The Issue Whether the Certificate of Need application (CON 9239) of Galencare, Inc., d/b/a Brandon Regional Hospital ("Brandon") to establish an open heart surgery program at its hospital facility in Hillsborough County should be granted?
Findings Of Fact District 6 District 6 is one of eleven health service planning districts in Florida set up by the "Health Facility and Services Development Act," Sections 408.031-408.045, Florida Statutes. See Section 408.031, Florida Statutes. The district is comprised of five counties: Hillsborough, Manatee, Polk, Hardee, and Highlands. Section 408.032(5), Florida Statutes. Of the five counties, three have providers of adult open heart surgery services: Hillsborough with three providers, Manatee with two, and Polk with one. There are in District 6 at present, therefore, a total of six existing providers. Existing Providers Hillsborough County The three providers of open heart surgery services ("OHS") in Hillsborough County are Florida Health Sciences Center, Inc., d/b/a Tampa General Hospital ("Tampa General"), St. Joseph's Hospital, Inc. ("St. Joseph's"), and University Community Hospital, Inc., d/b/a University Community Hospital ("UCH"). For the most part, Interstate 75 runs in a northerly and southerly direction dividing Hillsborough County roughly in half. If the interstate is considered to be a line dividing the eastern half of the county from the western, all three existing providers are in the western half of the county within the incorporated area of the county's major population center, the City of Tampa. Tampa General Opened approximately a century ago, Tampa General has been at its present location in the City of Tampa on Davis Island at the north end of Tampa Bay since 1927. The mission of Tampa General is three-fold. First, it provides a range of care (from simple to complex) for the west central region of the state. Second, it supports both the teaching and research activities of the University of South Florida College of Medicine. Finally and perhaps most importantly, it serves as the "health care safety net" for the people of Hillsborough County. Evidence of its status as the safety net for those its serves is its Case Mix Index for Medicare patients: 2.01. At such a level, "the case mix at Tampa General is one of the highest in the nation in Medicare population." (Tr. 2452). In keeping with its mission of being the county's health care safety net, Tampa General is a full-service acute care hospital. It also provides services unique to the county and the Tampa Bay area: a Level I trauma center, a regional burn center and adult solid organ transplant programs. Tampa General is licensed for 877 beds. Of these, 723 are for acute care, 31 are designated skilled nursing beds, 59 are comprehensive rehabilitation beds, 22 are psychiatry beds, and 42 are neonatal intensive care beds (18 Level II and 24 Level III). Of the 723 acute care beds, 160 are set aside for cardiac care, although they may be occupied from time-to-time by non-cardiac care patients. Tampa General is a statutory teaching hospital. It has an affiliation with the University of South Florida College of Medicine. It offers 13 residency programs, serving approximately 200 medical residents. Tampa General offers diagnostic and interventional cardiac catheterization services in four laboratories dedicated to such services. It has four operating rooms dedicated to open heart surgery. The range of open heart surgery services provided by Tampa General includes heart transplants. Care of the open heart patient immediately after surgery is in a dedicated cardiovascular intensive care unit of 18 beds. Following stay in the intensive care unit, the patient is cared for in either a 10-bed intermediate care unit or a 30- bed telemetry unit. Tampa General's full-service open heart surgery program provides high quality of care. St. Joseph's Founded by the Franciscan Sisters of Allegheny, New York, St. Joseph's is an acute care hospital located on Martin Luther King Boulevard in an "inner city kind of area" (Tr. 1586) of the City of Tampa near the geographic center of Hillsborough County. On the hospital campus sit three separate buildings: the main hospital, consisting of 559 beds; across the street, St. Joseph's Women's Hospital, a 197-bed facility dedicated to the care of women; and, opened in 1998, Tampa Children's Hospital, a 120-bed free-standing facility that offers pediatric services and Level II and Level III neonatal intensive care services. In addition to the women's and pediatric facilities, and consistent with the full-service nature of the hospital, St. Joseph's provides behavioral health and oncology services, and most pertinent to this proceeding, open heart surgery and related cardiovascular services. Designated as a Level 2 trauma center, St. Joseph's has a large and active emergency department. There were 90,211 visits to the Emergency Room in 1999, alone. Of the patients admitted annually, fifty-five percent are admitted through the Emergency Room. The formal mission of St. Joseph's organization is to take care of and improve the health of the community it serves. Another aspect of the mission passed down from its religious founders is to take care of the "marginalized, . . . the people that in many senses cannot take care of themselves, [those to whom] society has . . . closed [its] eyes . . .". (Tr. 1584). In keeping with its mission, it is St. Joseph's policy to provide care to anyone who seeks its hospital services without regard to ability to pay. In 1999, the hospital provided $33 million in charity care, as that term is defined by AHCA. In total, St. Joseph's provided $121 million in unfunded care during the same year. Not surprisingly, St. Joseph's is also a disproportionate Medicaid provider. The only hospital in the district that provides both adult and pediatric open heart surgery services, St. Joseph's has three dedicated OHS surgical suites, a 14-bed unit dedicated to cardiovascular intensive care for its adult OHS patients, a 12-bed coronary care unit and 86 progressive care beds, all with telemetry capability. St. Joseph's provides high quality of care in its OHS. UCH University Community Hospital, Inc., is a private, not-for-profit corporation. It operates two hospital facilities: the main hospital ("UCH") a 431-bed hospital on Fletcher Avenue in north Tampa, and a second 120-bed hospital in Carrollwood. UCH is accredited by the JCAHO "with commendation," the highest rating available. It provides patient care regardless of ability to pay. UCH's cardiac surgery program is called the "Pepin Heart & Vascular Institute," after Art Pepin, "a 14-year heart transplant recipient [and] . . . the oldest heart transplant recipient in the nation alive today." (Tr. 2841). A Temple Terrace resident, Mr. Pepin also helped to fund the start of the institute. Its service area for tertiary services, including OHS, includes all of Hillsborough County, and extends into south Pasco County and Polk County. The Pepin Institute has excellent facilities and equipment. It has three dedicated OHS operating suites, three fully-equipped "state-of-the-art" cardiac catheterization laboratories equipped with special PTCA or angioplasty devices, and several cardiology care units specifically for OHS/PTCA services. Immediately following surgery, OHS patients go to a dedicated 8-bed cardiovascular intensive care unit. From there patients proceed to a dedicated 20-bed progressive care unit ("PCU"), comprised of all private rooms. There is also a 24-bed PCU dedicated to PTCA patients. There is another 22-bed interventional unit that serves as an overflow unit for patients receiving PTCA or cardiac catheterization. UCH has a 22-bed medical cardiology unit for chest pain observation, congestive heart failure, and other cardiac disorders. Staffing these units requires about 110 experienced, full-time employees. UCH has a special "chest pain" Emergency Room with specially-trained cardiac nurses and defined protocols for the treatment of chest pain and heart attacks. UCH offers a free van service for its UCH patients and their families that operates around the clock. As in the case of the other two existing providers of OHS services in Hillsborough Counties, UCH provides a full range of cardiovascular services at high quality. Manatee County The two existing providers of adult open heart surgery services in Manatee County are Manatee Memorial Hospital, Inc., and Blake Medical Center, Inc. Neither are parties in this proceeding. Although Manatee Memorial filed a petition for formal administrative hearing seeking to overturn the preliminary decision of the Agency, the petition was withdrawn before the case reached hearing. Polk County The existing provider of adult open heart surgery services in Polk County is Lakeland Regional Medical Center, Inc. ("Lakeland"). Licensed for 851 beds, Lakeland is a large, not-for- profit, tertiary regional hospital. In 1999, Lakeland admitted approximately 30,000 patients. In fiscal 1999, there were about 105,000 visits to Lakeland's Emergency Room. Lakeland provides a wide range of acute care services, including OHS and diagnostic and therapeutic cardiac catheterization. It draws its OHS patients from the Lakeland urban area, the rest of Polk County, eastern Hillsborough County (particularly from Plant City), and some of the surrounding counties. Lakeland has a high quality OHS program that provides high quality of care to its patients. It has two dedicated OHS surgical suites and a third surgical suite equipped and ready for OHS procedures on an as-needed basis. Its volume for the last few years has been relatively flat. Lakeland offers interventional radiology services, a trauma center, a high-risk obstetrics service, oncology, neonatal intensive care, pediatric intensive care, radiation therapy, alcohol and chemical dependency, and behavioral sciences services. Lakeland treats all patients without regard to their ability to pay, and provides a substantial amount of charity care, amounting in fiscal year 1999 to $20 million. The Applicant Brandon Regional Hospital ("Brandon") is a 255-bed hospital located in Brandon, Florida, an unincorporated area of Hillsborough County east of Interstate 75. Included among Brandon's 255 beds are 218 acute care beds, 15 hospital-based skilled nursing unit beds, 14 tertiary Level II neonatal intensive care unit ("NICU") beds, and 8 tertiary Level III NICU beds. Brandon offers a wide array of medical specialties and services to its patients including cardiology; internal medicine; critical care medicine; family practice; nephrology; pulmonary medicine; oncology/hematology; infectious disease; neurology; psychiatry; endocrinology; gastroenterology; physical medicine; rehabilitation; radiation oncology; pathology; respiratory therapy; and anesthesiology. Brandon operates a mature cardiology program which includes inpatient diagnostic cardiac catheterization, outpatient diagnostic cardiac catheterization, electrocardiography, stress testing, and echocardiography. The Brandon medical staff includes 22 Board-certified cardiologists who practice both interventional and invasive cardiology. Board certification is a prerequisite to maintaining cardiology staff privileges at Brandon. Brandon's inpatient diagnostic cardiac catheterization program was initiated in 1989 and has performed in excess of 800 inpatient diagnostic cardiac catheterization procedures per year since 1996. Brandon's daily census has increased from 159 to 187 for the period 1997 to 1999 commensurate with the burgeoning population growth in Brandon's primary service area. Brandon's Emergency Room is the third busiest in Hillsborough County and has more visits than Tampa General's Emergency Room. From 1997- 1999, Brandon's Emergency Room visits increased from 43,000 to 53,000 per year and at the time of hearing were expected to increase an additional 5-6 percent during the year 2000. Brandon has also recently expanded many services to accommodate the growing health care needs of the Brandon community. For example, Brandon doubled the square footage of its Emergency Room and added 17 treatment rooms. It