (1)(a), is not satisfied. JFK certified that it will license and operate the facility if its CON proposal is approved. See, §408.037(2), Fla. Stat. JFK's Letter of Intent was timely filed and legally sufficient. See, §408.039(2)(a) and (c), Fla. Stat. Good Samaritan does not provide cardiac catheterization services, angioplasty, or open heart surgery. St. Mary's does not provide elective angioplasty or open heart surgery services. JFK is one of the hospitals to which Good Samaritan and St. Mary's transfer patients in need of inpatient cardiac catheterization services, angioplasty, and open heart surgery. Neither Good Samaritan nor St. Mary's have any present plans to apply for CON approval to add skilled nursing beds or acute care beds. The parties also stipulated that Subsections 408.035(1)(e), (f), (g), (h) - as related to training health professionals, (j), (k), and (2), Florida Statutes, are not at issue or not applicable to this proposal. For the batching cycle in which JFK applied for CON Number 9099, AHCA published a fixed need of zero for District 9, acute care subdistrict 5. In the absence of a numeric need for additional acute care beds in the subdistrict, JFK relied on not normal circumstances to support the need for its proposal, including the following: delays in admitting patients arriving through the emergency room to inpatient beds, delays in moving patients from surgery to recovery to acute care beds, and seasonal variations in occupancy exceeding optimal levels and, at times, exceeding 100%. Good Samaritan and St. Mary's oppose JFK's CON application. In general, these Petitioners claimed that other problems cause overcrowding in the emergency room at JFK, that the type of beds proposed will not be appropriate for the needs of most patients, that "seasonality" is not unique to or as extreme at JFK, and that a hospital-specific occupancy level below that set by rule cannot constitute a special or not normal circumstance. If JFK achieves the projected utilization, experts for Good Samaritan and St. Mary's also projected adverse financial consequences for those hospitals. Rule 59C-1.038(5) - special circumstances During the hearing, the parties stipulated that the numeric need for new acute care beds in the subdistrict is zero. The rule for determining numeric need also includes the following provision: (5) Approval Under Special Circumstances. Regardless of the subdistrict's average annual occupancy rate, need for additional acute care beds at an existing hospital is demonstrated if the hospital's average occupancy rate based on inpatient utilization of all licensed acute care beds is at or exceeds 80 percent. The determination of the average occupancy rate shall be made based on the average 12 months occupancy rate for the reporting period specified in section (4). Proposals for additional beds submitted by facilities qualifying under this subsection shall be reviewed in context with the applicable review criteria in section 408.035, F.S. The applicable time period for the special circumstances provision is calendar year 1997. JFK's reported acute care occupancy was 76.29% in 1997, and 79.7% in 1998, not 80%, as required by the rule. JFK and AHCA take the position that other special circumstances may, nevertheless, be and have been the basis for the approval of additional acute care beds. JFK also maintained that the reported average occupancy levels understated the demand for and actual use of its inpatient beds. Due to seasonal fluctuations caused by the influx of winter residents, JFK reached or exceeded 100% occupancy on 5 or 6 days, exceeded 80% occupancy on 20 days, and averaged 90.9% occupancy, in January 1999. In February 1999, the average was 96.5%, but was over 100% on 8 days, and over 90% on 25 days. In March 1999, the average occupancy was 90.1%, but exceeded 100% on one day, and 90% on 17 days. In recent years, the "season" also has extended into more months, from approximately Thanksgiving to Easter or Passover. It also includes flu season which disproportionately affects the health of the elderly. JFK also demonstrated that occupancy varies based on the day of the week, generally highest on Mondays, Tuesdays, and Wednesdays and lowest on weekends. JFK's acute care beds were also occupied by patients who were not classified as 24-hour medical/surgical inpatients. Others included observation and 23-hour patients, covered by Medicare or health maintenance organizations (HMOs). Some of those patients were classified initially as outpatients to lower reimbursement rates, but routinely subsequently reclassified and admitted as inpatients. In fact, during the applicable time period for determining occupancy, Medicare allowed patients to be classified as outpatients for up to 72-hour hospital stays. Subsequently, Medicare reduced the allowable hospital stay to 48 hours for all "outpatients," according to AHCA's expert witness. When not classified as inpatients, patients are not counted in average occupancy rates which are based solely on the admitted inpatient census, counted each midnight. For example, in February 1999, the average daily census for 23-hour patients was 10.8 patients, which, when combined with 24-hour patients, results in an average occupancy of 99.7% for the month. Due to the Medicare classification system, some but not all of the so- called 23-hour patients affect the accuracy of the inpatient utilization data. According to AHCA's expert witness, however, numeric need cannot be determined because of JFK's failure to quantify the number of Medicare patients who actually affected the acute care bed utilization. The 23-hour or observation patients may use, but do not require CON-approved and licensed acute care beds. Instead, those patients may be held in either non-CON, non-licensed "observation" beds or in licensed acute care beds. As AHCA determined, to the extent that 23-hour patients in reality stayed longer, and adversely affected JFK's ability to accommodate acute care patients, their presence can be considered to determine if special circumstances exist. Combining 24-hour and 23-hour patients, JFK experienced an occupancy rate of 80% in 1996, and 85.7% in 1997. While some of the 23-hour patients were, in fact, outpatients who should not be considered and others stayed from 24 hours up to 3 days and should be considered, JFK's proportion of Medicare services is important to determining whether special circumstances based on acute care utilization exist. With 74% of all JFK patients in the Medicare category, but without having exact numbers, it is more reasonable than not to conclude that the occupancy level is between the range of 76.29% for acute care only and 85.7% for acute care and 23-hour patients. A reasonable inference is that JFK achieved at least 80% occupancy of patients who were in reality inpatients in its acute care beds in 1997. The expert health planner for the Petitioners conceded that bed availability declines, capacity is a constraint, and high occupancy becomes a barrier to service at some level between 80 and 83% occupancy. In a prior CON filed on behalf of Good Samaritan for a 4-bed addition to an 11-bed neonatal intensive care unit (NICU), the same expert asserted that 76% occupancy was a reasonable utilization standard. That occupancy level was based on the desire to maintain 95% bed availability. An exact comparison of the occupancy levels in this and the NICU case, however, is impossible due to the small size of the NICU unit and the fact that the applicant met the occupancy level in that rule for special circumstances. The statistical data on the number patients actually using acute care beds at JFK in excess of 24-hours despite their classification, supports its claim of overcrowding. Emergency Room Conditions JFK described overcrowding in its emergency department as another special circumstance creating a need for additional acute care beds. The emergency room at JFK has 37 bays each with a bed and another 15 to 17 spaces used for stretchers. Eighteen parking spaces are reserved for ambulances in front of the emergency department. It is not uncommon for a patient to wait in the JFK emergency room up to 24 hours after being admitted to the hospital, before being moved to an acute care bed. In February 1999, after having converted 10 substance abuse beds to acute care beds in October 1998, JFK still provided 234 patient days of acute care in the emergency department. The waiting time for patients to receive a bed after being admitted through the emergency department ranged from 10 hours to 5 days in the winter, and from an average of 6 hours up to 24 hours in the summer. While JFK claims that the quality of care is not adversely affected, it does note that patient privacy and comfort are compromised due to the noise, lights, activity, and lack of space for visitors in the emergency room. JFK's patients tend to be older and sicker than the average. As a result, more patients arriving at its emergency room are admitted to the hospital. In the winter of 1998, JFK was holding up to 35 acute care inpatients at a time in the emergency room. Nationally, from 15% to 20% of emergency room patients are admitted to hospitals. By contrast, almost twice that number, or one-third of JFK's emergency room patients become admitted inpatients. Emergency room admissions are also a substantial number of total admissions at JFK. In calendar year 1998, slightly more than 65% of all inpatient admissions to JFK arrived through the emergency room, most by ambulance. Ambulance arrivals at any particular hospital are often dictated by the patient's condition, with unstable patients directed to the nearest hospital. Once patients are stabilized in the emergency room at JFK, those requiring obstetric, pediatric, or psychiatric admissions are transferred from JFK which does not provide those inpatient services. Emergency room patients in need of acute care services provided at JFK, like the neonates at issue in the prior Good Samaritan application, are unlikely candidates for transfer The emergency room at JFK receives up to 50,000 patient visits a year, up from approximately 32,000 annual visits five years ago. JFK operates one of the largest and busiest emergency departments in Palm Beach County. Due to overcrowding in the emergency department at Delray Hospital, in southern Palm Beach County, patients have been diverted to other facilities, including JFK. In terms of square footage, JFK's emergency room does not meet the standards to accommodate the 52 to 54 bays and stretchers and related activities. JFK lacks adequate space for support services which should also be available in the emergency department. The Petitioners asserted that enlarging the emergency room will alleviate its problems. JFK demonstrated, however, that regardless of the physical size of the emergency room, optimal patient care requires more capacity to transfer patients faster to acute care beds outside the emergency department. Conditions in Other Departments Of 343 operational beds at JFK at the time of the final hearing, 290 were monitored or telemetry acute care beds, 30 were critical care beds, and 23 were non-monitored, non-critical care beds. Most of the monitored beds are in rooms equipped with antennae to transmit data from electrodes and monitors when attached to patients. When monitoring is not necessary, the same beds are used by regular acute care patients. The large number of monitored beds located throughout the hospital in various units reflects JFK's largely elderly population and specialization in cardiology. In 1998, 820 inpatient cardiac catheterizations (caths) were performed at JFK. Petitioners Good Samaritan and St. Mary's transferred 90 and 28 of those cath patients, respectively to JFK. In the first five months of 1999, 449 caths were performed, including procedures on 35 patients transferred from Good Samaritan and 16 from St. Mary's. Cath lab patients are held in the lab longer after their procedures when beds are not available in cardiac or the post- anesthesia care units. The Petitioners suggested that cath lab patients could be placed in a 12-bed holding area added to the lab in July 1999; however, that space was expected to be filled by patients being prepared for caths. Open heart surgery is available in Palm Beach County at three hospitals, Delray, JFK and Palm Beach Gardens. Patients admitted to JFK for other primary diagnoses often require cardiac monitoring even though they are not in a cardiac unit. The additional 24 beds which were under construction at the time of the final hearing will also be monitored beds. The 20 beds at issue in this proceeding will not be monitored. The Petitioners questioned whether non-monitored beds will alleviate overcrowding at JFK where so many patients require monitoring. JFK physicians in various specialties testified concerning conditions in other areas of the hospital. A nephrologist, who consults primarily in intensive care units, described the backlog and delay in moving patients from intensive care into acute care beds. A cardiologist noted that patients are taking telemetry beds they do not need because there is no other place to put them. A general and vascular surgeon described the overcrowding as a problem with the ability to move patients from more to less intensive care when appropriate. Elective surgeries have been delayed to be sure that patients will have beds following surgery. The evidence presented by JFK supports the conclusion that the additional acute care beds will assist in alleviating overcrowding in other hospital units, including backlogs in the existing monitored beds. JFK has established as factual bases for special circumstances that its high occupancy exceeds the optimal much of the year, aggravated by seasonal fluctuations; that it has relatively large emergency room admissions over which it has no control; and that its intensive care and monitored beds are not available when needed. Number of Beds Needed With the conversion, in 1998, of 10 substance abuse beds to acute care beds and the 1999 construction of 24 of 40 additional beds requested by JFK, the number of licensed and approved beds at JFK increased to 367. In addition, with CON- exemption, JFK has added observation beds. As a result of AHCA's partial approval of the previous JFK request for new construction and due to unfavorable changes in Medicare reimbursement policies for hospital-based SNUs, JFK now seeks this 20-bed conversion. JFK ceased operating the SNU in October 1998, after Medicare reimbursement changed to a system based on resource utilization groups (RUGs). JFK was unable to operate the SNU without financial losses, that is, unable to cover its patient care costs under the RUGs system. The proposal to convert the beds back to acute care, as they were previously licensed will allow JFK to reconnect existing oxygen lines in the walls and to use the beds for acute care patients. Although Good Samaritan and St. Mary's suggested that JFK can profitably operate a SNU, there was no evidence presented other than its previous occupancy levels which were very high, and the fact that Columbia is not closing all of its SNUs. The Petitioners also question JFK's ability to use its SNU beds for acute care and/or observation patients. AHCA, however, took the position that acute care licensure is required for beds in which acute care patients are routinely treated. Otherwise, the agency would not have accurate data on utilization, bed inventory, and the projected need. In order to demonstrate the number of beds needed, JFK's expert used historical increases in admissions. Some admissions data was skewed because the parent corporation, Columbia, closed Palm Beach Regional in 1996, and consolidated its activities at JFK. Excluding from consideration the increase of 3,707 admissions from 1995 to 1996, JFK's expert considered approximately 800 as reasonable to assume as an average annual increase. That represents roughly the mid-point between the 1996 to 1997 increase of 605, and the 1997 to 1998 increase of 1,076 admissions. A projected increase of 800 admissions for an average 5-day length of stay would result in an increase of 4,000 patient days a year which, at 80% occupancy, justifies an increase of 14 beds a year. Considering the closing of Palm Beach Regional, the number of beds in the subdistrict will have been reduced by 170. At the hearing, JFK's expert also relied on 3.3% annual patient day increase to project the number of beds needed, having experienced an increase of 5.8% from 1997 to 1998. Using this methodology, JFK projected a need for 20 additional acute care beds by 2002, and over 40 more by 2004. That methodology assumed patient growth in the excess of population growth and, necessarily, an increase in market share. JFK's market share increased in its primary service area from approximately 19% in 1993 to 27% in 1997. But the market share also slightly declined from 1997 to 1998. AHCA's methodology for determining the number of beds needed was based on the entire population of Palm Beach County, not just the more elderly southern area. It also assumed that JFK's market share would remain constant. Using this more conservative approach than JFK, AHCA projected a need for 383 acute care beds, or 16 beds added to the current total of 367 licensed and approved beds, at an optimal 75% occupancy by the year 2004. AHCA relied on a projection of 104,959 total patient days in 2004. Using the same methodology, JFK's expert determined that total projected patient days for 1998 would have been 94,225, but the actual total was 98,126 patient days. AHCA's methodology underestimates the number of beds needed, but does confirm that more than 16 additional beds will be needed by 2004. AHCA's reliance on 75% as an optimal future occupancy level as compared to the hospital-specific historical level of 80% was criticized, as was the use of the year 2004 as a planning horizon. The rule requires 80% occupancy for a prior reporting period and does not establish any planning horizon. Good Samaritan and St. Mary's used 80% occupancy in their analysis of bed need. At 80% occupancy, Petitioners projected an average daily census of 265 patients in 331 beds in 2001, or 268 patients in 334 beds in 2002, and 270 patients in 358 beds in 2003, as compared to 367 existing and approved beds. The Petitioners' projection is an underestimate of bed-need based on the actual average daily census of 269 patients in 1998. The Petitioners' methodology erroneously projects a need for fewer licensed beds than JFK has currently, despite the special circumstances evincing overcrowding. At 80% occupancy, based on the special circumstances rule, a hospital exceeds the optimal level and needs more beds. But, according to the Petitioners, 80% is a future occupancy target for the appropriate planning horizon of 2002. As AHCA's expert noted, it is illogical to use 80% as both optimal and as an indication of the need for additional beds. Similarly, it is not reasonable to use a planning horizon which coincides with the time when more beds will be needed. Therefore, the use of 75% for the five-year planning horizon of 2004 is a reasonable optimal target, as contrasted to the need for additional beds when 80% occupancy is reached at some future time beyond the planning horizon. AHCA's underestimate of need at 16 more beds by 2004, and JFK's overestimate of need at 40 more beds by 2004, support the conclusion that the requested addition of 20 beds in this application is in a reasonably conservative range. Rule 59C-1.038(6)(a) and Subsection 408.035(l)(n) - service and commitment to medically indigent; and Rule 59C-1.038(6)(b) - conversion of beds Rule 59C-1.038(6), Florida Administrative Code, also includes the following criteria: Priority consideration for initiation of new acute care services of capital expenditures shall be given to applicants with documented history of providing services to medically indigent patients or a commitment to do so. When there are competing applications within a subdistrict, priority consideration shall be given to the applications which meet the need for additional acute care beds in a particular service through the conversion of existing underutilized beds. Subsection (a) of the Rule, overlaps with District 9 health plan allocation factor one, which must be considered pursuant to Subsection 408.035(1)(a), and with the explicit criterion of Subsection 408.035(1)(n), Florida Statutes. All three require a commitment to and record of service to Medicaid, indigent and/or handicapped patients. JFK agreed to have its CON conditioned on 5% of the care given in the 20 new beds to Medicaid and charity patients. The commitment for the 24 beds under construction is 3% for Medicaid and charity patients. If charity patients are defined as those with family incomes equal to or below 150% of federal poverty guidelines, JFK provided $2.9 million in charity care in calendar year 1998, and $720,000 as of April for 1999. JFK provided an additional 3% to 5% in Medicaid care. The Medicaid total includes Palm Beach County Health Care District patients, who are also called welfare patients. The charity care provided by JFK is equivalent to approximately 1% of its gross revenue. JFK explained its relatively low Medicaid care as a function of its relatively limited services for people covered by Medicaid, particularly, the young who utilize obstetrics and pediatrics. JFK pointed to the differing demographics in Palm Beach County with more elderly, who have Medicare coverage, located in its primary service area. Excluding pediatric and obstetric care, Medicaid covered 6.7% of patients in southern Palm Beach County as compared to 16.3% in northern Palm Beach County. Of the Medicaid patients, 2.9% in the southern area as compared to 6% in the northern area are adults. On this basis, JFK established the adequacy of its historical Medicaid and indigent care, and of its proposed commitment. Subsection (6)(b) of Rule 59C-1.038 is inapplicable when, as in this case, there are not competing applications to compare. Subsection 408.035(1)(a) - other local health plan factors and Subsection 408.035(1)(o) - continuum of care District 9 allocation factor 2, favoring cost containment practices, is enhanced by the proposed conversion rather than the new construction of beds. Within the Columbia group of hospitals, there is an effort to avoid unnecessary duplications of services. JFK caters to an elderly population and to providing cardiology, neurology, and oncology services. Columbia's Palms West provides pediatric and obstetric care. Another Columbia facility in Palm Beach County, Columbia Hospital, specializes in inpatient psychiatric services. The elimination of the hospital-based SNU at JFK does eliminate one level of care in the system, contrary to the criteria. District 9 health plan allocation factor 3 requires favorable consideration of plans, like JFK's, to convert unused or underutilized beds. In this case, the JFK SNU was highly utilized but unprofitable. There is no evidence that alternative placements in free-standing nursing homes are inappropriate or unavailable. Minor inefficiencies result from the time lag for transfers during which skilled nursing patients remain in acute care beds. To some extent, the inefficiencies were already occurring while JFK operated the SNU due to its high average census of 18 or 19 patients in a total of 20 SNU beds. Those inefficiencies are outweighed by the low cost conversion of 20 beds for $117,000, particularly as compared to its prior 24-bed construction for $4 million. In general, the applicable local health plan allocation factors support the approval of the JFK application. Rule 59C-1.030 - needs access for low income, minorities, handicapped, elderly, Medicaid, Medicare, indigent or other medically underserved In general, the proposal is intended to increase access to JFK's services by decreasing waiting times for admissions. The services are used by a large number of elderly patients, who are primarily covered by Medicare. JFK demonstrated that the population in its service area also tends to be wealthier than the population in northern Palm Beach County. Medicaid and indigent access to care at JFK is consistent and reasonable given the demographic data presented. Access for elderly Medicare patients will be enhanced by the proposal. Subsection 408.035(1)(b) - accessibility, availability, appropriateness, and adequacy of like and existing services Good Samaritan and St. Mary's argue that hospitals below 75% occupancy are available alternatives to JFK's patients. Yet, those facilities are not viable alternatives for unstable patients admitted through the emergency room. Neither is it appropriate to transfer patients who need services provided at JFK. JFK does not allege that any problems exist at other facilities, but only that it is affected by special circumstances. From January to June 1998, the closest hospitals to JFK experienced wide-ranging occupancy levels from 92% at Delray, the hospital with services most comparable to those at JFK, to 57% at Bethesda, and 47% at Wellington. The wide range in occupancy rate is further indication of uniqueness of the need for patients to access services available only at Delray and JFK. Subsection 408.035(1)(d) - outpatient care or other alternatives Admitted inpatients have no alternatives to their need for acute care beds. Subsection 408.035(1)(h) - alternative use of resources and accessibility for residents The continued use of the 20 beds as a SNU was suggested as an alternative. As noted, however, that proved to be financially unprofitable at JFK, in comparison to the low cost conversion to acute care beds. AHCA reasonably rejected the idea that of the beds being designated "observation" beds when used for acute care patients. In addition, in 1996, JFK estimated the cost of moving patients from bed to bed in the hospital due to the shortage of appropriate beds, when needed, at up to $1 million. This project is intended to meet a facility-specific need based on the demand for services at JFK from patients who cannot reasonably initially be sent or subsequently transferred to other hospitals. As such, JFK's additional beds do not meet the criterion for accessibility for all residents of the district. Subsection 408.035(1)(i) - utilization and long-term financial feasibility Good Samaritan and St. Mary's contend that JFK's proposal includes unrealistically high utilization projections for the additional 20 beds. Using 98,000 patient days in 1998, which excludes any days attributable to skilled nursing beds, total utilization projected in the second year is 78.4%. For the additional 20 beds, projected utilization is 77.4%. The expert for Good Samaritan and St. Mary's disagreed with the allocation of patient days between the existing and additional beds. If 80% utilization is assigned to existing 367 beds, as he suggested, then the average annual occupancy of the 20 new beds would be only 50%. The financial break-even point for the project, however, is 50 to 75 patient days, or 10 to 15 patients with average lengths of stay of 5 days. Therefore, even with the lower projected occupancy of 50%, or an average of 10 beds at any time, the project is financially feasible in the long-term. In reality, a separate allocation of patient days to the 20 new beds is somewhat arbitrary. It is also less important than total projected utilization, since the 20 beds do not represent a separate unit in which specialized services will be provided. The additional beds will become a part of the total medical/surgical inventory. By demonstrating that there will be sufficient total occupancy to exceed the financial break-even point in the newly converted beds regardless of the allocation of patient days to any particular bed, JFK demonstrated the long- term financial feasibility of the proposal for CON 9099. Subsection 408.035(1)(l) - impact on costs; effects of competition If the JFK proposal is approved, Good Samaritan anticipates a loss of 255 patients, or 1,392 patient days, which is equivalent to a financial loss of over $1.5 million. St. Mary's anticipates losses of 158 patients or 973 patient days, and in excess of $1 million. Both hospitals were experiencing overall operating losses in 1999. But, the estimates of financial losses for both hospitals did not take into consideration all of the expense reductions associated with serving fewer patients. Excluding pediatrics and obstetrics, which are not available at JFK, JFK's overlapping service areas with Good Samaritan and St. Mary's are minimal. Good Samaritan's market share in JFK's primary service area is 4.8%, and St. Mary's is 9.3%. Pediatrics and obstetrics contribute 30.7% of total patients at Good Samaritan, and 49.5% at St. Mary's. Physician overlap among the hospitals is also limited. Although 357 doctors admitted patients to JFK and 464 to St. Mary's in the first two quarters of 1998, the number of overlapping doctors was 28. With a total of 379 admitting doctors at Good Samaritan for the same period of time, only 21 were included in JFK's 357 admitting physicians. In general, doctors in the northern Palm Beach County acute care subdistrict seldom admit patients to hospitals in the southern subdistrict, and vice versa. The absence of overlapping medical staff also reflected the differences in the services. Most of the top twenty doctors who admitted patients to Good Samaritan and St. Mary's were obstetricians and pediatricians. When obstetricians and pediatricians are excluded, the number of overlapping doctors for JFK and Good Samaritan is reduced to 15, and for JFK and St. Mary's to 22. In addition to providing different services, to different areas of the County, doctors who practice primarily in one or the other subdistrict served patients in different payor classification mixes. In 1997, JFK's patients were 74% Medicare, consistent with the fact that a larger percentage of elderly patients live in JFK's service area. By contrast, Medicare patients were approximately 48% of the total at Good Samaritan, and 32% of the total at St. Mary's. Historically, the addition of acute care beds at JFK has not affected other hospitals in the district or even the same acute care subdistrict. After the conversion of 10 substance abuse beds in the fall of 1998, the acute care patient days at every hospital in the same subdistrict increased in early 1999 over comparable periods of time in 1998. The assumption that additional beds at JFK will take patients from other hospitals includes the assumption that JFK will draw a larger share of an incremental increase of patients. The assumption is, in other words, that all patients will be new to JFK. The expert health planner for Good Samaritan and St. Mary's conceded that facility-specific overcrowding can justify projections that the additional beds will accommodate the existing census plus growth attributable to increasing population, and will not generate new patients. The expert assumed, nevertheless that from 1478 to 1486 new patients (depending on whether the length of stay is rounded off) would be associated with JFK's project. From that total, the proportional losses allocated were 255 patients from Good Samaritan and 158 patients from St. Mary's. Another underlying assumption increase is that all of the new patients would go to other hospitals if JFK does not add 20 acute care beds. That assumption suggests that all of the patients could receive the services they need at the other facilities, which is not supported by the facts or current utilization data. More likely, with the addition of beds due to overcrowding, some patients will come from the existing hospital census at JFK. It is not reasonable to assume that JFK will have all new patients, nor that all patients could be treated at other hospitals in the absence of JFK's expansion. The proportion of emergency room admissions at JFK is reasonably expected to continue. Patients who arrive at JFK requiring open heart surgery, angioplasties or invasive cardiac caths are reasonably expected to continue to receive those services at JFK, including patients who are transferred to JFK from Good Samaritan and St. Mary's. Based on the failure to support the assumptions, and the differences in service areas, medical staff, specialties, and patient demographics, Good Samaritan and St. Mary's have not shown any adverse impact from the JFK proposal. On balance, considering the statutory and rule criteria for reviewing CON applications, JFK established, as a matter of fact, that it meets the special circumstance criteria related to emergency room admissions, pre- and post-surgical and intensive care backlogs, and average annual occupancy projections in excess of optimal levels.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED That a final order be entered issuing CON 9099 to convert 20 skilled nursing beds to 20 acute care beds at Columbia/JFK Medical Center, L.P., d/b/a JFK Medical Center, on condition that a minimum of 5% of new acute care patient days will be provided to Medicaid and charity patients. The file of the Division of Administrative Hearings, DOAH Case No. 99-0714 is hereby closed. DONE AND ENTERED this 7th day of April, 2000, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER 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 7th day of April, 2000. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Julie Gallagher, General Counsel Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Richard A. Patterson, Esquire Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Thomas A. Sheehan, III, Esquire Moyle, Flanigan, Katz, Kolins, Raymond & Sheehan, P.A. Post Office Box 3888 West Palm Beach, Florida 33402 Stephen A. Ecenia, Esquire Thomas W. Konrad, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. Post Office Box 551 Tallahassee, Florida 32302-0551 Robert D. Newell, Jr., Esquire Newell & Terry, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313
The Issue Whether the application of Wuesthoff Memorial Hospital, Inc. d/b/a Wuesthoff Memorial Hospital ("Wuesthoff"), for the conversion of ten acute care beds to ten Level II neonatal intensive care beds meets, on balance, the applicable statutory and rule criteria for approval.