has also implemented an outpatient diagnostic and rehabilitation center, increased the number of labor, delivery and recovery suites, and created a high-risk ante-partum observation unit. Brandon was recently approved for 5 additional tertiary Level II NICU beds and 3 additional tertiary Level III NICU beds which increased Brandon's Level II/III NICU bed complement to 22 beds. Brandon is a Level 5 hospital within HCA's internal ranking system, which is the company's highest facility level in terms of service, revenue, and patient service area population. Brandon has been ranked as one of the Nation's top 100 hospitals by HCIA/Mercer, Inc., based on Brandon's clinical and financial performance. The Proposal On September 15, 1999, Brandon submitted to AHCA CON Application 9239, its third application for an open heart surgery program in the past few years. (CON 9085 and 9169, the two earlier applications, were both denied.) The second of the three, CON 9169, sought approval on the basis of the same two "not normal" circumstances alleged by Brandon to justify approval in this proceeding. CON 9239 addresses the Agency's January 2002 planning horizon. Brandon proposes to construct two dedicated cardiovascular operating rooms ("CV-OR"), a six-bed dedicated cardiovascular intensive care unit ("CVICU"), a pump room and sterile prep room all located in close proximity on Brandon's first floor. The costs, methods of construction, and design of Brandon's proposed CV-OR, CVICU, pump room, and sterile prep room are reasonable. As a condition of CON approval, Brandon will contribute $100,000 per year for five years to the Hillsborough County Health Care Program for use in providing health care to the homeless, indigent, and other needy residents of Hillsborough County. The administration at Brandon is committed to establishing an adult open heart surgery program. The proposal is supported by the medical and nursing staff. It is also supported by the Brandon community. The Brandon Community in East Hillsborough County Brandon, Florida, is a large unincorporated community in Hillsborough County, east of Interstate 75. The Brandon area is one of the fastest growing in the state. In the last ten years alone, the area's population has increased from approximately 90,000 to 160,000. An incorporated Brandon municipality (depending on the boundaries of the incorporation) has the potential to be the eighth largest city in Florida. The Brandon community's population is projected to further increase by at least 50,000 over the next five to ten years. Brandon Regional Hospital's primary service area not only encompasses the Brandon community, but further extends throughout Hillsborough County to a populous of nearly 285,000 persons. The population of Brandon's primary service area is projected to increase to 309,000 by the year 2004, of which approximately 32,000 are anticipated to be over the age of 65, making Brandon's population "young" relative to much of the rest of the State. The community of Brandon has attracted several new large housing developments which are likely to accelerate its projected growth. According to the Hillsborough County City- County Planning Commission, six of the eleven largest subdivisions of single-family homes permitted in 1998 are located nearby. For example, the infrastructure is in place for an 8,000-acre housing development east of Brandon which consists of 7,500 homes and is projected to bring in 30,000 people over the next 5-10 years. Two other large housing developments will bring an additional 5,000-10,000 persons to the Brandon area. The community of Brandon is also an attractive area for relocating businesses. Recent additions to the Brandon area include, among others, CitiGroup Corporation, Atlantic Lucent Technologies, Household Finance, Ford Motor Credit, and Progressive Insurance. CitiGroup Corporation alone supplemented the area's population with approximately 5,000 persons. The community of Brandon has experienced growth in the development of health care facilities with 5 new assisted living facilities and one additional assisted living facility under construction. The average age of the residents of these facilities is much higher than of the Brandon area as a whole. Existing Providers' Distance from Brandon's PSA Brandon's primary service area ("PSA") is comprised of 12 zip code areas "in and around Brandon, essentially eastern Hillsborough County." (Tr. 1071). Using the center of each zip code in Brandon's primary service area as the location for each resident of the zip code area, the residents of Brandon's PSA are an average of 15 miles from Tampa General, 16.4 miles from St. Joseph's, 17.3 miles from UCH and 24.6 miles from Lakeland Regional Medical Center. In contrast, they are only 7.7 miles from Brandon Regional Hospital. Using the same methodology, the residents of Brandon's PSA are an average of more than 40 miles from Blake Medical Center (44.9 miles) and Manatee Memorial (41 miles). Numeric Need Publication Rule 59C-1.033, Florida Administrative Code (the "Open Heart Surgery Program Rule" or the "Rule") specifies a methodology for determining numeric need for new open heart surgery programs in health planning districts. The methodology is set forth in section (7) of the Rule. Part of the methodology is a formula. See subsection (b) of Section (7) of the Rule. Using the formula, the Agency calculated numeric need in the District for the January 2002 Planning Horizon. The calculation yielded a result of 3.27 additional programs needed to serve the District by January 1, 2002. But calculation of numeric need under the formula is not all that is entailed in the complete methodology for determining numeric need. Numeric need is also determined by taking other factors into consideration. The Agency is to determine net need based on the formula "[p]rovided that the provisions of paragraphs (7)(a) and (7) (c) do not apply." Rule 59C-1.033(b), Florida Administrative Code. Paragraph (7)(a) states, "[a] new adult open heart surgery program shall not normally be approved in the district" if the following condition (among others) exists: 2. One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool; . . . Rule 59C-1.033(7)(a), Florida Administrative Code. Both Blake Medical Center and Manatee Memorial Hospital in Manatee County were operational and performed less that 350 adult open heart surgery operations in the qualifying time periods described by subparagraph (7)(a)2., of the Rule. (Blake reported 221 open heart admissions for the 12-month period ending March 31, 1999; Manatee Memorial for the same period reported 319). Because of the sub-350 volume of the two providers, the Rule's methodology yielded a numeric need of "0" new open heart surgery programs in District 6 for the January 2002 Planning Horizon. In other words, the numeric need of 3.27 determined by calculation pursuant to the formula prior to consideration of the programs described in (7)(a)2.1, was "zeroed out" by operation of the Rule. Accordingly, a numeric need of zero for the district in the applicable planning horizon was published on behalf of the Agency in the January 29, 1999, issue of the Florida Administrative Weekly. No Impact on Manatee County Providers In 1998, only one resident of Brandon's PSA received an open heart surgery procedure in Manatee County. For the same period only two residents from Brandon's PSA received an angioplasty procedure in Manatee County. These three residents received the services at Manatee Memorial. Of the two Manatee County programs, Manatee Memorial consistently has a higher volume of open heart surgery cases and according to the latest data available at the time of hearing has "hit the mark" (Tr. 1546) of 350 procedures annually. Very few residents from other District 6 counties receive cardiac services in Manatee County. Similarly, very few Manatee county residents migrate from Manatee County to another District 6 hospital to receive cardiac services. In 1998, only 19 of a total 1,209 combined open heart and angioplasty procedures performed at either Blake or Manatee Memorial originated in the other District 6 counties and only two were from the Brandon area. Among the 6,739 Manatee County residents discharged from a Florida hospital in calendar year 1998 following any cardiovascular procedure (MDC-5), only 58(0.9 percent) utilized one of the other providers in District 6, and none were discharged from Brandon. Among the 643 open heart surgeries performed on Manatee County residents in 1998, only 17 cases were seen at one of the District 6 open heart programs outside of Manatee County. There is, therefore, practically no patient exchange between Manatee County and the remainder of the District. In sum, there is virtually no cardiac patient overlap between Manatee County and Brandon's primary service area. The development of an open heart surgery program at Brandon will have no appreciable or meaningful impact on the Manatee County providers. CON 9169 In CON 9169, Brandon applied for an open heart surgery program on the basis of special circumstances due to no impact on low volume providers in Manatee County. The application was denied by AHCA. The State Agency Action Report ("SAAR") on CON 9169, dated June 17, 1999, in a section of the SAAR denominated "Special Circumstances," found the application to demonstrate "that a program at Brandon would not impact the two Manatee hospitals . . .". (UCH Ex. No. 6, p. 5). The "Special Circumstances" section of the SAAR on CON 9169, however, does not conclude that the lack of impact constitutes special circumstances. In follow-up to the finding of the application's demonstration of no impact to the Manatee County, the SAAR turned to impact on the non-Manatee County providers in District The SAAR on CON 9169 states, "it is apparent that a new program in Brandon would impact existing providers [those in Hillsborough and Polk Counties] in the absence of significant open heart surgery growth." Id. In reference to Brandon's argument in support of special circumstances based on the lack of impact to the Manatee County providers, the CON 9169 SAAR states: [T]he applicant notes the open heart need formula should be applied to District 6 excluding Manatee County, which would result in the need for several programs. This argument ignores the provision of the rule that specifies that the need cannot exceed one. (UCH No. 6, p. 7). The Special Circumstances Section of the SAAR on CON 9169 does not deal directly with whether lack of impact to the Manatee County providers is a special circumstance justifying one additional program. Instead, the Agency disposes of Brandon's argument in the "Summary" section of the SAAR. There AHCA found Brandon's special circumstances argument to fail because "no impact on low volume providers" is not among those special circumstances traditionally or previously recognized in case law and by the Agency: To demonstrate need under special circumstances, the applicant should demonstrate one or more of the following reasons: access problems to open heart surgery; capacity limits of existing providers; denial of access based on payment source or lack thereof; patients are seeking care outside the district for service; improvement of care to underserved population groups; and/or cost savings to the consumer. The applicant did not provide any documentation in support of these reasons. (UCH No. 6, p. 29). Following reference to the Agency's publication of zero need in District 6, moreover, the SAAR reiterated that [t]he implementation of another program in Hillsborough County is expected to significantly [a]ffect existing programs, in particular Tampa General Hospital, an important indigent care provider. (Id.) Typical "not normal circumstances" that support approval of a new program were described at hearing by one health planner as consisting of a significant "gap" in the current health care delivery system of that service. Typical Not Normal Circumstances Just as in CON 9169, none of the typical "not normal" circumstances" recognized in case law and with which the Agency has previous experience are present in this case. The six existing OHS programs in District 6 have unused capacity, are available, and are adequate to meet the projected OHS demand in District 6, in Hillsborough County ("County"), and in Brandon's proposed primary service area ("PSA"). All three County OHS providers are less than 17 miles from Brandon. There are, therefore, no major service geographic gaps in the availability of OHS services. Existing providers in District 6 have unused capacity to meet OHS projected demand in January 2002. OHS volume for District 6 will increase by only 179 surgeries. This is modest growth, and can easily be absorbed by the existing providers. In fact, existing OHS providers have previously handled more volume than what is projected for 2002. In 1995, 3,313 OHS procedures were generated at the six OHS programs. Yet, only 3,245 procedures are projected for 2002. The demand in 1995 was greater than what is projected for 2002. Neither population growth nor demographic characteristics of Brandon's PSA demonstrate that existing programs cannot meet demand. The greatest users of OHS services are the elderly. In 1999, the percentage in District 6 was similar to the Florida average; 18.25 percent for District 6, 18.38 percent for the state. The elderly percentage in Hillsborough County was less: 13.21 percent. The elderly component in Brandon's PSA was less still: 10.44 percent. In 2004, about 18.5 percent of Florida and District 6 residents are projected to be elderly. In contrast, only 10.5 percent of PSA residents are expected to be elderly. Brandon's PSA is "one of the younger defined population segments that you could find in the State of Florida" (Tr. 2892) and likely to remain so. Brandon's PSA will experience limited growth in OHS volume. Between 1999 - 2002, OHS volume will grow by only 36. The annual growth thereafter is only 13 surgeries. This is "very modest" growth and is among the "lowest numbers" of incremental growth in the State. Existing OHS providers can easily absorb this minimal growth. Brandon's PSA, is not an underserved area . . . there is excellent access to existing providers and . . . the market in this service area is already quite competitive. There is not a single competitor that dominates. In fact, the four existing providers [in Hillsborough and Polk Counties] compete quite vigorously. (Tr. 2897). Existing OHS programs in District 6 provide very good quality of care. The surgeons at the programs are excellent. Dr. Gandhi, testifying in support of Brandon's application, testified that he was very comfortable in referring his patients for OHS services to St. Joseph and Tampa General, having, in fact, been comfortable with his father having had OHS at Tampa General. Likewise, Dr. Vijay and his group, also supporters of the Brandon application, split time between Bayonet Point and Tampa General. Dr. Vijay is very proud to be associated with the OHS program at Tampa General. Lakeland also operates a high quality OHS program. In its application, Brandon did not challenge the quality of care at the existing OHS programs in District 6. Nor did Brandon at hearing advance as reasons for supporting its application, capacity constraints, inability of existing providers to absorb incremental growth in OHS volume or failure of existing providers to meet the needs of the residents of Brandon's primary service area. The Agency, in its preliminary decision on the application, agreed that typical "not normal" circumstances in this case are not present. Included among these circumstances are those related to lack of "geographic access." The Agency's OHS Rule includes a geographic access standard of two hours. It is undisputed that all District 6 residents have access to OHS services at multiple OHS providers in the District and outside the District within two hours. The travel time from Brandon to UCH or Tampa General, moreover, is usually less than 30 minutes anytime during the day, including peak travel time. Travel time from Brandon to St. Joseph's is about 30 minutes. There are times, however, when travel time exceeds 30 minutes. There have been incidents when traffic congestion has prevented emergency transport of Brandon patients suffering myocardial infarcts from reaching nearby open heart surgery providers within the 30 minutes by ground ambulance. Delays in travel are not a problem in most OHS cases. In the great majority, procedures are elective and scheduled in advance. OHS procedures are routinely scheduled days, if not weeks, after determining that the procedure is necessary. This high percentage of elective procedures is attributed to better management of patients, better technology, and improved stabilizing medications. The advent of drugs such as thrombolytic therapy, calcium channel blockers, beta blockers, and anti-platelet medications have vastly improved stabilization of patients who present at Emergency Rooms with myocardial infarctions. In its application, Brandon did not raise outmigration as a not-normal circumstance to support its proposal and with good reason. Hillsborough County residents generally do not leave District 6 for OHS. In fact, over 96 percent of County residents receive OHS services at a District 6 provider. Lack of out-migration shows two significant facts: (a) existing OHS programs are perceived to be reasonably accessible; and (2) County residents are satisfied with the quality of OHS services they receive in the County. This 96 percent retention rate is even more impressive considering there are many OHS programs and options available to County residents within a two-hour travel time. In contrast, there are two low-volume OHS providers in Manatee County, one of them being Blake. Unlike Hillsborough County residents, only 78 percent of Manatee County residents remain in District 6 for OHS services. Such outmigration shows that these residents prefer to bypass closer programs, and travel further distances, to receive OHS services at high-volume facility in District 8, which they regard as offering a higher quality of service. In its Application, Brandon does not raise economic access as a "not normal" circumstance. In fact, Brandon concedes that the demand for OHS services by Medicaid and indigent patients is very limited because Brandon's PSA is an affluent area. Brandon does not "condition" its application on serving a specific number or percentage of Medicaid or indigent patients. There are no financial barriers to accessing OHS services in District 6. All OHS providers in Hillsborough County and LRMC provide services to Medicaid and indigent patients, as needed. Approving Brandon is not needed to improve service or care to Medicaid or indigent patient populations. Tampa General is the "safety net" provider for health care services to all County residents. Tampa General is an OHS provider geographically accessible to Brandon's PSA. Tampa General actively services the PSA now for OHS. Brandon did not demonstrate cost savings to the patient population of its PSA if it were approved. Approving Brandon is not needed to improve cost savings to the patient population. Brandon based its OHS and PTCA charges on the average charge for PSA residents who are serviced at the existing OHS providers. While that approach is acceptable, Brandon does not propose a charge structure which is uniquely advantageous for patients. Restated, patients would not financially benefit if Brandon were approved. Tertiary Service Open Heart Surgery is defined as a tertiary service by rule. A "tertiary health service" is defined in Section 408.032(17), Florida Statutes, as follows: health service, which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost- effectiveness of such service. As a tertiary service, OHS is necessarily a referral service. Most hospitals, lacking OHS capability, transfer their patients to providers of the service. One might expect providers of open heart surgery in Florida in light of OHS' status as a tertiary service to be limited to regional centers of excellence. The reality of the six hospitals that provide open heart surgery services in District 6 defies this health-planning expectation. While each of the six provides OHS services of high quality, they are not "regional" centers since all are in the same health planning district. Rather than each being a regional center, the six together comprise more localized providers that are dispersed throughout a region, quite the opposite of a center for an entire region. Brandon's Allegations of Special Circumstances. Brandon presents two special circumstances for approval of its application. The first is that consideration of the low-volume Manatee County providers should not operate to "zero out" the numeric need calculated by the formula. The second relates to transfers and occasional problems with transfers for Brandon patients in need of emergency open heart services. "Time is Muscle" Lack of blood flow to the heart during a myocardial infarction ("MI") results in loss of myocardium (heart muscle). The longer the blood flow is disrupted or diminished, the more myocardium is lost. The more myocardium lost, the more likely the patient will die or, should the patient survive, suffer severe reduction in quality of life. The key to good patient outcome when a patient is experiencing an acute MI is prompt evaluation and rapid treatment upon presentation at the hospital. Restoration of blood flow to the heart (revascularization) is the goal of the treating physician once it is recognized that a patient is suffering an MI. If revascularization is not commenced within 2 hours of the onset of an acute MI, an MI patient's potential for recovery is greatly diminished. The need for prompt revascularization for a patient suffering an MI is summed up in the phrase "time is muscle," a phrase accepted as a maxim by cardiologists and cardiothoracic surgeons. Recent advances in modern medicine and technology have improved the ability to stabilize and treat patients with acute MIs and other cardiac traumas. The three primary treatment modalities available to a patient suffering from an MI are: 1) thrombolytics; 2) angioplasty and stent placement; and, 3) open heart surgery. Because of the advancement of the effectiveness of thrombolytics, thrombolytic therapy has become the standard of care for treating MIs. Thrombolytic therapy is the administration of medication to dissolve blood clots. Administered intravenously, thrombolytic medication begins working within minutes to dissolve the clot causing the acute MI and therefore halt the damage done by an MI to myocardium. The protocols to administer thrombolysis are similar among hospitals. If a patient presents with chest pain and the E.R. physician identifies evidence of an active heart attack, thrombolysis is normally administered. If the E.R. physician is uncertain, a cardiologist is quickly contacted to evaluate the patient. Achieving good outcomes in cases of myocardial infarctions requires prompt consultation with the patient, competent clinical assessment, and quick administration of appropriate treatment. The ability to timely evaluate patient conditions for MI, and timely administer thrombolytic therapy, is measured and evaluated nationally by the National Registry of Myocardial Infarction. The National Registry makes the measurement according to a standard known as "door-to-needle" time. This standard measures the time between the patient's presentation at the E.R. and the time the patient is initially administered thrombolytic medication by injection intravenously. Patients often begin to respond to thrombolysis within 10-15 minutes. Consistent with the maxim, "time is muscle," the shorter the door-to-needle time, the better the chance of the patient's successful recovery. The effectiveness of thrombolysis continues to increase. For example, the advent of a drug called Reapro blocks platelet activity, and has increased the efficacy rate of thrombolysis to at least 85 percent. As one would expect, then, thrombolytic therapy is the primary method of revascularization available to patients at Brandon. Due to the lack of open heart surgery backup, moreover, Brandon is precluded by Agency rule from offering angioplasty in