Findings Of Fact Wuesthoff Memorial Hospital, Inc., d/b/a Wuesthoff Memorial Hospital ("Wuesthoff") is a 303 bed acute care hospital in Rockledge, Florida, in Brevard County, District 7. The Agency For Health Care Administration ("AHCA") is the state agency designated by statute to issue, revoke, or deny Certificates of Need ("CON") for health care beds and services. Wuesthoff is the applicant for a CON to convert ten acute care beds to a ten bed Level II neonatal intensive care unit ("NICU"), for total project costs of $1,239,330. By prehearing stipulation, the parties agreed to the following facts: the fixed need pool for Level II NICU beds for District 7 shows zero net numeric bed need; there are 41 licensed and 18 approved Level II NICU beds in District 7, 10 in Brevard County, 49 in Orange County, none in Osceola and Seminole Counties; the letter of intent and CON application were filed timely and properly deemed complete; Wuesthoff does not have any approved Level II NICU beds; the District 7 Health Plan, including the 1991 CON Allocation Factors, are applicable to the review of this application; and the 1989 State Health Plan is also applicable to the review of this application. With regard to the statutory criteria, the parties also agreed that: Wuesthoff's historic record of providing high quality care is not in dispute; Wuesthoff does not maintain that its NICU service will be intended as a research and education facility; the availability of resources, including management personnel and funds for capital and operating expenditures, for project accomplishment and operation, is not in dispute; the immediate and long term financial feasibility of the proposal as demonstrated in Wuesthoff's application are not in dispute, assuming Wuesthoff proves the accuracy of utilization assumptions; Wuesthoff does not provide a substantial portion of services or resources to individuals not residing within the district or in adjacent districts; Wuesthoff's past levels of service to Medicaid and medically indigent patients are not in dispute; the special needs and circumstances of health maintenance organizations are not applicable to this application; and the costs and methods of proposed construction are not in dispute. At issue in this case are the statutory review criteria in Subsections 408.035(1)(a), (b), (d), (e), (f), portions of (h) and (i), (j) and (l), Florida Statutes (1992 supp.). Subsections 408.035(2)(a), (b), (c) and (d) are also in dispute. NEED Subsection 408.035(1)(a) requires consideration of need in relation to state and local health plans. The 1989 State Health Plan and CON allocation factors in the 1991 District 7 Health Plan are applicable to the review of Wuesthoff's CON application. Wuesthoff is not located in Orange County and, therefore, does not meet the District 7 factor favoring Orange County providers who will serve Medicaid newborns. The second factor favors applicants proposing to provide at least 45 percent of all patient days to Medicaid patients and 6 percent to indigent patients. Wuesthoff projected that it would achieve 50.5 percent Medicaid patient days and 4.5 percent to uninsured patients. Despite these projections, Wuesthoff failed to make a commitment to have its CON conditioned on the provision of specified percentages Medicaid and indigent patient days. On this basis, AHCA concluded that Wuesthoff fails to meet the factor. Wuesthoff's position is accepted. Its projections justify favorable consideration under this factor, its historic Medicaid service supports its projections, and AHCA can condition the CON if appropriate. The third factor requires applicants to identify specific services, educational programs, and/or interventions which will provide for an unmet need. This factor is also related to Subsection 408.035(1)(b) - the availability and accessibility of existing and approved Level II NICU beds in the district; (2)(a) - the availability of less costly more efficient facilities; and (2)(c) and (d) - availability and efficiency of existing inpatients facilities, and problems in obtaining existing inpatient care in the absence of the proposed services. There is no dispute that there is zero numeric need for additional Level II NICU beds in District 7. Level II beds exist at Holmes Regional Medical Center ("Holmes") in Melbourne Brevard County, and in Orange County at Winter Park Memorial Hospital ("Winter Park"), Orlando Regional Medical Center ("ORMC") and Florida Hospital. Holmes, the only Level II NICU in Brevard County, is, however, not available because its 10 Level II NICU beds have had occupancy levels not less than 122 percent and up to 147 percent during the past three years. Holmes provided 36.8 percent of the NICU services in District 7, with ten of the 59 licensed or approved beds, or 17 percent of the District beds. There was also evidence that Holmes' physicians do not accept transfers of indigent or Medicaid obstetrics patients from the service area of Wuesthoff and from northern Brevard County. In 1992, district wide occupancy in Level II NICU beds was over 95 percent. All of the other providers, except Holmes, are located in Orange County. Winter Park's 1992 occupancy rate was only 34 percent in its 5 bed unit. Florida Hospital, with a 1992 rate of 87.8 percent in 14 beds, has been approved for 8 additional beds. ORMC, with a 1992 occupancy rate averaging 90.2 percent, has approval for an additional 10 beds. Available beds at Winter Park or Florida Hospital have not historically alleviated overcrowding at Holmes. At hearing, AHCA's expert health planner testified that Holmes reached 122 percent occupancy when Winter Park was at 30 percent and Florida Hospital was 58.2 percent. Wuesthoff has demonstrated that Winter Park, Florida Hospital, and ORMC are geographically and economically inaccessible to Medicaid and indigent patients in Wuesthoff's service area. Expert testimony linked indigency to a greater need for NICU care. Wuesthoff demonstrated that Medicaid and indigent obstetrics patients in its service area cannot and do not use the facilities in Orange County adequately and appropriately for prenatal care or delivery due to transportation and economic difficulties. Indigent patients with high risk pregnancies served by the Brevard County Public Health Unit are referred to ORMC. Experts estimated that fewer than 50 percent of those end up delivering at ORMC. For Medicaid patients who comply with referrals for prenatal care, Medicaid is charged $119 per patient per non-emergency, pre-scheduled trip to ORMC. For infants born in Brevard County in need of Level II care, emergency transportation to ORMC costs $700 by ambulance or over $2000 by helicopter. The number of Public Health medicaid or indigent obstetrics patients referred to ORMC from the Wuesthoff area was reasonably estimated to be 250 patients a year. With 50 percent of the babies needing Level II care, the estimate of 125 neonatal referrals is reasonable. The statutory criterion of need in relation to the State Health Plan also requires consideration of preferences for applicants (1) converting from acute care to NICU beds; (2) proposing to serve Children's Medical Services ("CMS"), Medicaid and charity patients; and (3) proposing to serve substance abusing pregnant and postpartum women. AHCA agreed that the Wuesthoff CON application meets all of the applicable State Health Plan preferences. Wuesthoff is proposing, as also required by AHCA rule, to convert acute care beds, currently utilized at 56.33 percent occupancy. In 1992, Medicaid obstetric patients days accounted for 50.5 percent of the total. A CMS clinic is located on the Wuesthoff campus and receives services from its staff pediatricians. See also, 59C-1.042(3)(j) and (k), F.A.C. Wuesthoff demonstrated the absence of any outpatient alternatives for Level II NICU beds, as required in Subsection 408.035(1)(d), Florida Statutes, (1992 supp.). Wuesthoff fails to comply with the criteria in Subsections 408.035(1)(e), (f), (g), (j) and (k), Florida Statutes, (1992 supp.). It does not plan to jointly operate a NICU with other providers, although it is under consideration as a satellite regional perinatal intensive care center ("RPICC"). The proposed services are available in adjoining areas, including Volusia County to the north, where Level II NICU occupancy was 85 percent in 1992. Wuesthoff does not intend to be a research or educational facility, nor will it serve substantial numbers of individuals residing outside its service district. Wuesthoff is not a health maintenance organization hospital. UTILIZATION AND OPERATIONS Pursuant to Subsections 408.035(1)(h), (i) and (l), and (2)(a), Wuesthoff must be able to staff and fund a Level II NICU that is financially feasible and does not impact negatively health services quality or costs. AHCA presented no evidence at hearing to contradict that presented by Wuesthoff to show that it has the staff and funds for its proposed project. Wuesthoff also has shown that it will profit from the conversion of underutilized acute care beds to Level II NICU beds. Rule 59C-1.042, Florida Administrative Code, includes the methodology for calculating numeric need, among other requirements for approval of Level II NICU programs. Numeric need, under the rule, is zero. In fact, the calculations show that 15 more Level II beds than needed have been approved in District 7. As required by the rule, average occupancy rates in District 7 exceeded 80 percent in the 12 months ending 6 months prior to the quarter in which numeric need was calculated. The rule also favors RPICC's. Wuesthoff is not a RPICC, although it is under consideration as a satellite of the ORMC RPICC. Wuesthoff is not an existing provider of Level II NICU services, and therefore, does not qualify for additional beds under the rule. As required by the NICU rule, Wuesthoff's application seeks the establishment of the minimum size Level II unit of ten beds. The applicant also has on staff a neonatologist, a head nurse with experience and training in neonatal intensive care, registered nurses, respiratory therapists, and social services personnel with the required training. Wuesthoff is capable of performing the blood gas analyses, clinical laboratory support services, and intervention screening. If approved, Wuesthoff would also be eligible to participate in a county grant-funded neonatal developmental disabilities program. Wuesthoff either has installed or has made appropriate plans to obtain the equipment and to make the renovations required by Subsections (9)(b) and (c) of the Rule. Wuesthoff is capable of meeting the data reporting requirements of Subsection 13 of the Rule. The two hour travel time for geographic access to Level II NICU services is met by the existing District 7 providers, and Wuesthoff's proposal is not needed to meet that standard. MINIMUM BIRTH VOLUME Rule 59C-1.042(6), provides in relevant part, as follows: Hospitals applying for Level II NICU services shall not normally be approved unless the hospital had a minimum service volume of 1,000 live births for the most recent 12- month period ending 6 months prior to the beginning date of the quarter of the publication of the fixed need pool. Wuesthoff does not meet the 1000 minimum number of births. In 1991, there were 963 live births at Wuesthoff. From 1988-1990, live birth at Wuesthoff exceeded 1000. In 1992, Wuesthoff had 998 live births. AHCA asserts that the quality of care that volume requirements assure will be adversely affected by the approval of Wuesthoff's application. Wuesthoff has presented competent, substantial evidence that this concern is not well founded, for the following reasons: A privately-owned Birthing Center located on Merritt Island in Brevard County, is staffed by a doctor who owns the facility and has hospital privileges only at Wuesthoff. At the Birthing Center, there were 124 deliveries in 1990, 156 in 1991, and 178 in 1992. The Birthing Center, Jess Parrish Memorial Hospital in Titusville, and Cape Canaveral Hospital, all are Brevard County obstetrics facilities without Level II NICU services. In fact, births at Cape Canaveral exceeded 1000 in 1992. The live births in these three Brevard County facilities, at Wuesthoff, and the overcrowding at the Level II NICU at Holmes, provide a reasonable basis to conclude that Wuesthoff can exceed the minimum birth volume necessary to meet the quality of care objectives of the rule. As required by Subsections (11) and (12) of the NICU rule, Wuesthoff has 24 hour emergency transportation in cooperation with Jess Parrish Memorial Hospital and Cape Canaveral Hospital. Wuesthoff has a transfer agreement with ORMC, which has all levels of NICU care. AHCA also questioned Wuesthoff's utilization assumption and projections. With combined live births at Brevard facilities without Level II NICUs exceeding 3,000 a year, with two of the facilities jointly operating an emergency transportation service with Wuesthoff, and the third staffed by a obstetrician with privileges only at Wuesthoff, Wuesthoff's assumptions that the majority of neonates born at these facilities needing Level II NICU care will be transferred to Wuesthoff are reasonable. As agreed in the prehearing stipulation, because utilization projections are found reasonable, Wuesthoff's proposal is financially feasible.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be issued approving Certificate of Need 7081 to Wuesthoff Memorial Hospital to convert ten acute care beds to a ten bed Level II neonatal intensive care unit condi tioned upon Wuesthoff's providing not less than a combined total of 51 percent Medicaid and indigent patient days in the unit. DONE AND ENTERED this 10th day of November, 1993, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of November, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-0963 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. Accepted in Finding of Fact 1. Subordinate to Finding of Fact 33. Accepted in Finding of Fact 4. Accepted in Finding of Fact 4. Accepted in Findings of Fact 11, 12, and 13. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Findings of Fact 16 and 17. Subordinate to Findings of Fact 15 and 17. Subordinate to Findings of Fact 12 and 13. Accepted in Finding of Facts 15 and 18. Accepted in Finding of Fact 15. Accepted in Finding of Fact 16. Subordinate to Finding of Fact 17. Accepted in Finding of Fact 17. Subordinate to Finding of Fact 16. Accepted in Finding of Fact 17. Accepted in Finding of Fact 15. Accepted in Finding of Fact 17. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Accepted in Finding of Fact 16. Accepted in Finding of Fact 12. Subordinate to Finding of Fact 16. Accepted in Finding of Fact 16. Accepted in Finding of Fact 15. Accepted in Finding of Fact 15. Accepted in Conclusions of Law 40. Accepted in Finding of Fact 15. Subordinate to Finding of Fact 16. Accepted in Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 15. Subordinate to Finding of Fact 16. Accepted in Finding of Fact 12. Subordinate to Finding of Fact 16. Accepted in Finding of Fact 21. Accepted in Finding of Fact 16 and 17. Accepted in Finding of Fact 16. Subordinate to Finding of Fact 12. Accepted in Finding of Fact 28. Subordinate to Findings of Fact 16 and 17. Subordinate to Findings of Fact 16 and 17. Subordinate to Findings of Fact 16 and 17. Subordinate to Findings of Fact 16 and 17. Accepted in Findings of Fact 21 and 26. Accepted in Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Accepted in Finding of Fact 17. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 17. Subordinate to Finding of Fact 18. Accepted in Finding of Fact 35. Subordinate to Findings of Fact 35. Subordinate to Finding of Fact 12 and 35. Accepted in Finding of Fact 19. Accepted in Finding of Fact 19. Accepted in Finding of Fact 9. Accepted in Finding of Fact 9. Accepted in Finding of Fact 78. Accepted in Conclusions of Law 39. Accepted in Finding of Fact 12-15. Accepted in Finding of Fact 12. Accepted in Finding of Fact 12. Accepted in Finding of Fact 12-13. Accepted in Finding of Fact 12. Accepted in relevant part in Finding of Fact 32. Accepted in relevant part in Finding of Fact 32. Accepted in relevant part in Finding of Fact 32. Accepted in relevant part in Finding of Fact 32. Accepted in relevant part in Finding of Fact 32. Accepted in Finding of Fact 20. Rejected Conclusion in Findings of Fact 21. Rejected Conclusion in Findings of Fact 21. Rejected Conclusion in Findings of Fact 21. Accepted in Finding of Fact 23. Accepted in Finding of Fact 23. Accepted in Finding of Fact 17. Accepted in Finding of Fact 33. Accepted in Finding of Fact 21. Accepted in Finding of Fact 21. Accepted in Finding of Fact 23. Accepted in Finding of Fact 5. Accepted in Finding of Fact 9. Accepted in Finding of Fact 9. Accepted in Finding of Fact 9. 105. Accepted in Findings of Fact 10-17. 106. Accepted in Finding of Fact 12. 107. Accepted in Finding of Fact 15. 108. Accepted in Finding of Fact 14. 109. Accepted in Finding of Fact 12. 110. Accepted in Finding of Fact 15. 111. Accepted in Findings of Fact 10-17. 112. Accepted in Findings of Fact 10-17. 113. Accepted in Finding of Fact 24. 114. Accepted in Finding of Fact 24. 115. Accepted in Finding of Fact 25. 116. Accepted in Conclusions of Law 42. 117. Accepted in Finding of Fact 19. 118. Accepted in Finding of Fact 19. 119. Accepted in Finding of Fact 28. 120. Accepted in Finding of Fact 28. 121. Accepted in Finding of Fact 33. 122. Accepted in Finding of Fact 31. 123. Accepted in Finding of Fact 28. 124. Accepted in Finding of Fact 29. 125. Accepted in Finding of Fact 34. 126. Accepted in Finding of Fact 34. 127. Accepted in Finding of Fact 30. 128. Accepted in general in Conclusions of Law 42. 129. Accepted in Finding of Fact 11. 130. Accepted in Findings of Fact 13 and 24. 131. Accepted in Finding of Fact 14. Respondent's Proposed Findings of Fact. Accepted in Findings of Fact 1 and 4. Accepted in Finding of Fact 3. Accepted in Finding of Fact 4. Accepted in Finding of Fact 4. Accepted in Finding of Fact 8. Rejected in Findings of Fact 9. Rejected in Findings of Fact 10. Accepted in Finding of Fact 19. Accepted in Finding of Fact 19. Accepted in Conclusions of Law 40. Rejected in Conclusions of Law 41. Accepted in Finding of Fact 4. Accepted in Finding of Fact 4. Accepted in Finding of Fact 24. Accepted in Finding of Fact 13. Accepted in Finding of Fact 25. Accepted in Finding of Fact 13. Accepted in Finding of Fact 4. Accepted in Findings of Fact 21 and 26. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Accepted in Finding of Fact 31. Accepted in Findings of Fact 16 and 17. Subordinate to Finding of Fact 16. Accepted in Findings of Fact 15-17. Accepted in Finding of Fact 17. Accepted in Finding of Fact 17. Accepted in Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Rejected in Findings of Fact 12. Accepted in Finding of Fact 35. Accepted in Finding of Fact 12. Rejected first sentence in Finding of Fact 35. Accepted in Finding of Fact 35. Accepted in Finding of Fact 5. Accepted in Finding of Fact 28. Accepted in Finding of Fact 33. Accepted in Finding of Fact 33. Accepted in Finding of Fact 28. Accepted in Finding of Fact 34. Accepted in Finding of Fact 34. Accepted in Finding of Fact 35. Accepted in Finding of Fact 5. Accepted in Finding of Fact 20. Accepted in Finding of Fact 21. Accepted in Finding of Fact 21. Accepted in Finding of Fact 21. Accepted in Findings of Fact 5 and 22. Accepted in Findings of Fact 5 and 22. Accepted in Finding of Fact 21. Accepted in Finding of Fact 23. Accepted in Findings of Fact 5 and 36. Accepted in Finding of Fact 35. Subordinate to Finding of Fact 35. Accepted in Conclusions of Law 40. Subordinate to Finding of Fact 35. Rejected in Findings of Fact 35. Rejected in Findings of Fact 36. Accepted in Finding of Fact 21. Accepted in Finding of Fact 21. Rejected in Findings of Fact 35. Accepted in Finding of Fact 5. Accepted in Finding of Fact 5. Accepted in Finding of Fact 9. Rejected in Findings of Fact 10-17. Rejected first sentence in Findings of Fact 10-17. Rejected in Findings of Fact 10-17. COPIES FURNISHED: Kenneth F. Hoffman, Attorney Patricia A. Renovitch, Attorney OERTEL, HOFFMAN, FERNANDEZ & COLE, P.A. Post Office Box 6507 Tallahassee, Florida 32302 Lesley Mendelson, Senior Attorney Agency For Health Care Administration The Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Sam Power, Agency Clerk Agency For Health Care Administration The Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303
Findings Of Fact The Parties FRTC is a wholly-owned subsidiary of Charter Medical Corporation (Charter) which proposes to construct and operate a freestanding, 60 bed, 24- hour-a-day, Intensive Residential Treatment Program for children between the ages of 6 and 18 in Palm Beach County within HRS District IX, pursuant to Rule 10-28.152(8), F.A.C. and Chapter 395, F.S. Although FRTC represents it will construct its proposed facility with or without CON licensure, which it is entitled to do, given the peculiarities of this type of health care entity, it is clear that a prime motivator in FRTC's CON application is that with CON licensure, FRTC potentially will have greater access to insurance reimbursement because it may then call itself a "hospital." FRTC will seek JCAH accreditation. HRS is the state agency with the authority and responsibility to consider CON applications, pursuant to Chapter 10-5.011, F.A.C. and Sections 381.701-381.715, F.S. (1987). HRS preliminarily approved FRTC's application, and supported it through formal hearing and post-hearing proposals. RTCPB is an existing 40 bed residential treatment center for adolescents between the ages of 12 and 18, located in Palm Beach County, on the campus of Lake Hospital of the Palm Beaches. It provides services similar or identical to those services proposed to be offered by FRTC. It is JCAH accredited through an extension of Lake Hospital's accreditation and is close to JCAH accreditation in its own right. RTCPB is a subsidiary of Psychiatric Hospitals, Inc. (PIA) . PIA operates two residential treatment centers in Florida. RTCPB is not CON licensed as an IRTP, under Chapters 381 and 395, F.S., but is licensed as a child care facility under Chapter 395, F.S., as a provider of services to HRS under Chapters 10M-9 and 10E-10, F.A.C. RTCPB accepts substance abusers in residency. RTCPB has also applied for CON licensure as an IRTP in a batching cycle subsequent to the present one. That application has been preliminarily denied by HRS and RTCPB is awaiting a Section 120.57(1), F.S., formal administrative hearing thereon. RTCPB now estimates its current patients' average length of stay (ALOS) as 106 days but projects a 315 day (10 1/2 months) ALOS in its subsequent CON application. RTCPB is charging $185 per day or HRS patients and $255 with $23-26 ancillaries [sic] per day for private pay patients. Like FRTC, it uses a "levels" system of behavior modification and patient control. Humana is a 250 bed JCAH accredited hospital located in Palm Beach County, Florida. Of Humana's 250 beds, 162 are traditional acute care beds and 88 are psychiatric beds. The 88 psychiatric beds are administratively divided into different units, one of which is a 27 bed adolescent psychiatric unit; this unit opened January 20, 1987, and has an average length of stay of nine months. Humana's existing CONs are for short-term adult psychiatric beds and do not authorize an adolescent unit with an average length of stay of over 30 days. Ninety days is the demarcation, by rule, between short- and long-term psychiatric beds. Humana recently applied for a CON for more psychiatric beds and also applied for an IRTP CON in a subsequent batch to the present one. Humana's present 27 bed adolescent psychiatric unit provides grossly similar services to those proposed to be offered by FRTC, but its emphasis is more medical-psychiatric than emotional-behavioral. Like FRTC, Humana does not accept in residency adolescents with a primary diagnosis of substance abuse. Like FRTC and RTCPB, Humana uses a "levels" system. Eighty percent of Humana's patient mix are commercial pay, and the unit is running at a 15 to 20 percent profit margin. Humana usually charges $325 per day on their adolescent unit plus ancillaries [sic] amounting to 10 percent of the patient's bill, but HRS contract patients pay only $225 per day. Humana has lost a number of adolescent unit referrals to RTCPB since RTCPB opened June 1, 1987, but the unit continues to be almost fully occupied. Humana's main referral asset, as well as the source of the confusion of referring entities, appears to be the reputation of its director, Dr. Kelly. Dr. Kelly previously directed a program at Lake Hospital which was identical to the program that he now directs at Humana. Lake Hospital currently has RTCPB operating under its auspices, but not Dr. Kelly. Nature of the FRTC Program FRTC's proposed program is designed to serve those persons in the designated age group who have psychiatric diagnoses of a severity requiring a long-term approach in a multidisciplinary structured living setting to facilitate recovery. It will not, however, treat adolescents with an active diagnosis of chemical dependency or substance abuse. It also only commits to 1.5 percent indigent care. The proposed FRTC program differs from an acute care setting in significant quantitative and qualitative ways, the most visible of which is that acute care psychiatric settings (either long- or short-term) are geared toward dealing with patients actively dangerous to property, themselves, or others, but patients whom it is reasonably assumed will respond primarily to physiologically-oriented physicians and registered nurses administering daily medication, treatment, and monitoring, as opposed to a long-term living arrangement emphasizing behaviorally-oriented group interaction as an alternative to parental care at home. FRTC will, however, accept patients with psychiatric diagnoses of effective disorders, depression, schizophrenia and impulse disorders and those who may be potentially harmful to themselves, others, or property for whom no other less intensive or less restrictive form of treatment would be predictably helpful. FRTC would fall on the continuum of care below an acute psychiatric facility such as Humana. Assessment of such a target group on a patient by patient basis is obviously subject to a wide variation of interpretation by qualified health care professionals, but FRTC anticipates both verifying referral diagnoses and assuring quality of care by insuring that each new patient is seen by a psychiatrist within 24 hours of admission, and by having each case reviewed by an independent utilization review committee. FRTC also plans to complete appropriate patient assessments and develop and update individual, integrated treatment programs. FRTC will provide, where appropriate, for continuity of care from previous acute care institutions through the FRTC program and out into more normal individual or family living arrangements. Parents will have to consent to their child's placement at FRTC. FRTC's program proposes an average length of stay of 365 days (one year) with a range of six months to two years. Based upon all the credible record evidence as a whole, including, but not limited to, the protestants' respective ALOS, this is a reasonable forecast despite contrary evidence as to Charter's experience at its "template" Virginia institution, Charter Colonial. FRTC's program components will include individual therapy, recreational therapy, occupational therapy, and general education. The general education component in FRTC's proposed program is more general and more open than that offered in acute care settings, such as Humana. FRTC's overall program will utilize a "levels" system of behavioral management based upon patients earning privileges, which levels system has a good patient rehabilitation and functional administrative track record in many different kinds of psychiatric health care facilities, including Humana and RTCPB. FRTC intends that each patient's program