all but the most extreme cases: those in which it is determined that a patient will not survive a transfer. While Brandon has protocols, authority, and equipment to perform angioplasty when a patient is not expected to survive a transfer, physicians are reluctant to perform angioplasty without open heart backup because of complications that can develop that require open heart surgery. Angioplasty, therefore, is not usually a treatment modality available to the MI patient at Brandon. Although the care of choice for MI treatment, thrombolytics are not always effective. To the knowledge of the cardiologists who testified in this proceeding, there is not published data on the percentage of patients for whom thrombolytics are not effective. But from the cardiologists who offered their opinions on the percentage in the proceeding, it can be safely found that the percentage is at least 10 percent. Thrombolytics are not ordered for these patients because they are inappropriate in the patients' individual cases. Among the contraindications for thrombolytics are bleeding disorders, recent surgery, high blood pressure, and gastrointestinal bleeding. Of the patients ineligible for thrombolytics, a subset, approximately half, are also ineligible for angioplasty. The other half are eligible for angioplasty. Under the most conservative projections, then at least 1 in 20 patients suffering an MI would benefit from timely angioplasty intervention for which open heart surgery back-up is required in all but the rarest of cases. In 1997, 351 people presented to Brandon's Emergency Room suffering from an acute MI. In 1998, the number of MIs increased to 427. In 1999, 428 patients presented to Brandon's Emergency Room suffering from an acute MI. At least 120 (10 percent) of the total 1206 MI patients presenting to Brandon's Emergency Room from 1997 to 1999 would have been ineligible for thrombolytics as a means of revascularization. Of these, half would have been ineligible for angioplasty while the other half would have been eligible. Sixty, therefore, is the minimum number of patients from 1997 to 1999 who would have benefited from angioplasty at Brandon using the most conservative estimate. Transfers of Emergency Patients Those patients who presented at Brandon's Emergency Room with acute MI and who could not be stabilized with thrombolytic therapy had to be transferred to one of the nearby providers of open heart surgery. In 1998, Brandon transferred an additional 190 patients who did not receive a diagnostic catheterization procedure at Brandon for either angioplasty or open heart surgery. For the first 9 months of 1999, 114 such transfers were made. Thus, in 1998 alone, Brandon transferred a total of 516 cardiac patients to existing providers for the provision of angioplasty or open heart surgery, more than any other provider in the District. In 1999, Brandon made 497 such transfers. Not all of these were emergency transfers, of course. But in the three years between 1997 and 1999 at least 60 patients were in need of emergency transfers who would benefit from angioplasty with open heart backup. Of those Brandon patients determined to be in need of urgent angioplasty or open heart surgery, all must be transferred to existing providers either by ambulance or by helicopter. Ambulance transfer is accomplished through ambulances maintained by the Hillsborough County Fire Department. Due to the cardiac patient's acuity level, ambulance transfer of such patients necessitates the use of ambulances equipped with Advanced Life Support Systems (ALS) in order to monitor the patient's heart functions and to treat the patient should the patient's condition deteriorate. Hillsborough County operates 18 ambulances. All have ALS capability. Patients with less serious medical problems are sometimes transported by private ambulances equipped with Basic Life Support Systems (BLS) that lack the equipment to appropriately care for the cardiac patient. But, private ambulances are not an option to transport critically ill cardiac patients because they are only equipped with BLS capability. Private ambulances, moreover, do not make interfacility transports of cardiac patients between Hillsborough County hospitals. There are many demands on the ambulance transfer system in Hillsborough County. Hillsborough County's 18 ALS ambulances cover in excess of 960 square miles. Of these 18 ambulances, only three routinely operate within the Brandon area. Hillsborough County ambulances respond to 911 calls before requests for interfacility transfers of cardiac patients and are extremely busy responding to automobile accidents, especially when it rains. As a result, Hillsborough County ambulances are not always available on a timely basis when needed to perform an interfacility transfer of a cardiac patient. At times, due to inordinate delay caused by traffic congestion, inter-facility ambulance transport, even if the ambulance is appropriately equipped, is not an option for cardiac patients urgently in need of angioplasty or open heart surgery. It has happened, for example, that an ambulance has appeared at the hospital 8 hours after a request for transport. Some cardiac surgeons will not utilize ground transport as a means of transporting urgent open heart and angioplasty cases. Expeditious helicopter transport in Hillsborough County is available as an alternative to ground transport. But, it too, from time-to-time, is problematic for patients in urgent need of angioplasty or open heart surgery. Tampa General operates two helicopters through AeroMed, only one of which is located in Hillsborough County. AeroMed's two helicopters are not exclusively devoted to cardiac patients. They are also utilized for the transfer of emergency medical and trauma patients, further taxing the availability of AeroMed helicopters to transfer patients in need of immediate open heart surgery or angioplasty. BayCare operates the only other helicopter transport service serving Hillsborough County. BayCare maintains several helicopters, only one of which is located in Hillsborough County at St. Joseph's. BayCare helicopters are not equipped with intra-aortic balloon pump capability, thereby limiting their use in transporting the more complicated cardiac patients. Helicopter transport is not only a traumatic experience for the patient, but time consuming. Once a request has been made by Brandon to transport a patient in need of urgent intervention, it routinely takes two and a half hours, with instances of up to four hours, to effectuate a helicopter transfer. At the patient's beside, AeroMed personnel must remove the patient's existing monitors, IVS, and drips, and refit the patient with AeroMed's equipment in preparation for flight. In more complicated cases requiring the use of an intra-aortic balloon pump, the patient's balloon pump placed at Brandon must be removed and substituted with the balloon pump utilized by AeroMed. Further delays may be experienced at the receiving facility. The national average of the time from presentation to commencement of the procedure is reported to be two hours. In most instances at UCH, it is probably 90 minutes although "[t]here are of course instances where it would be much faster . . .". (Tr. 3212). On the other hand, there are additional delays from time-to-time. "[P]erhaps the longest circumstance would be when all the labs are full . . . or . . . even worse . . . if all the staff has just left for the day and they are almost home, to then turn them around and bring them all back." (Id.) Specific Cases Involving Transfers Delays in the transfer process were detailed at hearing by Brandon cardiologists with regard to specific Brandon patients. In cases in which "time is muscle," delay is critical except for one subset of such cases: that in which, no matter what procedure is available and no matter how timely that procedure can be provided, the patient cannot be saved. Craig Randall Martin, M.D., Board-certified in Internal Medicine and Cardiovascular Disease, and an expert in cardiology, wrote to AHCA in support of the application by detailing two "examples of patients who were in an extreme situation that required emergent, immediate intervention . . . [intervention that could not be provided] at Brandon Hospital." (Tr. 408). One of these concerned a man in his early sixties who was a patient at Brandon the night and morning of October 13 and 14, 1998. It represents one of the rare cases in which an emergency angioplasty was performed at Brandon even though the hospital does not have open heart backup. The patient had presented to the Emergency Room at approximately 11:00 p.m., on October 13 with complaints of chest pain. Although the patient had a history of prior infarctions, PTCA procedures, and onset diabetes, was obese, a smoker and had suffered a stroke, initial evaluation, including EKG and blood tests, did not reveal an MI. The patient was observed and treated for what was probably angina. With the subsiding of the chest pain, he was appropriately admitted at 2:30 a.m. to a non- intensive cardiac telemetry bed in the hospital. At 3:00 a.m., he was observed to be stable. A few hours or so later, the patient developed severe chest pain. The telemetry unit indicated a very slow heart rate. Transferred to the intensive care unit, his blood pressure was observed to be very low. Aware of the seriousness of the patient's condition, hospital personnel called Dr. Martin. Dr. Martin arrived on the scene and determined the patient to be in cardiogenic shock, an extreme situation. In such a state, a patient has a survival rate of 15 to 20 percent, unless revascularization occurs promptly. If revascularization is timely, the survival rate doubles to 40 percent. Coincident with the cardiogenic shock, the patient was suffering a complete heart block with a number of blood clots in the right coronary artery. The patient's condition, to say the least, was grave. Dr. Martin described the action taken at Brandon: . . . I immediately called in the cardiac catheterization team and moved the patient to the catheterization laboratory. * * * Somewhere around 7:30 in the morning, I put a temporary pacemaker in, performed a diagnostic catheterization that showed that one of his arteries was completely clotted. He, even with the pacemaker giving him an adequate heart rate, and even with the use of intravenous medication for his blood pressure, . . . was still in cardiogenic shock. * * * And I placed an intra-aortic balloon pump . . ., a special pump that fits in the aorta and pumps in synchrony with the heart and supports the blood pressure and circulation of the muscle. That still did not alleviate the situation . . . an excellent indication to do a salvage angioplasty on this patient. I performed the angioplasty. It was not completely successful. The patient had a respiratory arrest. He required intubation, required to be put on a ventilator for support. And it became apparent to me that I did not have the means to save this patient at [Brandon]. I put a call to the . . . cardiac surgeon of choice . . . . [Because the surgeon was on vacation], [h]is associate [who happened to be in the operating room at UCH] called me back immediately . . . and said ["]Yes, I'll take your patient. Send him to me immediately, I will postpone my current case in order to take care of your patient.