will be individualized according to age and program component directed to his/her diagnosis and each patient will receive individual, resident group, and family therapies. As to assessment, types of therapy, continuity of care, and general education provisions, FRTC's proposal is grossly consistent with that of its "template." To the extent there is evidence of inconsistencies between the two programs in the record, the FRTC proposal represents either improvements over, or refinements of, its template program which have been developed as Charter/FRTC has learned more about what actually "works" for the IRTP form of health care, or it represents changes to accommodate Florida's perception of what less restrictive but still intensive residential treatment should be, or it anticipates local community needs. Quality of Care The applicant's parent corporation is an experienced provider of many types of accredited psychiatric facilities. The type of quality assurance program proposed and the staff mix provide reasonable quality care assurances. Design, Construction, and Personnel Refinements to FRTC's original schematic take into consideration the influence that physical structure has on an Intensive Residential Treatment Program. Those refinements include modification of a multipurpose room into a half-court gymnasium, addition of a classroom, addition of a mechanical room, modification of the nursing station to decrease the amount of space, and the deletion of one seclusion room and addition of a four to six bed assessment unit. The modifications resulted in the addition of approximately 1,000 square feet to the original design. A minimum of four to six acres would be necessary to accommodate the modified design which totals approximately 32,000 square feet. Public areas, such as administration and support services, dining room, and housekeeping areas, are to the front; private areas, such as the nursing units, are to the back. The facility's middle area houses gym, classrooms, and occupational therapy areas. The location encourages residential community involvement. Each of three, 20-bed units is made up of a group of two consultation rooms, a galley, a laundry, a day room and core living space located directly across from the nursing station for maximum observation and efficiency. Each unit comprises a separate wing. Six handicapped accessible patient beds are contemplated; the building will be handicapped-accessible. The staffing projections have increased and the pattern has been minimally altered in the updates. The updated pro forma also modified the initial financial projections so as to increase salary expense and employee benefits based on this change in staffing. An increase in the total project cost impacted on depreciation, and interest expense changed with time. All these changes are reasonable and insubstantial. FRTC's design is adequate for providing a suitable environment for intensive residential treatment for children and adolescents even though it is not identical to Charter's "template" for residential treatment and even though Charter's extensive experience with acute care facilities has focused these changes in its residential treatment concepts. The parties stipulated to the adequacy of FRTC's proposed equipment list and costs. Total construction cost was demonstrated to be reasonably estimated at $2,078,000. The square footage costs of $64.86 per square foot represet an increase from the square footage costs contained in the original CON application. The original budget was updated based upon a three percent inflation factor and the addition of the approximately 1,000 square feet. The additional space is not a significant construction change. The total project costs of $4,728,000 are reasonable. The testimony of HRS Deputy Assistant Secretary for Regulation and Health Facilities, John Griffin, who testified by deposition, (RTCPB's Exhibit 8, pp. 21-22) revealed no firm policy on what the agency, within its expertise, views as substantial and impermissible amendments to a CON application; HRS did not move at hearing to remand for further review; and the undersigned concludes that the changes in facility design, costs, and staffing do not represent significant changes which would be excludable as evidence and that they do represent permissible minor modifications and refinements of the original FRTC application. Site Availability No party contended that FRTC's application was a "site specific" application, that a residential treatment program is otherwise required to be "site specific," or that an IRTP CON is governed by a "site specific" rule or by "site specific" statutory criteria. Therefore, it was only necessary for FRTC in this noncomparative proceeding to establish that several suitable sites were available within the required geographic parameters at the financial amount allotted in FRTC's projections. FRTC did establish financially and geographically available and suitable sites through the testimony of Robert H. Ellzey, a qualified expert in commercial real estate values. The Non-Rule Need Policy There are no hospital licensed Intensive Residential Treatment Programs in Palm Beach County or in District IX. IRTPs are in a separate licensure category by law from psychiatric beds, acute care beds, and rehabilitation beds. There is a separate need methodology for long-term psychiatric beds and there are no CON licensed long-term psychiatric programs for children and adolescents in District IX, unless one considers Humana which is treating adolescents well beyond 30 or 90 days residency. HRS has no promulgated rule predicting need for IRTPs seeking specialty hospital licensure under Chapter 395, F.S. Subsequent to advice of its counsel that a CON must be obtained as a condition of IRTP licensure pursuant to Chapter 395, F.S., HRS elected to evaluate all IRTP CON applications in the context of the statutory criteria of Chapter 381, F.S., and in the context of HRS' non-rule policy establishing a rebuttable presumption of need for one "reasonably sized" IRTP in each HRS planning district. The May 5, 1988 Final Order in Florida Psychiatric Centers v. HRS, et al., DOAH Case No. 88- 0008R, held this non-rule policy invalid as a rule due to HRS' failure to promulgate it pursuant to Section 120.54, F.S., but that order also held the policy not to be invalid as contrary to Chapter 381, F.S. That Final Order intervened between the close of final hearing in the instant case and entry of the instant Recommended Order, however, it does not alter the need for the agency to explicate and demonstrate the reasonableness of its non-rule policy on a case by case basis. HRS was unable to do so in the formal hearing in the instant case. Notwithstanding the oral testimony of Robert May and Elizabeth Dudek, and the deposition testimony of John Griffin, it appears that the non- rule policy is not based upon generally recognized health planning considerations, but solely on the agency's statutory interpretation of recent amendments to Chapter 395 and some vague perception, after internal agency discussions, that the policy is consistent with certain promulgated need rules and with certain other non-rule policies for other types of health care entities, which other non-rule policies were never fully enunciated or proved up in this formal hearing. The HRS non-rule policy was also not affirmatively demonstrated to be rational because it does not take into account the reasonableness of a proposed facility's average length of stay, referral sources, geographic access, or other factors common to duly promulgated CON rules. Numerical Need and Conformity to Applicable Health Plans FRTC sought to support HRS' non-rule policy on numerical need for, and definition of, a "reasonably sized" IRTP through the testimony of Dr. Ronald Luke, who was qualified as an expert in health planning, development of need methodologies, health economies, survey research, and development of mental health programs. In the absence of a finding of a rational non-rule policy on numerical need, Dr. Luke's evidence forms the cornerstone of FRTC's demonstration of numerical need. Through the report and testimony of Dr. Luke, and despite contrary expert health planning testimony, FRTC established the numerical need for, and reasonableness of, its 60 licensed IRTP beds in District IX with projected 60 percent occupancy in the first year and 50 percent in the second year of operation using two bed need methodologies. Dr. Luke ultimately relied on a utilization methodology based upon 1991 population projections. Dr. Luke used a census rate per 100,000 population of 21.58. This is appropriately and reasonably derived from national data for residential treatment patients aged 0-17, regardless of the fact that the types of residential treatment considered by the NIMH data base employed by Dr. Luke greatly vary in concept and despite HRS having not yet clearly defined the nature of the programs and services it expects to be offered by a Florida specialty hospital licensed IRTP. Therefrom, Dr. Luke derived an average daily census of 52 in 1991. That figure yields a bed sizing of between 58 and 61 beds, depending on whether an 85 percent or 90 percent occupancy factor is plugged in. Either 58 or 61 beds is within the range of ratios calculated by Dr. Luke's other methodology for currently licensed Florida IRTPs in other districts. Assuming a target occupancy rate of 85 percent and an ALOS of one year, Dr. Luke considered the gross District IX IRTP bed need to be 60. In the absence of any like program to assess occupancy for and in the presence of similar programs such as Humana operating at nearly full occupancy now and RTCPB forecasting its occupancy at 88 percent in 1990 if it were IRTP-licensed, it is found that 60 beds are justified. Since there are no IRTP beds licensed as specialty hospitals in the current district bed inventory, no adjustment of this figure must be made to account for existing licensed IRTP beds. Simply stated, this is a CON application for an IRTP, nothing more and nothing less, and the subtrahend to be subtracted from gross district bed need is zero when there is a zero specialty hospital licensed IRTP bed inventory. Luke's calculated gross need of 60 bed is also his net need and is accepted. Fifty beds is generally the minimum size HRS will approve to be feasible for any free standing facility to be eonomically efficient and to be able to benefit from economies of scale. This 50 bed concept is within the wide range of bed ratios that HRS implicitly has found reasonable in, previously- licensed IRTP CON approvals. Conformity With Applicable Health Plans Section 38l.705(1)(a), F.S., requires HRS to consider CON applications against criteria contained in the applicable State and District Health Plans. In this regard, neither the applicable State Health Plan nor the applicable District IX Local Health Plan make any reference to a need for intensive residential treatment facilities. The District IX Health Plan addresses the need for psychiatric and substance abuse services to be available to all individuals in District IX. FRTC's project addresses this goal only in part. The District Health Plan states that priority should be given to CON applicants who make a commitment to providing indigent care. FRTC proposes only 1.5 percent indigent care which works out to only 1/2 of the ALOS of one patient at the proposed facility and is hardly optimum, but in a noncomparative hearing, it stands alone as advancing the given accessibility goal within the plan. Objective 1.3 of the State Health Plan provides: Through 1987, additional long-term inpatient psychiatric beds should not normally be approved unless the average annual occupancy for all existing and approved long-term hospital psychiatric beds in the HRS District is at least 80 percent. FRTC's project is neutral as to this goal. The District Plan also contains a goal for a complete range of health care services for the population of the district. FRTC advances this goal. The State Health Plan further provides: Goal 10: DEVELOP A COMPLETE RANGE OF ESSENTIAL PUBLIC MENTAL HEALTH SERVICES IN EACH HRS DISTRICT OBJECTIVE 10.1: Develop a range of essential mental health services in each HRS district by 1989. OBJECTIVE 10.3: Develop a network of residential treatment settings for Florida's severely emotionally disturbed children by 1990. RECOMMENDED ACTION: 1.03A: Develop residential placements within Florida for all SED children currently receiving ing treatment in out-of-state facilities by 1990. The FRTC project advances these goals in part. To the extent SED patients placed outside the state for residential treatment services are HRS patients whom FRTC as yet has not contracted to treat, the FRTC project does not advance this goal. However, increased insurance reimbursement will advance accessibility for those SED children and adolescents in need of this type of care whose families have insurance coverage. The State Plan also emphasizes a goal for a continuum of care. The FRTC plan advances this goal. Financial Feasibility William S. Love, Senior Director of Hospital Operations for Charter, was accepted as an expert in health care finance. Mr. Love prepared the pro forma financial statement contained in the original CON application and the update of the pro forma in response to HRS' completeness questions. Mr. Love also had input into the updated financial information which increased salary and benefit expense. (See FOF No. 11). The revised pro forma utilized an assumption of gross patient revenues of $300 per day and a 365 day ALOS, both of which are reasonable and both of which support the rest of FRTC's assumptions (See FOF No. 9). Routine revenues are based on the types of routine services patients normally receive on a daily basis. Ancillary revenues are support revenues such as pharmacy charges, X-rays, lab charges, and other charges not generally utilized on a routine basis. The only charges to patients at the proposed FRTC facility are the routine and ancillary charges. The assumptions with regard to contractual adjustments are that there will be no Medicare utilization since the facility is projected for children and adolescents and no Medicaid since freestanding facilities in Florida are not eligible for Medicaid. Two percent of gross patient revenues are estimated to be contractual adjustments which relate to HMOs and PPOs. FRTC addresses indigent care by 1.5 percent of gross revenues which will be dedicated to Charter Care which is free care. The assumptions with regard to bad debt are that 8 percent of gross revenue will be the allowance for bad debt. An assumption of 20 percent of salaries was used for employee benefits which include the FICA tax, health insurance, dental insurance, retirement plans, and other benefits. Supplies and expenses were calculated as a function of patient day with a $90 per day estimate. Included in supplies and expenses are supplies utilized in the delivery of health care services as well as medical professional fees such as the half-time medical director and purchased services such as laundry, linen, speech and hearing services, utilities, telephone, malpractice insurance, repairs and maintenance. The depreciation assumptions are that the building would be depreciated over 40 years, fixed equipment over 20 years and major movable equipment over 10 years. Pre-opening expenses for the first 45 days of operation have been capitalized over 60 months with low amortization costs over 15 years. There is no income tax assumed in the first year but the assumption in subsequent years is that the tax rate will be 38 percent. The failure to assume a hospital tax is inconsequential. The assumptions for the second fiscal year are basically the same. Although staffing remained the same, the FTEs per occupied bed increased, and a 7 percent inflation factor was added. The project will be financially feasible even though the facility is pessimistically projecting a loss of $102,000 for the first year because a facility can suffer a loss in its first year of operation and remain financially feasible. The facility projects a $286,000 profit in its second year of operation. With regard to utilization by class of pay, FRTC has assumed that the insurance category represents 65.5 percent of total revenues projected and includes such things as commercial insurance, Blue Cross and any third party carrier other than Medicare and Medicaid. Assumptions with regard to the private pay are that 25 percent of the total revenues will be generated by private pay patients and would include the self pay portions of an insurance payor's bill, such as deductible and co-insurance. Bad debt was assumed to be 8 percent, and Charter Care or free care, 1.5 percent. FRTC's projected utilization by class of pay is reasonable and is supported by the protestants' current experience with commercial insurance utilization and reimbursement and the predicted recoveries if RTCPB were IRTP-licensed. In the second year of operation, the assumptions with regard to utilization by class of pay demonstrated an increase in the insurance category from 65.5 to 66.5 percent with everything else remaining the same except for a decrease in bad debt to 7 percent. The assumption with regard to a decrease in bad debt is based upon the establishment of referral patterns from acute psychiatric facilities, outpatient programs, mental health therapists, and miscellaneous programs. The assumption is that 65 percent of the patients would be covered by insurance, not that 65 percent of each bill would be paid by insurance. Charter's experience has been that a good portion of the deductible and co-insurance payments are collectible. FRTC did not assume payment from any governmental contracts or HRS reimbursement. FRTC's projected self pay percentages assumption reasonably contemplates the percentage of households in the district which can afford its projections for self pay. For purposes of evaluating the financial feasibility of this proposal, a management fee was not included because in looking at the financial feasibility of a facility the expenses of a corporate home office are incurred whether or not the facility is built. It was not appropriate to allocate a management fee to the hospital because it showed a loss in its first year of operation and a profit in its second. When the facility becomes profitable, FRTC anticipates passing the profit through to the corporation to help reduce the corporate overhead. If a management fee had been allocated to this facility, allocations would have had to have been made to the other Charter facilities to show where their management expense had decreased and their profitability increased. It would have been inappropriate to take these fixed expenses and allocate a portion of them to the proposed FRTC facility. In addition to the fact that the failure to include a management fee in the pro forma should not affect the feasibility of the project, Charter has good cause not to apply a $44 per patient day management fee in its IRTP. FRTC's categories of payor class are generally reasonable based in part on the results of a survey performed in Florida. FRTC's assumptions and calculations are reasonable, based upon the testimony of William S. Love and Dr. Ronald Luke, notwithstanding the testimony of Dan Sullivan, Donald Wilson, and Christopher Knepper, also qualified as experts. Specifically, it is found that Dr. Luke's assessment that the designation of a facility as a licensed specialty hospital has a beneficial effect on its ability to obtain insurance reimbursement for services, that reimbursement impacts to increase ALOS, and that the breakdown of sources of payment that FRTC has used is reasonable, is a credible assessment, supported elsewhere in the record. It is also found that Mr. Knepper's assessment for bad debt is inadequately supported and inconsistent with other evidence, and therefore not credible. Mr. Sullivan's testimony is not persuasive. Staffing and Recruitment Dr. Brett, a Charter regional director for hospital operations, was accepted as an expert in staffing psychiatric facilities including residential treatment centers. His distinctions between the acute care and residential types of facilities are corroborated and explained by other witnesses and evidence. Mr. Joyner was accepted as Charter's expert recruiter. Although the depth of Mr. Joyner's hands-on involvement in active recruitment is not extensive, the Charter network of manpower referrals and "head hunting" will obviously support this project. Upon the combined testimony of Dr. Brett, Mr. Joyner, and Paul Bodner, Charter's senior director of physician relations, there is sufficient evidence that FRTC can recruit a suitable staffing pattern to ensure quality of care (see FOF Nos. 9 and 10) in its proposed program, even if it has to hire from out of state and pay somewhat higher salaries due to some qualified manpower shortages in certain categories in Palm Beach County. In making this finding, the undersigned has considered the testimony of Donald Wilson concerning certain institution-specific recruiting problems of his principal, RTCPB, and the "step down" status of residential treatment as testified by Mary Certo, of Humana. Impact on Costs and Competition The FRTC project can reasonably be expected to attract patients with insurance coverage who would otherwise go to existing facilities for care, however, in light of the relatively consistent occupancy rates at Humana and RTCPB despite both their geographical proximity and the unique confusion of referrals arising over the relocation of Dr. Kelly, this impact is not altogether clear. Dr. Kelly's reputation will not be impacted by granting of a CON to FRTC. It is also not possible upon the basis of the record created in this hearing to factor out reimbursement differences inherent in Humana's current CON classification and RTCPB's circumstance as an unlicensed intensive residential treatment center. In any case, the negative impact upon Humana must be measured against the health planning goals expressed by several witnesses that it is desirable to substitute more suitable, less restrictive facilities for institutionalization of the severely emotionally disturbed child and adolescent whenever possible and that it is also desirable to encourage residential treatment upon a continuum of care basis after acute psychiatric care. The FRTC project will obviously increase the accessibility to this type of treatment for young people who have the appropriate insurance coverage. These goals are in conformity with the applicable health plans. The FRTC project can reasonably be expected to initially increase some costs of health services throughout the district because it will inflate some salary costs due to competition, but the negative impact will probably be short term.
Recommendation Upon a balanced consideration of all relevant criteria it is RECOMMENDED that HRS enter a Final Order approving FRTC's CON application for an IRTP, as updated, for licensure as a specialty hospital. DONE and ORDERED this 28th day of June, 1988, in Tallahassee, Florida. ELLA JANE P. DAVIS 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 28th day of June, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 87-2037 & 87-2050 The following constitute specific rulings pursuant to Section 120.59(2), F.S., with regard to the parties' respective Proposed Findings of Fact. Proposed Findings of Fact (PFOF) of FRTC: Covered in "issue" and FOF 1. Covered in FOF 1 and 2. 3-7. Except as subordinate or unnecessary, accepted in "procedural and evidentiary matters" and FOF 11. 8. Accepted in FOF 12. 9-12. Except as subordinate, unnecessary, or cumulative, accepted in FOF 7-9. 13. Accepted in FOF 10. 14-17. Accepted in part and rejected in part in FOF 7-11, 30. Although portions of the underlying data referred to in proposal 16 and by Mr. Joyner in his testimony was excluded from evidence, he was qualified as a recruitment expert and for the reasons set forth in FOF 30, his opinion is accepted. 18-19. Accepted in FOF 21. Accepted in FOF 22, 26, 29. Accepted in FOF 23. Accepted in FOF 24. Accepted in FOF 25 and 29. Accepted in FOF 26 and 29. Except as subordinate or unnecessary, covered in FOF 27. Except as mere argument or statement of position, accepted in FOF 26-27, and 29. 27-29. Accepted in part and rejected in part as unnecessary and cumulative to the facts as found; in part rejected as mere argument or recital of testimony, not distinguishing opinion from fact. To the degree adopted or accepted upon the record as a whole, see FOF 26-29. 30-31. Accepted in FOF 28. 32-40. Accepted in part and rejected in part as unnecessary and cumulative to the facts as found; in part rejected as mere argument or recital of testimony, not distinguishing opinion from fact. To the degree adopted or accepted upon the record as a whole, see FOF 9, 11, 21, 26-29. 41-44. Accepted in part and rejected in part as unnecessary and cumulative to the facts as found in FOF 29-32. 45-47. Rejected, as recital or summation of testimony and as part of preliminary agency review not relevant to this de novo proceeding. 48. Covered in FOF 7, 18-20, 22, and 26. 49-52. dejected as set out in "organic law and legislative background," "procedural and evidentiary matters," FOF 13-15. See also COL. 53. Accepted in FOF 16. 54-58. Rejected in part and accepted in part as set out in FOF 14-15. Rejected where not supported in full by the record as a whole, where subordinate, unnecessary or cumulative to the facts as found and where mere recital of testimony. 59. Accepted in principle and modified to conform to the record in FOF 18-20, 31. 60-61. Accepted in part and rejected in part as stated in "procedural and evidentiary matters" and in FOF 14-16 and the COL. Accepted in FOF 15 and COL. Accepted in FOF 18-20, 31. 64-68. Rejected as unnecessary to the facts as found in FOF 1, 7, 13-15 and 29, also in part as not supported by the record as a whole, and as primarily legal argument and recitation of testimony. Accepted in FOF 3-4 and 30. Accepted in part and rejected in part in FOF 3-4, 7, 26, and 29. 71-74. Except as subordinate or unnecessary, accepted in FOF 5-9 and 30-32. HRS' Proposed Findings of Fact (PFOF): 1-3. Accepted in "organic law and legislative background." 4. (Two paragraphs) Accepted FOF 3-4. Accepted in "issue" and FOF 3-4. Accepted, FOF 29-32. Rejected as unnecessary. Accepted, FOF 1. 10-18 & 20. Except as subordinate or unnecessary, accepted in FOF 5, 6, 15, 26, 31. 19. Rejected as irrelevant. 21-28. Accepted in part as modified to conform to the record as a whole in FOF 6-9, 30-31. The irrelevant, unnecessary or subordinate material has also been rejected. 29-31. Accepted in FOF 4, 9, 21, 26, 29-31. 32-35. Accepted in FOF 7-9. 36-41. Accepted in FOF 7-9 as modified to conform to the record as a whole, to eliminate subordinate and irrelevant matters and to comport with the rulings on the insubstantiality of updates to the CON application, in "procedural and evidentiary matters" and FOF 11. 42-45. Accepted as modified to conform to the record as a whole, to eliminate subordinate and irrelevant matters and to comport with the rulings on the insubstantiality of updates to the CON application in "procedural and evidentiary matters" and FOF 9-11, 21, 23, 30 and 32. Accepted in FOF 22, 26, 29. Accepted in FOF 7, 20, 22, 26. 49-52. Accepted in FOF 3, 4, 21-29. Assuming, based on the transcript reference, that this proposal refers to FRTC's pro forma, this proposal is accepted but unnecessary for the reasons set forth in rulings on HRS' PFOF 36-45. See FOF 11 and 21-29. Accepted in FOF 13-15. 55-58. Rejected as unnecessary. 59. Accepted but not dispositive of any material issue at bar. See FOF 13-15. 60-62. Accepted in part and rejected in part in FOF 13-14, as mere recital of testimony and statements of position. 63. Accepted in FOF 29. 64-65. Accepted in FOF 5-9. Accepted in FOF 7-9. Accepted that HRS made this assumption but it fails to explicate the non-rule policy. See FOF 13-14. Accepted in FOF 16. Rejected as a statement of position or COL. Peripherally, see COL. Accepted in FOF 13-14 but not dispositive of any material issue at bar. Rejected in FOF 13-14. 