["] At that point, we called for helicopter transport, and there were great delays in obtaining [the] transport. The patient was finally transferred to University Community Hospital, had surgery, was unsuccessful and died later that afternoon. (Tr. 409-412). By great delays in the transport, Dr. Martin referred to inability to obtain prompt helicopter transport. University Community Hospital, the receiving hospital, was not able to find a helicopter. Dr. Martin, therefore, requested Tampa General (a third hospital uninvolved from the point of being either the transferring or the receiving hospital) to send one of its two helicopters to transfer the patient from Brandon to UCH. Dr. Martin described Tampa General's response: They balked. And I did not know they balked until an hour later. And I promptly called them back, got that person on the telephone, we had a heated discussion. And after that person checked with their supervisor, the helicopter was finally sent. There was at least an hour-and-a-half delay in obtaining a helicopter transport on this patient that particular morning that was unnecessary. And that is critical when you have a patient in this condition. (Tr. 413, emphasis supplied.) In the case of this patient, however, the delay in the transport from Brandon to the UCH cardiovascular surgery table, in all likelihood, was not critical to outcome. During the emergency angioplasty procedure at Brandon, some of the clot causing the infarction was dislodged. It moved so as to create a "no-flow state down the right coronary artery. In other words, . . ., it cut off[] the microcirculation . . . [so that] there is no place for the blood . . . to get out of the artery. And that's a devastating, deadly problem." (Tr. 2721). This "embolization, an unfortunate happenstance [at times] with angioplasty", id., probably sealed the patient's fate, that is, death. It is very likely that the patient with or without surgery, timely or not, would not have survived cardiogenic shock, complete heart block, and the circumstance of no circulation in the right coronary artery that occurred during the angioplasty procedure. Adithy Kumar Gandhi, M.D., is Board-certified in Internal Medicine and Cardiology. Employed by the Brandon Cardiology Group, a three-member group in Brandon, Dr. Gandhi was accepted as an expert in the field of cardiology in this proceeding. Dr. Gandhi testified about two patients in whose cases delays occurred in transferring them to St. Joseph’s. He also testified about a third case in which it took two hours to transfer the patient by helicopter to Tampa General. The first case involves an elderly woman. She had multiple-risk factors for coronary disease including a family history of cardiac disease and a personal history of “chest pain.” (Tr. 2299). The patient presented at Brandon’s Emergency Room on March 17, 1999 at around 2:30 p.m. Seen by the E.R. physician about 30 minutes later, she was placed in a monitored telemetry bed. She was determined to be stable. During the next two days, despite family and personal history pointing to a potentially serious situation, the patient refused to submit to cardiac catheterization at Brandon as recommended by Dr. Gandhi. She maintained her refusal despite results from a stress test that showed abnormal left ventricular systolic function. Finally, on March 20, after a meeting with family members and Dr. Gandhi, the patient consented to the cath procedure. The procedure was scheduled for March 22. During the procedure, it was discovered that a major artery of the heart was 80 percent blocked. This condition is known as the “widow-maker,” because the prognosis for the patient is so poor. Dr. Gandhi determined that “the patient needed open heart surgery and . . . to be transferred immediately to a tertiary hospital.” (Tr. 2305-6). He described that action he took to obtain an immediate transfer as follows: I talked to the surgeon up at St. Joseph’s and I informed him I have had difficulties transferring patients to St. Joseph’s the same day. [I asked him to] do me a favor and transfer the patient out of Brandon Hospital as soon as possible by helicopter. The surgeon promised me that he would take care of that. (Tr. 2261). The assurance, however, failed. The patient was not transferred that day. That night, while still at Brandon, complications developed for the patient. The complications demanded that an intra-aortic balloon pump be inserted in order to increase the blood flow to the heart. After Dr. Gandhi’s partner inserted the pump, he, too, contacted the surgeon at St. Joseph’s to arrange an immediate transfer for open heart surgery. But the patient was not transferred until early the next morning. Dr. Gandhi’s frustration at the delay for this critically ill patient in need of immediate open heart surgery is evident from the following testimony: So the patient had approximately 18 hours of delay of getting to the hospital with bypass capabilities even though the surgeon knew that she had a widow-maker, he had promised me that he would make those transfer arrangements, even though St. Joseph’s Hospital knew that the patient needed to be transferred, even though I was promised that the patient would be at a tertiary hospital for bypass capabilities. (Tr. 2262). Rod Randall, M.D., is a cardiologist whose practice is primarily at St. Joseph’s. He had active privileges at Brandon until 1998 when he “switched to courtesy privileges,” (Tr. 1735) at Brandon. He reviewed the medical records of the first patient about whom Dr. Gandhi testified. A review of the patient’s medical records disclosed no adverse outcome due to the patient’s transfer. To the contrary, the patient was reasonably stable at the time of transfer. Nonetheless, it would have been in the patient’s best interest to have been transferred prior to the catheterization procedure at Brandon. As Dr. Randall explained, [W]e typically cath people that we feel are going to have a probability of coronary artery disease. That is, you don’t tend to cath someone that [for whom] you don’t expect to find disease . . . . If you are going to cath this patient, [who] is in a higher risk category being an elderly female with . . . diminished injection fraction . . . why put the patient through two procedures. I would have to do a diagnostic catheterization at one center and do some type of intervention at another center. So, I would opt to transfer that patient to a tertiary care center and do the diagnostic catheterization there. (Tr. 1764, 1765). Furthermore, regardless of what procedure had been performed, the significant left main blockage that existed prior to the patient’s presentation at Brandon E.R. meant that the likely outcome would be death. The second of the patients Dr. Gandhi transferred to St. Joseph’s was a 74-year-old woman. Dr. Gandhi performed “a heart catheterization at 5:00 on Friday.” (Tr. 2267). The cath revealed a 90 percent blockage of the major artery of the heart, another widow-maker. Again, Dr. Gandhi recommended bypass surgery and contacted a surgeon at St. Joseph’s. The transfer, however, was not immediate. “Finally, at approximately 11:00 the patient went to St. Joseph’s Hospital. That night she was operated on . . . ”. (Tr. 2267). If Brandon had had open heart surgery capability, “[t]hat would have increased her chances of survival.” No competent evidence was admitted that showed the outcome, however, and as Dr. Randall pointed out, the medical records of the patient do not reveal the outcome. The patient who was transferred to Tampa General (the third of Dr. Ghandhi's patients) had presented at Brandon’s ER on February 15, 2000. Fifty-six years old and a heavy smoker with a family history of heart disease, she complained of severe chest pain. She received thrombolysis and was stabilized. She had presented with a myocardial infarction but it was complicated by congestive heart failure. After waiting three days for the myocardial infarction to subside, Dr. Gandhi performed cardiac catheterization. The patient “was surviving on only one blood vessel in the heart, the other two vessels were 100 percent blocked. She arrested on the table.” (Tr. 2271). After Dr. Gandhi revived her, he made arrangements for her transfer by helicopter. The transfer was done by helicopter for two reasons: traffic problems and because she had an intra-aortic balloon pump and there are a limited number of ambulances with intra- aortic balloon pump maintenance capability. If Brandon had had the ability to conduct open heart surgery, the patient would have had a better likelihood of successful outcome: “the surgeon would have taken the patient straight to the operating room. That patient would not have had a second arrest as she did at Tampa General.” (Tr. 2273). Marc Bloom, M.D., is a cardiothoracic surgeon. He performs open-heart surgery at UCH, where he is the chief of cardiac surgery. He reviewed the records of this 54-year-old woman. The records reflect that, in fact, upon presentation at Brandon’s E.R., the patient’s heart failure was very serious: She had an echocardiogram done that . . . showed a 20 percent ejection fraction . . . I mean when you talk severe, this would be classified as a severe cardiac compromise with this 20 percent ejection fraction. (Tr. 2712). Once stabilized, the patient should have been transferred for cardiac catheterization to a hospital with open- heart surgery instead of having cardiac cath at Brandon. It is true that delay in the transfer once arrangements were made was a problem. The greater problem for the patient, however, was in her management at Brandon. It was very likely that open heart surgery would be required in her case. She should have been transferred prior to the catheterization as soon as became known the degree to which her heart was compromised, that is, once the results of the echocardiogram were known. Adam J. Cohen, M.D., is a cardiologist with Diagnostic Consultative Cardiology, a group located in Brandon that provides cardiology services in Hillsborough County. Dr. Cohen provided evidence of five patients who presented at Brandon and whose treatments were delayed because of the need for a transfer. The first of these patients was a 76-year old male who presented to Brandon’s ER on April 6, 1999. Dr. Cohen considered him to be suffering “a complicated myocardial infarction.” (Brandon Ex. 45, p. 43) Cardiac catheterization conducted by Dr. Cohen showed “severe multi-vessel coronary disease, cardiogenic shock, severely impaired [left ventricular] function for which an intra-aortic balloon pump was placed . . .”. (Id.) During the placement of the pump, the patient stopped breathing and lost pulse. He was intubated and stabilized. A helicopter transfer was requested. There was only one helicopter equipped to conduct the transfer. Unfortunately, “the same day . . . there was a mass casualty event within the City of Tampa when the Gannet Power Plant blew up . . .”. (Brandon Ex. 45, p. 44). An appropriate helicopter could not be secured. Dr. Cohen did not learn of the unavailability of helicopter transport for an hour after the request was made. Eventually, the patient was transferred by ambulance to UCH. There, he received angioplasty and “stenting of the right coronary artery times two.” (Id., at p. 47.) After a slow recovery, he was discharged on April 19. In light of the patient’s complex cardiac condition, he received a good outcome. This patient is an example of another patient who should have been transferred sooner from Brandon since Brandon does not have open heart surgery capability. The second of Dr. Cohen’s patients presented at Brandon’s E.R. at 10:30 p.m. on June 14, 1999. He was 64 years old with no risk factors for coronary disease other than high blood pressure. He was evaluated and diagnosed with “a large and acute myocardial infarction” Two hours later, the therapy was considered a failure because there was no evidence that the area of the heart that was blocked had been reperfused. Dr. Cohen recommended transfer to UCH for a salvage angioplasty. The call for a helicopter was made at 12:58 a.m. (early the morning of June 15) and the helicopter arrived 40 minutes later. At UCH, the patient received angioplasty procedure and stenting of two coronary arteries. He suffered “[m]oderately impaired heart function, which is reflective of myocardial damage.” (Brandon Ex. 45, p. 58). If salvage angioplasty with open heart backup had been available at Brandon, the patient would have received it much more quickly and timely. Whether the damage done to the patient’s heart during the episode could have been avoided by prompt angioplasty at Brandon is something Dr. Cohen did not know. As he put it, “I will never know, nor will anyone else know.” (Brandon Ex. 45, p. 60). The patient later developed cardiogenic shock and repeated ventricular tachycardia, requiring numerous medical interventions. Because of the interventions and mechanical trauma, he required surgery