72-74. Rejected as preliminary agency action, irrelevant to this de novo proceeding. 75-76. Accepted in FOF 17-20. This is a subordinate definition and not a FOF. See FOF 30-31 and COL. Rejected in part and accepted in part in FOF 17-20, 31. Accepted in FOF 10. Accepted in FOF 13-15. Accepted as stated in the "procedural and evidentiary matters," FOF 13-15 and in the COL. 82-85. Covered in FOF 3-6, 13-15. 86. Rejected as preliminary agency action, irrelevant to this de novo proceeding. 87-88. Rejected as subordinate or unnecessary. 89. Accepted in FOF 29. 90-96. Accepted as modified to conform to the record evidence as a whole and FOF 15-16 and to reject subordinate and unnecessary material. Accepted without any connotations of the word "therefore" in FOF 4, 7-9, 21 and 29. Rejected as unnecessary and cumulative. Accepted in "organic and legislative background" and FOF 13-15. Rejected as not established upon the record as a whole; unnecessary. Rejected as a statement of position only. Joint Proposed Findings of Fact of RTCPB and Humana 1-2 Accepted in FOF 1. 3-4. Accepted in FOF 2. 5-6. Accepted in "issue" and FOF 3-4. 7. Accepted in "issue" and FOF 5-6. 8-13. Accepted in part and rejected in part as set out under "procedural and evidentiary matters," FOF 3-6, 13-15, and the COL. 14-18. Except as subordinate or unnecessary, accepted in FOF 1, 7-9, 11, 21-29. 19-27. Rejected as irrelevant preliminary action to this de novo proceeding. 28-36. Rejected in part and accepted in part upon the compelling competent, substantial evidence in the record as a whole as set forth in FOF 13-14. Also as to 33 see FOF 15. 37-52. Accepted in part and rejected in part in FOF 13-16 upon the greater weight of the credible evidence of record as a whole. Irrelevant, unnecessary and subordinate material has been rejected, as has mere argument of counsel. Accepted in FOF 17. Rejected in FOF 20, 31. Accepted as modified in FOF 20, 31. Excepting the mere rhetoric, accepted in FOF 18, 31. Accepted as modified in FOF 7, 18-20, 26, 31. 58-59. Accepted in part and rejected in part in FOF 17-20, 26, Rejected as subordinate. Rejected as recital of testimony and argument 62-63. Rejected as unnecessary. 64-67. Accepted in FOF 3-4, 6-9. The first sentence is rejected as cumulative to the facts as found in FOF 3-4, 6-9. The second sentence is rejected as not supported by the greater weight of the evidence as a whole. Rejected in FOF 4, 21. Accepted in FOF 4 and 21, 29. Rejected as unnecessary Accepted in FOF 26. Rejected in FOF 15-20, 31. Rejected as unnecessary in a noncomparitive hearing. 75-87. Except as irrelevant, unnecessary, or subordinate, accepted in FOF 5-9, 30, 31. Rejected in part as unnecessary and in part as not comporting with the greater weight of the evidence in FOF 7-10 and 30. Accepted in FOF 1, 5-9. 90-92. Accepted in FOF 5-9. Rejected in FOF 5-6. Rejected as subordinate. 95-98. Accepted in FOF 5-9. 99-102. Rejected as unnecessary. 103. Except as subordinate or unnecessary, accepted in FOF 5-9. 104-118. Except as unnecessary, subordinate, or cumulative to the facts as found, these proposals are covered in FOF 5-9, 30-31. Except as Subordinate, covered in FOF 6 and 31. Accepted in part in FOF 5-9, 21-29, otherwise rejected as misleading. Except as subordinate, accepted in FOF 6. Rejected as unnecessary. Accepted in FOF 21. Accepted in FOF 21-29. Rejected in part and accepted in part in FOF 21-29. Rejected as subordinate and unnecessary in part and not supported by the greater weight of the credible evidence in 21-29. 127-128. These proposals primarily recite testimony by Mr. Grono, an administrator of a psychiatric hospital for very severely disturbed persons (Grant Center). This evidence by itself is not persuasive in light of Dr. Luke's study and other admissions of the parties referenced in FOF 21-29. Upon the greater weight of contrary evidence, it is rejected. 129. Rejected as subordinate except partly accepted in FOF 29. 130-133. Rejected upon the greater weight of the evidence in FOF 9, 11 and 21-29. 134, 139. Rejected as legal argument without citation. 135-138. Rejected in FOF 21-29. 140-144. Rejected as stated as not supported by the greater weight of the credible evidence and as partly mere legal argument. See FOF 9, 21-29. 145. The first sentence is rejected upon the reference to PFOF 140-144 for the same reasons given above and the remainder is rejected as subordinate. 146. Rejected in FOF 21-29. 147. Rejected as mere legal argument without citation. 148-149. Rejected in FOF 21-29, particularly 27 upon the greater weight of the credible evidence. The mere legal argument is also rejected. 150-157. Rejected as set out in FOF 28 upon the greater weight of the credible evidence. Uncited argument and statements of position have likewise bean rejected. 158, 160. Rejected as mere argument without citation. 159. Rejected as subordinate and not dispositive of any material issue at bar in FOF 23. 161. Rejected as mere argument. 162-167. Rejected as not supported by the greater weight of the credible evidence in FOF 30-32. Also 167 is rejected as mere argument without citation. 168. Accepted in part and rejected in part in FOF 30-32. 169. Accepted but subordinate. 170. Rejected as unnecessary and cumulative to the facts as found in FOF 31. 171-180. Covered in FOF 30-32. 181-185. Rejected as contrary to the evidence in part and in part unnecessary and cumulative to the ruling in "procedural and evidentiary matters" and FOF 7, 10-11, 21, 23, 30-32. 186-188. Rejected in FOF 7, 10 and 30 upon the greater weight of the credible evidence. 189. Rejected as unnecessary 190. Rejected in FOF 30. 191-392. Accepted but not dispositive of any material issue at bar. See FOF 30-32. 193. Rejected in FOF 30-32. 194-195. Except as subordinate or unnecessary, rejected in the several references to future establishment of referral networks. See FOF 21, 27. 196-197 & 199. Rejected as unnecessary 198. Rejected as irrelevant in part and immaterial in part upon the rulings in "procedural and evidentiary matters" and FOF 11. 200. Rejected as unnecessary 201-202. Accepted in FOF 7, 20, 26-27 and 31, but cumulative. 203. Covered in the COL. Rejected in FOF 21-22. 204. Rejected as mere argument without citation. COPIES FURNISHED: Michael J. Glazer, Esquire AUSLEY, McMULLEN, McGEHEE, CAROTHERS & PROCTOR 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 John T. Brennan, Jr., Esquire BONNER & O'CONNEL 900 17th Street, N.W. Washington, D.C. 20006 James C. Hauser, Esquire Joy Heath Thomas, Esquire MESSER, VICKERS, CAPARELLO, FRENCH & MADSEN 215 South Monroe Street Post Office Box 1876 Tallahassee, Florida 32302 Fred W Baggett, Esquire Stephen A. Ecenia, Esquire ROBERTS, BAGGETT, LaFACE & RICHARD 101 East College Avenue Tallahassee, Florida 32301 Lesley Mendelson, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue Whether Petitioner should be granted CON No. 6606 to convert 10 medical/surgical beds to 10 neonatal intensive care beds to create a Level II neonatal intensive care unit (NICU).
Findings Of Fact UCH is a licensed acute care hospital with 404 authorized beds. A number of these beds were transferred to the Women's Center, which was exempted from CON review by DHRS. (Exhibit 8) The Women's Center involved the expenditure by UCH of some $11,000,000 to construct and equip a separate building adjacent to the existing hospital. The Women's Center was completed and became operational in September 1991. Accordingly, at the time the Application for NICU beds was submitted through the processing of the Application by DHRS, no births were experienced at this facility. For the first two months the Women's Center was operational, the Women's Center experienced 107 births of which 1 required transfer to a hospital providing Level II neonatal intensive care services. At the time the batching cycle for the September 27, 1990 deadline and January 1993 planning horizon was published (Exhibit 18), the NICU inventory was in litigation, and DHRS did not publish a fixed bed need pool for that batching cycle. Instead, in Florida Administrative Weekly, Vol. 16, No. 34, dated August 24, 1990 (Exhibit 18), an estimated inventory of existing beds was used in the bed need formula calculation. This showed for District VI zero need for additional NICU Level II beds. Subsequent to the issuance of the State Agency Action Report (SAAR), in this case litigation was complete, and DHRS entered a Final Order on September 15, 1991 establishing the bed inventory for neonatal intensive care beds Level II and Level III in District 6. That Order increased the NICU Level II bed inventory by 15 beds by adding four beds to Lakeland Regional Medical Center (LMRC) NICU and 11 beds to Winter Haven's NICU. These additions increased the NICU Level II inventory in District VI from the 61 shown on Exhibit 18 to 76. The SAAR (Exhibit 6) used an inventory of 77 Level II NICU beds in District VI to determine no need after application of the bed need formula showed a need for 70 Level II NICU beds in District VI. Changing the inventory from 77 to 76 NICU beds does not affect this conclusion. Occupancy rates used in the bed need calculation were taken from the reports hospitals are required to submit to local health councils. In some instances in the batching cycle here involved, the hospitals had failed to report to the local health councils their occupancy rate for the period required by the bed need formula, and DHRS contacted these hospitals in District VI for the data needed. Petitioner contends that the occupancy rate data relied upon by DHRS in calculating the need for NICU beds for the 1993 planning horizon is inaccurate and that more reliable data is obtained from using different reports that the hospitals are required to submit to the Hospital Cost Containment Board (HCCB). Petitioner's expert witness opined that the information hospitals are required to submit to the HCCB provides a more accurate method of determining the occupancy rate of the Level II NICU beds at each hospital. Petitioner also contends that at the time the Level II occupancy rates were provided to DHRS there was no finite definition, by rule, of the differences between Levels I, II and III NICUs, and the hospitals did not submit accurate data. However, credible evidence was presented that a proposed definition of Levels I, II and III NICUs had been promulgated to all of the hospitals and, when enacted as a rule, this proposed definition was adopted verbatim or nearly so. Intervenors' witnesses pointed out that the hospital reports to HCCB are based on DRG's (diagnostic related groups), and the same DRG is frequently used on a Level I, II or III NICU admission. Accordingly, from those reports to the HCCB an accurate determination of the Level II occupancy rate cannot be made. Furthermore, the patient, during the hospital stay, is frequently moved from Level III to Level II to Level I care, and this data cannot be obtained from the reports submitted to the HCCB. Accordingly, it is found that the reports submitted by hospitals to the local health councils provide more accurate occupancy rates than can be gleaned from the reports submitted to the HCCB, and the occupancy rate utilized by DHRS to calculate NICU bed need is correct. The average occupancy rate for District VI hospitals providing NICU Level II beds was approximately 70 percent during the most recent 12 months prescribed for this batching cycle. Although discrepancies were noted in the patient days at Humana and Tampa General during this period, when these discrepancies were corrected, the district occupancy rate remained in the vicinity of 70 percent. Rule 10-5.042(3)(d), Florida Administrative Code, provides that regardless of bed need shown (by using the bed need formula) the establishment of new Level II NICU beds within a district shall not normally be approved, unless the average occupancy rate for Level II beds in the district equals or exceeds 80 percent for the most recent 12 month period ending 6 months prior to the beginning date of the quarter of the publication of the fixed bed need pool. Petitioner submitted no evidence to demonstrate a not normal situation existed to waive the 80 percent average District VI occupancy rate required before additional Level II NICU beds will be approved. Petitioner principally relied upon the admissions in Hillsborough County to demonstrate an 80 percent occupancy rate. However, the rule specifically refers to a district rate rather than to a subdistrict or one-county rate. In several areas, Petitioner's estimates used to determine the anticipated number of patients to be served in the proposed NICU are not realistic. To determine the ratio of Level II patients to the number of births, Petitioner relied on data from Lakeland Regional Medical Center (LMRC) as a comparable hospital. However, LMRC is not comparable to UCH in patient payor mix. In excess of 40 percent of LMRC obstetrical cases are Medicaid patients, while UCH projects only 6 percent Medicaid births. A lower income payor such as Medicaid patients have a much higher ratio of ill babies at birth than do more affluent mothers who generally receive better prenatal care. Consequently, the percentage of births needing Level II care in the payor mix expected at UCH is more comparable to the percentage experienced by Humana Women's Hospital, an Intervenor herein. At Humana the percentage of births requiring Level II care is on the order of 6 percent as compared to 15.6 percent at LMRC. This lower ratio is more consistent with UCH experience in its first two months of operations where out of 107 births only 1 required transfer to a Level II NICU. Some question was raised regarding the accuracy of Petitioner's estimate of 1500-1700 births during the first full year of operation. While it would be expected that admissions to a new facility would be lower the start-up year than in subsequent years, hard evidence to support the proposed number of births or a lessor number was not presented. In either case, Petitioner has failed to meet the birth requirement of a minimum of 1000 live births for the most recent 12 month period ending 6 months prior to the beginning date of the quarter of the publication of the fixed need pool needed to qualify for this CON. Petitioner presented no evidence to support the not normal conditions that would provide an exemption to this requirement in Rule 10-5.042(6), Florida Administrative Code, other than the fact that it is patently obvious that a hospital that commenced operations 6 months after submitting its CON application could not demonstrate 1000 live births in the 12 months preceding its application. The protesting providers of Level II neonatal care are both located within one hour driving time of the site of UCH as is All Children's Hospital in St. Petersburg. The other hospitals in District VI providing Level II neonatal care, to wit Manatee Memorial Hospital, Winter Haven Hospital and LMRC, are also within two hours driving time of UCH which is the geographical access guideline established by rules for NICUs. Although UCH contends that its application meets all eight preference items prescribed by the state health plan, the evidence presented established its application conclusively meets only one of these preferences, number 6. Absent a showing of need for the proposed facility as found in finding 6 above, granting this CON will increase the excess NICU beds in District VI and adversely impact existing providers. This includes Tampa General which is a disproportionate share provider (of Medicaid and indigent care). It appears from the evidence presented, that in constructing the Women's Hospital, space for an NICU was provided in the plans and, while awaiting a CON to provide a 10 bed Level II ICU, the space is used for storage. No structural changes will be required to operate a NICU at this location, and costs are related primarily to the equipment that will be needed. Whether the installation of a NICU in this space will improve the physical plant of the Women's Center depends on from which advantage point one looks. From Petitioner's point of view, the NICU would improve the physical plant and comply with Preference 3 of the state health plan. Based upon the premise that the proposed NICU beds will be used at an occupancy rate of 70 percent or greater, the conversion of 10 acute care beds currently operating at less than 50 percent occupancy to NICU beds, the overall occupancy rate will increase and Preference 4 would be met. However, no credible evidence was presented that the proposed 10 bed Level II NICU will operate at 70 percent capacity. If initial utilization of Level II care continues and less than 1 percent of UCH live births require Level II care, this Preference will not be met. Although Petitioner did not address Preference 5 in its application, the SAAR notes that HCB reports show of the three hospitals with a grouping of "05" UCH has lower gross revenues per adjusted admission. Petitioner meets Preference 6. Preference 7 of the State Health Plan pertains to applicants who propose to provide neonatal intensive care services to Children's Medical Services (CMS) and non-CMS patients who are defined as charity care patients. Although UCH proposes to provide 6 percent Medicaid and 5 percent indigent care, past history does not support this level of indigence or low pay care. Under Preference 8 of the State Health Plan, preference is given to applicants who propose to serve substance abuse, pregnant and postpartum women, and coordinate their services with other appropriate social agencies. Although UCH stated in its application that it has developed a referral relationship with the Teen Mom's Program, it did not specifically address coordination of its services with substance abuse, pregnant and postpartum women. The local health plan for District VI provides preference shall be given to an applicant who provides the department with documentation that they provide, or propose to provide, a disproportionate share of Medicaid and charity care patient days in relation to other hospitals in the subdistrict. UCH is not a disproportionate share provider and does not propose to become one. Accordingly, it does not comply with this preference item in the district health plan.
Recommendation It is, therefore, recommended that a Final Order be entered denying the application of University Community Hospital for Certificate of Need No. 6606 to establish and operate a 10 bed Level II neonatal intensive care unit. RECOMMENDED this 16th day of January, 1992, in Tallahassee, Florida. K. N. AYERS Hearing Officer Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of January, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-5720 Proposed findings submitted by Petitioner are accepted, except as noted below. Those not noted below and not contained in Hearing Officer findings were deemed not necessary to the conclusions reached. 22. Accepted as the testimony of Hopes, but not as a fact. Accepted only insofar as not in conflict with HO #5. Rejected. 32. Rejected. 34-35. Accepted insofar as not inconsistent with HO #7. 36. Same as 34. Accepted as testimony of witnesses. However, ultimate finding in HO #7 is that when these numbers were corrected, no change in bed need resulted. Rejected. 42. Rejected that Hopes utilization statistic more accurately reflects true utilization of NICU beds. 53-55. Rejected. 56. Rejected as outside the time period here involved. 58-59. Rejected. 62. Rejected insofar as inconsistent with HO #10. Rejected. Second sentence rejected as in conflict with HO #9. 75. Ultimate sentence rejected. 85. Rejected. 92. Accepted, except for the connotation that these patients have geographical access problems to existing facilities. 95. Accepted merely as the testimony of this witness who is currently an employee of UCH. 97-118. Although these preference items were discussed in HO findings #12-19, absent a comparative review these preferences were not considered in determining that a need for 10 more Level II NICU beds did not exist in District VI. Proposed findings submitted by Respondent and the Intervenors are accepted. Those not included in HO findings were deemed unnecessary to the conclusions reached. COPIES FURNISHED: Cynthia S. Tunnicliff, Esquire W. Douglas Hall, Esquire Post Office Drawer 190 Tallahassee, FL 32302 Richard Patterson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Tallahassee, FL 32308 James C. Hauser, Esquire Post Office Box 508 Tallahassee, FL 32302 John Radey, Esquire Post Office Drawer 11307 Tallahassee, FL 32302 Sam Power Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Slye General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700
The Issue Whether Certificate of Need ("CON") Application No. 9481 by St. Vincent's Medical Center, Inc. ("St. Vincent's"), for a 10- bed Level II neonatal intensive care unit ("NICU") at the hospital proposed in CON Application No. 9484P should be approved?
Findings Of Fact The Acute Care Cases Pursuant to order rendered March 14, 2002, this case (the "NICU Case") was heard in the same final hearing with DOAH Case Nos. 02-0447CON, 02-0882CON, 02-0943CON, and 02-0971CON, (the "Acute Care Cases"). The Order acknowledged overlap between the Acute Care Cases and this case but did not consolidate the cases so that separate recommended orders are required for the Acute Care Case and for this case. The final hearing in the Acute Care Cases and the NICU Case commenced on May 13, 2002, and concluded on June 20, 2002. (The record was reopened in the Acute Care Cases and the hearing on reopening ended October 9, 2002. The proceeding on reopening did not concern the NICU Case.) A Recommended Order was rendered in the Acute Care Cases on February 5, 2003. To the extent relevant, its findings of fact are incorporated into this order. Obstetrics at St. Vincent's St. Vincent's has a significant obstetrical practice that includes neonatal intensive care services. It operates a 17-bed Labor-Delivery-Recovery-Postpartum ("LDRP") Unit that has an adjacent 23-bed unit for overflow postpartum and gynecology patients. In the same area of the hospital is its 10-bed Level II Neonatal Intensive Care Unit ("NICU"). There are 2,300 to 2,400 births annually at St. Vincent's. The NICU has an average daily census of six. St. Vincent's participates in a family practice residency program in which residents rotate through the obstetrical department and "as far as the nurseries go" (tr. 912) the pediatric program. St. Vincent's operates a program unique to Jacksonville in which postpartum services are provided at no cost: the Seton Center. The center's services can be expanded to St. Luke's if acquired by St. Vincent's. St. Vincent's Level II NICU is staffed by the same neonatologists that staff the Level II NICU at St. Luke's. Obstetrics at St. Luke's St. Luke's has an existing 17-bed LDRP unit with 10 antipartum beds. The Obstetrics ("OB") Program is known as the Family Birth Place. Opened in March of 1998, it had approximately 500 deliveries that year. The number of births increased to 1,600 in 2000 and has remained in the range of 1,500 to 1,800. Not part of the original hospital construction but added later to accommodate the new obstetrical service, the Family Birth Place for security has a separate entrance at the hospital. It uses a strong LDRP concept, "meaning that the mothers are admitted to a room where they labor, they deliver and they usually stay there." (Tr. 971) There are two C-section rooms in the LDRP unit. If an obstetrical patient needs an extra day or two, she may be moved to the overflow unit. If not, as in the typical case of other obstetrical patients, the stay is spent in a "well decorated, [private] room that has the ability to take care of the baby, stabilize the baby and stabilize the mother during the birth process." (Tr. 972) There are both Mayo and community obstetricians on staff delivering babies at St. Luke's. In August of 2000, a 10-bed Level II NICU was opened as part of the Family Birth Place. The CON for the unit at St. Luke's was approved without opposition from Memorial. Obstetrics at Memorial Memorial provides OB and NICU level II services to the residents of District 4 at its Woman's Center. The center offers a complement of OB and Level II NICU services in an integrated, multi-floor, single patient tower on the Memorial Campus. The center includes an admitting area, a lactation consultant's office, multiple operative and post operative discharge areas, operating room suites for women's surgery, holding areas for meetings between candidates for surgery and anesthesiologists and other clinicians, labor and recovery beds, an overflow area, an anti-partum testing and triage area, an inpatient unit for C-section patients, and LDRP suites with a full spectrum of obstetrical and GYN services both inpatient and outpatient and the 10-bed Level II NICU. Memorial has invested in a number of improvements to the center. Rooms have been converted from semi-private to private. Hard wood floors and other improvements have been made to enhance the health care environment for OB and NICU patients. The quality of care at Memorial's Women Center is excellent. Relationship of the Proposed Project to Other Applications The 10-bed Level II NICU proposed by St. Vincent's to be located at St. Luke's is related and contingent upon the approval of two other CON applications. The first is St. Luke's CON No. 9483 for a 214-bed replacement hospital on the Mayo Clinic Campus. The second is St. Vincent's CON Application No. 9494P for establishment of a 135-bed facility to be operated at the existing St. Luke's facility. The two other applications are interdependent. Neither can be implemented unless both are approved. If both are not approved or if either is not approved, St. Luke's will continue to operate a Level II NICU at St. Luke's. The status quo will be unaffected vis-à-vis the Level II NICU at St. Luke's. If the two other applications are both approved and this application is approved the outcome vis-à-vis the number and type of NICU beds at St. Luke's will be no different than if the other two applications are not approved. There will continue to be a 10-bed Level II NICU at the St. Luke's facility. Approval of the all applications means that the operators of the NICU beds will be different (St. Vincent's instead of St. Luke's) but the number and type of beds will remain the same. The transfer in control of the NICU from St. Luke's to St. Vincent's, moreover, will be without interruption in the services rendered to the NICU patients. Only if the other two applications are both approved and this application is not approved will there be a change in the status quo vis-à-vis the number and type of the Level II NICU beds at the St. Luke's facility. In such a case, the Level II NICU beds at the St. Luke's facility will cease to exist.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration dismiss the Petition of Memorial Healthcare Group Inc., d/b/a Memorial Hospital Jacksonville for lack of standing. DONE AND ENTERED this 14th day of February, 2003, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of February, 2003. COPIES FURNISHED: Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Kathryn F. Fenske, Esquire Agency for Health Care Administration 8355 Northwest 53rd Street Miami, Florida 33166 Michael J. Cherniga, Esquire Sean M. Frazier, Esquire Greenberg Traurig, P.A. 101 East College Avenue Tallahassee, Florida 32301 Stephen A. Ecenia, Esquire Thomas W. Konrad, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 Stephen C. Emmanuel, Esquire Michael J. Glazer, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302-0391 R. Terry Rigsby, Esquire Law Office of R. Terry Rigsby, P. A. 215 South Monroe Street, Suite 505 Tallahassee, Florida 32301 Donna H. Stinson, Esquire Broad and Cassel 215 South Monroe Street, Suite 400 Post Office Drawer 11300 Tallahassee, Florida 32302