for repair of his right femoral artery. The patient recently showed an injection fraction of 45 percent below the minimum for normal of 50 percent. The third patient was a 51-year-old male who had undergone bypass surgery 19 years earlier. After persistent recurrent anginal symptoms with shortness of breath and diaphoresis, he presented at Brandon’s E.R. at 1:00 p.m. complaining of heavy chest pain. Thrombolytic therapy was commenced. Dr. Cohen described what followed: [H]he had an episode of heart block, ventricular fibrillation, losing consciousness, for which he received ACLS efforts, being defibrillated, shocked, times three, numerous medications, to convert him to sinus rhythm. He was placed on IV anti- arrhythmics consisting of amiodarone. The repeat EKG showed a worsening of progression of his EKG changes one hour after the initiation of the TPA. Based on that information, his clinical scenario and his previous history, I advised him to be transferred to University Hospital for a salvage angioplasty. (Brandon Ex. 45, p. 62). Transfer was requested at 1:55 p.m. The patient departed Brandon by helicopter at 2:20 p.m. The patient received the angioplasty at UCH. Asked how the patient would have benefited from angioplasty at Brandon without having to have been transferred, Dr. Cohen answered: In a more timely fashion, he would have received an angioplasty to the culprit lesion involved. There would have been much less occlusive time of that artery and thereby, by inference, there would have been greater salvage of myocardium that had been at risk. (Brandon Ex. 45, p. 65). The patient, having had bypass surgery in his early thirties, had a reduced life expectancy and impaired heart function before his presentation at Brandon in June of 1999. The time taken for the transfer of the patient to UCH was not inordinate. The transfer was accomplished with relative and expected dispatch. Nonetheless, the delay between realization at Brandon of the need for a salvage angioplasty and actual receipt of the procedure after a transfer to UCH increased the potential for lost myocardium. The lack of open heart services at Brandon resulted in reduced life expectancy for a patient whose life expectancy already had been diminished by the early onset of heart disease. The fourth patient of Dr. Cohen’s presented to Brandon’s E.R. at 8:30, the morning of August 29, 1999. A fifty-four-year-old male, he had been having chest pain for a month and had ignored it. An EKG showed a complete heart block with atrial fibrillation and change consistent with acute myocardial infarction. Thrombolytic therapy was administered. He continued to have symptoms including increased episodes of ventricular arrhythmias. He required dopamine for blood pressure support due to his clinical instability and the lack of effectiveness of the thrombolytics. The patient refused a transfer and catheterization at first. Ultimately, he was convinced to undergo an angioplasty. The patient was transferred by helicopter to UCH. The patient was having a “giant ventricular infarct . . . a very difficult situation to take care of . . . and the majority of [such] patients succumb to [the] disease . . .”. (Tr. 2703). The cardiologist was unable to open the blockage via angioplasty. Dr. Bloom was called in but the patient refused surgical intervention. After interaction with his family the patient consented. Dr. Bloom conducted open heart surgery. The patient had a difficult post-operative course with arrythmias because “[h]e had so much dead heart in his right ventricle . . .”. (Id.) The patient received an excellent outcome in that he was seen in Dr. Bloom’s office with 40 percent injection fraction. Dr. Bloom “was just amazed to see him back in the office . . . and amazed that this man is alive.” (Tr. 2704). Most of the delay in receiving treatment was due to the patient’s reluctance to undergo angioplasty and then open heart surgery. The fifth patient of Dr. Cohen’s presented at Brandon’s E.R. on March 22, 2000. He was 44 years old with no prior cardiac history but with numerous risk factors. He had a sudden onset of chest discomfort. Lab values showed an elevation consistent with myocardial injury. He also had an abnormal EKG. Dr. Cohen performed a cardiac cath on March 23, 2000. The procedure showed a totally occluded left anterior descending artery, one of the three major arteries serving the heart. Had open heart capability been available at Brandon, he would have undergone angioplasty and stenting immediately. As it was, the patient had to be transferred to UCH. A transfer was requested at 10:25 that morning and the patient left Brandon’s cath lab at 11:53. Daniel D. Lorch, M.D., is a specialist in pulmonary medicine who was accepted as an expert in internal medicine, pulmonary medicine and critical care medicine, consistent with his practice in a “five-man pulmonary internal medicine critical care group.” (Brandon Ex. 42, p. 4). Dr. Lorch produced medical records for one patient that he testified about during his deposition. The patient had presented to Brandon’s E.R. with an MI. He was transferred to UCH by helicopter for care. Dr. Lorch supports Brandon’s application. As he put it during his deposition: [Brandon] is an extremely busy community hospital and we are in a very rapidly growing area. The hospital is quite busy and we have a large number of cardiac patients here and it is not infrequently that a situation comes up where there are acute cardiac events that need to be transferred out. (Brandon Ex. 42, p. 20). Transfers Following Diagnostic Cardiac Catheterization Brandon transfers a high number cardiac patients for the provision of angioplasty or open heart surgery in addition to those transferred under emergency conditions. In 1996, Brandon performed 828 diagnostic cardiac catheterization procedures. Of this number, 170 patients were transferred to existing providers for open heart surgery and 170 patients for angioplasty. In 1997, Brandon performed 863 diagnostic catheterizations of which 180 were transferred for open heart surgery and 159 for angioplasty. During 1998, 165 patients were transferred for open heart surgery and 161 for angioplasty out of 816 diagnostic catheterization procedures. For the first nine months of 1999, Brandon performed 639 diagnostic catheterizations of which 102 were transferred to existing providers for open heart surgery and 112 for angioplasty. A significant number of patients are transferred from Brandon for open heart surgery services. These transfers are consistent with the norm in Florida. After all, open heart surgery is a tertiary service. Patients are routinely transferred from most Florida hospitals to tertiary hospitals for OHS and PCTA. The large majority of Florida hospitals do not have OHS programs; yet, these hospitals receive patients who need OHS or PTCA. Transfers, although the norm, are not without consequence for some patients who are candidates for OHS or PCTA. If Brandon had open heart and angioplasty capability, many of the 1220 patients determined to be in need of angioplasty or open heart surgery following a diagnostic catheterization procedure at Brandon could have received these procedures at Brandon, thereby avoiding the inevitable delay and stress occasioned by transfer. Moreover, diagnostic catheterizations and angioplasties are often performed sequentially. Therefore, Brandon patients determined to be in need of angioplasty following a diagnostic catheterization would have had access to immediate angioplasty during the same procedure thus reducing the likelihood of a less than optimal outcome as the result of an additional delay for transfer. Adverse Impact on Existing Providers Competition There is active competition and available patient choices now in Brandon's PSA. As described, there are many OHS programs currently accessible to and substantially serving Brandon's PSA. There is substantial competition now among OHS providers so as to provide choices to PSA residents. There are no financial benefits or cost savings accruing to the patient population if Brandon is approved. Brandon does not propose lower charges than the existing OHS providers. Balanced Budget Act The Balanced Budget Act of 1997 has had a profound negative financial impact on hospitals throughout the country. The Act resulted in a significant reduction in the amount of Medicare payments made to hospitals for services rendered to Medicare recipients. During the first five years of the Act's implementation, Florida hospitals will experience a $3.6 billion reduction in Medicare revenues. Lakeland will receive $17 million less, St.Joseph's will receive $44 million less, and Tampa General will receive $53 million less. The impact of the Act has placed most hospitals in vulnerable financial positions. It has seriously affected the bottom line of all hospitals. Large urban teaching hospitals, such as TGH, have felt the greatest negative impact, due to the Act's impact on disproportionate share reimbursement and graduate medical education payment. The Act's impact upon Petitioners render them materially more vulnerable to the loss of OHS/PTCA revenues to Brandon than they would have been in the absence of the Act. Adverse Impact on Tampa General Tampa General is the "safety net provider" for Hillsborough County. Tampa General is a Medicaid disproportionate share provider. In fiscal year 1999, the hospital provided $58 million in charity care, as that term is defined by AHCA. Tampa General plays a unique, essential role in Hillsborough County and throughout West Central Florida in terms of provision of health care. Its regional role is of particular importance with respect to Level I trauma services, provision of burn care, specialized Level III neonatal and perinatal intensive care services, and adult organ transplant services. These services are not available elsewhere in western or central Florida. In fiscal year 1999, Tampa General experienced a net loss of $12.6 million in providing the services referenced above. It is obligated under contract with the State of Florida to continue to provide those services. Tampa General is a statutory teaching hospital. In fiscal year 1999, it provided unfunded graduate medical education in the amount of $19 million. Since 1998, Tampa General has consistently experienced losses resulting from its operations, as follows: FY 1998-$29 million, FY 1999-$27 million; FY 2000 (5 months)-$10 million. The hospital’s financial condition is not the result of material mismanagement. Rather, its financial condition is a function of its substantial provision of charity and Medicaid services, the impact of the Act, reduced managed care revenues, and significant increases in expense. Tampa General’s essential role in the community and its distressed financial condition have not gone unnoticed. The Greater Tampa Chamber of Commerce established in February of 2000 an Emergency Task Force to assess the hospital's role in the community, and the need for supplemental funding to enable it to maintain its financial viability. Tampa General requires supplemental funding on a continuing basis in order to begin to restore it to a position of financial stability, while continuing to provide essential community services, indigent care, and graduate medical education. It will require ongoing supplemental funding of $20- 25 million annually to avoid triggering the default provision under its bond covenants. As of the close of hearing, the 2000 session of the Florida Legislature had adjourned. The Legislature appropriated approximately $22.9 million for Tampa General. It is, of course, uncertain as to what funding, if any, the Legislature will appropriate to the hospital in future years, as the terms which constitute the appropriations must be revisited by the Legislature on an annual basis. Tampa General has prepared internal financial projections for its fiscal years 2000-2002. It projects annual operating losses, as follows: FY 2000-$20.1 million; FY 2001- $20.6 million; FY 2002-$31.9 million. While its projections anticipate certain "strategic initiatives" that will enhance its financial condition, including continued supplemental legislative funding, the success and/or availability of those initiatives are not "guaranteed" to be successful. If the Brandon program is approved, Tampa General will lose 93 OHS cases and 107 angioplasty cases during Brandon's second year of operation. That loss of cases will result in a $1.4 million annual reduction in TGH's net income, a material adverse impact given Tampa General’s financial condition. OHS services provide a positive contribution to Tampa General's financial operations. Those services constitute a core piece of Tampa General's business. The anticipated loss of income resulting from Brandon's program pose a threat to the hospital’s ability to provide essential community services. Adverse Impact on UCH UCH operated at a financial break-even in its fiscal year 1999. In the first five months of its fiscal year 2000, the hospital has experienced a small loss. This financial distress is primarily attributed to less Medicare reimbursement due to the Act and less reimbursement from managed care. UCH's reimbursement for OHS services provides a good example of the financial challenges facing hospitals. In 1999, UCH's net income per OHS case was reduced 33 percent from 1998. Also in 1999, UCH received OHS reimbursement of only 32 percent of its charges. UCH would be substantially and adversely impacted by approval of Brandon's proposal. As described, UCH currently is a substantial provider of OHS and angioplasty services to residents of Brandon's PSA. There are many cardiologists on staff at Brandon who also actively practice at UCH. UCH is very accessible from Brandon's PSA. UCH reasonably projects to lose the following volumes in the first three years of operation of the proposed program: a loss of 78-93 OHS procedures, a loss of 24-39 balloon angioplasties, and a loss of 97-115 stent angioplasties. Converting this volume loss to financial terms, UCH will suffer the following financial losses as a direct and immediate result of Brandon being approved: about $1.1 million in the first year, and about $1.2 million in the second year, and about $1.3 million in the third year. As stated, UCH is currently operating at about a financial break-even point. The impact of the Balanced Budget Act, reduced managed care reimbursement, and UCH's commitment to serve all patients regardless of ability to pay has a profound negative financial impact on UCH. A recurring loss of more than $1 million dollars per year due to Brandon's new program will cause substantial and adverse impact on UCH. Adverse Impact on St. Joseph’s If Brandon's application is approved, St. Joseph’s will lose 47 OHS cases and 105 PTCA cases during Brandon's second year. That loss of cases will result in a $732,000 annual reduction in SJH's net income. That loss represents a material impact to SJH. Between 1997 and 2000, St. Joseph’s has experienced a pattern of significant deterioration in its financial performance. Its net revenue per adjusted admission had been reduced by 12 percent, while its costs have increased significantly. St. Joseph's net income from operations has deteriorated as follows: FYE 6/30/97-$31 million; FYE 12/31/98- $24 million; FYE 12/31/99-$13.8 million. A net operating income of $13.8 million is not much money relative to St Joseph's size, the age of its physical plant, and its need for capital to maintain and improve its facilities in order to remain competitive. St. Joseph’s offers a number of health care services to the community for which it does not receive reimbursement. Unreimbursed services include providing hospital admissions and services to patients of a free clinic staffed by volunteer members of SJH's medical staff, free immunization programs to low-income children, and a parish nurse program, among others. St. Joseph’s evaluates such programs annually to determine whether it has the financial resources to continue to offer them. During the past two years, the hospital has been forced to eliminate two of its free community programs, due to its deteriorating financial condition. St. Joseph’s anticipates that it will have to eliminate additional unreimbursed community services if it experiences an annual reduction in net income of $730,000. Adverse Impact to LRMC The approval of Brandon will have an impact on Lakeland. Lakeland will suffer a financial loss of about $253,000 annually. This projection is based on calculated contribution margins of OHS and PTCA/stent procedures performed at the hospital. A loss of $253,000 per year is a material loss at Lakeland, particularly in light of its slim operating margin and the very substantial losses it has experienced and will continue to experience as a result of the Balanced Budget Act of 1997. In addition to the projected loss of OHS and other procedures based upon Brandon's application, Lakeland may experience additional lost cases from areas such as Bartow and Mulberry from which it draws patients to its open heart/cardiology program. Lakeland will also suffer material adverse impacts to its OHS program due to the negative effect of Brandon's program on its ability to recruit and retain nurses and other highly skilled employees needed to staff its program. The approval of Brandon will also result in higher costs at existing providers such as Lakeland as they seek to compete for a limited pool of experienced people by responding to sign-on bonuses and by reliance on extensive temporary nursing agencies and pools. Nursing Staff/Recruitment The staffing patterns and salaries for Brandon's projected 40.1 full-time equivalent employees to staff its open heart surgery program are reasonable and appropriate. Filling the positions will not be without some difficulty. There is a shortage for skilled nursing and other personnel needed for OHS programs nationally, in Florida and in District 6. The shortage has been felt in Hillsborough County. For example, it has become increasingly difficult to fill vacancies that occur in critical nursing positions in the coronary intensive care unit and in telemetry units at Tampa General. Tampa General's expenses for nursing positions have "increased tremendously." (Tr. 2622). To keep its program going, the hospital has hired "travelers . . . short-term employment, registered nurses that come from different agencies, . . . with [the hospital] a minimum of 12 weeks." (Tr. 2622). In fact, all hospitals in the Tampa Bay area utilize pool staff and contract staff to fill vacancies that appear from time-to- time. Use of contract staff has not diminished quality of care at the hospitals, although "they would not be assigned to the sickest patients." (Tr. 2176). Another technique for dealing with the shortage is to have existing full-time staff work overtime at overtime pay rates. St. Joseph's and Lakeland have done so. As a result, they have substantially exceeded their budgeted salary expenses in recent months. It will be difficult for Brandon to hire surgical RNs, other open heart surgery personnel and critical care nurses necessary to staff its OHS program. The difficulty, however, is not insurmountable. To meet the difficulty, Brandon will move members of its present staff with cardiac and open heart experience into its open heart program. It will also train some existing personnel in conjunction with the staff and personnel at Bayonet Point. In addition to drawing on the existing pool of nurses, Brandon can utilize HCA's internal nationwide staffing data base to transfer staff from other HCA facilities to staff Brandon's open heart program. Approximately 18 percent of the nurses hired at Brandon already come from other HCA facilities. The nursing shortage has been in existence for about a decade. During this time, other open heart programs have come on line and have been able to staff the programs adequately. Lakeland, in District 6, has demonstrated its ability to recruit and train open heart surgery personnel. Brandon, itself, has been successful, despite the on- going shortage, in appropriately staffing its recent additions of tertiary level NICU beds, an expanded Emergency Room, labor and delivery and recovery suites, and new high-risk, ante-partum observation unit. Brandon has begun to offer sign-on bonuses to compete for experienced nurses. Several employees who staff the Lakeland, UCH and Tampa General programs live in Brandon. These bonuses are temptations for them to leave the programs for Brandon. Other highly skilled, experienced individuals who already work at existing programs may be lost to Brandon's program as well simply as the natural result of the addition of a new program. In the end, Brandon will be able to staff its program, but it will make it more difficult for all of the programs in Hillsborough County and for Lakeland to meet their staffing needs as well as producing a financial impact on existing providers. Financial Feasibility Short-Term Brandon needs $4.2 million to fund implementation of the program. Its parent corporation, HCA will provide financing of up to $4.5 million for implementation. The $4.2 million in start-up costs projected by Brandon does not include the cost of a second cath lab or the costs to upgrade the equipment in the existing cath lab. Itemization of the funds necessary for improvement of the existing cath lab and the addition of the second cath lab were not included in Brandon's pro formas. It is the Agency's position that addition of a cath lab (and by inference, upgrade to an existing lab) requires only a letter of exemption as projects separate from an open heart surgery program even when proposed in support of the program. (See UCH No. 7, p. 83). The position is not inconsistent with cardiac catheterization programs as subject to requirements in law separate from those to which an open heart surgery program is subject. Brandon, through HCA, has the ability to fund the start-up costs of the project. It is financially feasible in the short-term. Long-Term Open heart surgery programs (inclusive of angioplasty and stent procedures, as well as other open heart surgery procedures) generally are very profitable. They are among the most profitable of programs conducted by hospitals. Brandon's projected charges for open heart, angioplasty, and stent procedures are based on the average charges to patients residing in Brandon's PSA inflated at 2 percent per year. The inflation rate is consistent with HCFA's August 1, 2000, Rule implementing a 2.3 percent Medicare reimbursement increase. Brandon's projected payor mix is reasonably based on the existing open heart, angioplasty, and stent patients within its PSA. Brandon also estimated conservatively that it would collect only 45 to 50 percent of its charges from third-party payors. To determine expenses, Brandon utilized Bayonet Point's accounting system. It provided a level of detail that could not be obtained otherwise. "For patients within Brandon's primary service area, . . . that information is not provided by existing providers in the area that's available for any public consumption." (Tr. 1002). While perhaps the most detailed data available, Bayonet Point data was far from an ideal model for Brandon. Bayonet Point performs about 1,500 OHS cases per year. It achieves economies of scale that will not be achievable at Brandon in the foreseeable future. There is a relationship between volume and cost efficiency. The higher the volume, the greater the cost efficiency. Brandon's volume is projected to be much lower than Bayonet Point's. To make up for the imperfection of use of Bayonet Point as an "expenses" proxy, Brandon's financial expert in opining that the project was feasible in the long-term, considered two factors with regard to expenses. First, it included its projected $1.8 million in salary expenses as a separate line item over and above the salary expenses contained in the Bayonet Point data. (This amounted to a "double" counting of salary expenses.) Second, it recognized HCA's ability to obtain competitive pricing with respect to equipment and services for its affiliated hospitals, Brandon being one of them. Brandon projected utilization of 249 and 279 cases in its second and third year of operations. These projections are reasonable. (See the testimony of Mr. Balsano on rebuttal and Brandon Ex. 74). Comparison of Agency Action in CONs 9169 and 9239 Brandon's application in this case, CON 9239, was filed within a six-month period of the filing of an earlier application, CON 9169. The Agency found the two applications to be similar. Indeed, the facts and circumstances at issue in the two applications other than the updating of the financial and volume numbers are similar. So is the argument made in favor of the applications. Yet, the first application was denied by the Agency while the second received preliminary approval. The difference in the Agency's action taken on the later application (the one with which this case is concerned), i.e., approval, versus the action taken on the earlier, denial, was explained by Scott Hopes, the Chief of the Bureau of Certificate of Need at the time the later application was considered: The [later] Brandon application . . ., which is what we're addressing here today, included more substantial information from providers, both cardiologists, internists, family practitioners and surgeons with specific case examples by patient age [and] other demographics, the diagnoses, outcomes, how delays impacted outcomes, what permanent impact those adverse outcomes left the patient in, where earlier . . . there weren't as many specifics. (Tr. 1536, 1537). A comparison of the application in CON 9169 and the record in this case bears out Mr. Hopes' assessment that there is a significant difference between the two applications. Comparison of the Agency Action with the District 9 Application During the same batching cycle in which CON 9239 was considered, five open heart surgery applications were considered from health care providers in District 9. Unlike Brandon's application, these were all denied. In the District 9 SAAR, the Agency found that transfers are an inherent part of OHS as a tertiary service. The Agency concluded that, "[O]pen heart surgery is a tertiary service and patients are routinely transferred between hospitals for this procedure." (UCH Ex. 7, pp. 51-54). In particular, the Agency recognized Boca Raton's claim that it had provided "extensive discussion of the quality implications of attempting to deal with cardiac emergencies through transfer to other facilities." (UCH Ex. 7, p. 52). Unlike the specific information referred to by Mr. Hopes in his testimony quoted, above, however, the foundation for Boca Raton's argument is a 1999 study published in the periodical Circulation, entitled "Relationship Between Delay in Performing Direct Coronary Angioplasty and Early Clinical Outcomes." (UCH Ex. 7, p. 21). This publication was cited by the Agency in its SAAR on the application in this case. Nonetheless, a fundamental difference remains between this case and the District 9 applications, including Boca Raton's. The application in this case is distinguished by the specific information to which Mr. Hopes alluded in his testimony, quoted above.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered granting the application of Galencare, Inc., d/b/a Brandon Regional Hospital for open heart surgery, CON 9239. DONE AND ENTERED this 30th day of March, 2001, 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 30th day of March, 2001. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Thomas W. Konrad, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 North Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 James C. Hauser, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 John H. Parker, Jr., Esquire Jonathan L. Rue, Esquire Sarah E. Evans, Esquire Parker, Hudson, Rainer & Dobbs 1500 Marquis Two Tower 285 Peachtree Center Avenue, Northeast Atlanta, Georgia 30303 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Monroe Street Tallahassee, Florida 32301
Findings Of Fact Galencare, Inc., d/b/a Northside Hospital ("Northside") and NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital ("Palms") were litigants in administrative proceedings concerning the Agency For Health Care Administration's ("AHCA's") preliminary action on certificate of need applications. Northside moved to dismiss Palms' application based on defects in the corporate resolution. The resolution is as follows: RESOLVED, that the Corporation be and hereby is authorized to file a Letter of Intent and Certificate of Need Application for an adult open heart surgery program and the designation of three medical/surgical beds as a Coronary Intensive Care Unit as more specifically described by the proposed Letter of Intent attached hereto. RESOLVED, that the Corporation is hereby authorized to incur the expenditures necessary to accomplish the aforesaid proposed project. RESOLVED, that if the aforedescribed Certificate of Need is issued to the Corporation by the Agency for Health Care Administration, the Corporation shall accomplish the proposed project within the time allowed by law, and at or below the costs contained in the aforesaid Certificate of Need Application. RESOLVED, that the Corporation certifies that it shall appropriately license and immediately there- after operate the open heart surgery program. In its Motion, Northside claimed that the third and fourth clauses in the Resolution are defective, the third clause because it does not "certify" that the time and cost conditions will be met and the fourth for omitting "adult" to describe the proposed open heart surgery program. Northside relies on the language of the statute requiring that a resolution shall contain statements . . .authorizing the filing of the application described in the letter of intent; authorizing the applicant to incur the expenditures necessary to accomplish the proposed project; certifying that if issued a certificate, the applicant shall accomplish the proposed project within the time allowed by law and at or below the costs contained in the application; and certifying that the applicant shall license and operate the facility. Subsection 408.039(2)(c), Florida Statutes. Northside also relies on Rule 59C-1.008(1)(d), which is as follows: The resolution shall contain, verbatim, the requirements specified in paragraph 408.039 (2)(c), F.S., . . . Palms' filed the Motion For Sanctions against Northside on November 15, 1993, pursuant to Subsection 120.57(1)(b)5 for filing a frivolous motion for an improper purpose, needlessly increasing the cost of the litigation, with no legal basis. Northside's claims that the Resolution was defective were rejected in the Recommended Order of Dismissal of January 11, 1994, amended and corrected on January 26, 1994, and not discussed in AHCA's Final Order of March 15, 1994.
The Issue This proceeding concerns applications for certificates of need (CON) for open heart surgery programs at Central Florida Regional Hospital and Winter Park Memorial Hospital. It must be determined whether those applications meet applicable statute and rule criteria and should be approved by the Department of Health and Rehabilitative Services. By stipulation, filed on June 20, 1989, the parties agree that the following criteria have either been met or are not at issue in this proceeding: Section 381.705(1)(c), F.S., regarding quality of care, only as to the applicants' record of providing quality of care in currently existing programs, and not as to the provision of open heart services. Section 381.705(1)(f), F.S., regarding the need for special equipment and services in the district which are not reasonably and economically accessible in adjoining areas. Section 381.705(1)(j), F.S., regarding the special needs and circumstances of health maintenance organizations. Section 381.705(2)(e), F.S., regarding nursing home beds. Rule 10-5.O11(1)(f)3.c., F.A.C., regarding the applicants' ability to provide a specified range of services in the facility if granted their certificates of need.
Findings Of Fact The Parties Applicant, Central Florida Regional Hospital (CFRH) is a 226-bed private, for profit hospital in Sanford, Seminole County Florida. CFRH was a county-owned hospital until 1980, when it was purchased by Central Florida Regional Hospital, Inc., a wholly-owned subsidiary of Hospital Corporation of America (HCA). CFRH currently provides a wide range of diagnostic and treatment services, including cardiology, neurology surgery, special imaging, and nuclear cardiology. Its in-patient cardiac catheterization services were initiated in April, 1988. Applicant, Winter Park Memorial Hospital (WPMH), is a 301-bed acute care, not-for-profit hospital located in Winter Park, Orange County, Florida. It was opened in 1955, and is governed by a board of directors comprised of business and civic leaders in the central Florida area. WPMH also currently offers diagnostic cardiac catheterizations services with medical/surgical, pediatric/obstetric, and a broad range of outpatient services. The Department of Health and Rehabilitative Services (HRS) is the agency responsible for administering sections 381.701 through 381.715. F.S., the "Health Facility and Services Development Act", the statute describing the certificate of need (CON) process. Petitioner, Humana of Florida, Inc., is the corporate owner of Humana Hospital Lucerne (Humana), a 267-bed hospital facility in downtown Orlando, Orange County, Florida. Along with its broad range of existing services, Humana provides open heart surgery and a full range of diagnostic and therapeutic cardiac catheterizations. It maintains two operating rooms (ORs) dedicated for open heart surgery. Petitioner, Adventist Health Systems/Sunbelt, Inc. is the corporate owner and licensee of a number of hospitals, including Florida Hospital. Florida Hospital is a private not-for-profit tertiary care hospital with over 1100 beds on three campuses in central Florida: Orlando, Apopka, and Altamonte Springs. Florida Hospital's open heart surgery program, the largest in HRS District 7, and one of the largest in the southeast United States, is conducted at the Orlando facility in Orange County. It has four ORs dedicated to open heart surgery. Florida Hospital has an active cardiac catheterization program with a full range of diagnostic and therapeutic procedures, such as angioplasty and valvuloplasty. The Applications CFRH proposes to add its open heart surgery program at a total cost of $4,322,702.00, including construction costs, equipment and financing costs. CFRH intends to start with a single furnished OR and with shelled-in space for a second OR. These and a recovery area will be located on the first floor adjacent to the existing surgical department. Twelve existing general medical/surgery beds will be converted to intensive care beds on the second floor, accessible by means of an elevator dedicated to the exclusive use of open heart surgery patients. CFRH's primary service area is described as north Seminole and southwest Volusia counties, an area containing no other open heart surgery programs. It anticipates it will draw its open heart surgery patients primarily from that service area, and projects 200 surgeries by the end of the first year, with 288 surgeries during the second year. WPMH proposes to add two dedicated ORs and related operating suite rooms for open heart surgery, at a cost of $1,470,000.00. One of the ORs will be kept available for emergency open heart surgery cases. The application does not include additional intensive care or critical care unit beds. Because it is slowly phasing in additional progressive care beds, the applicant anticipates that the current bottleneck created by patients waiting to leave critical care to go to progressive care, will be relieved by the time the open heart surgery program generates a demand for critical care and intensive care beds. Like CFRH, WPMH claims a relatively local primary service area, east Orange and south Seminole Counties, and proposes that its open heart surgery program will serve that same area. WPMH projects a case load of 117 open heart surgery patients the first year, 173 the second year, and is confident that it will meet the minimum requirement of 200 adult open heart procedures annually by the end of the third year of service. Neither CFRH nor WPMH are projecting pediatric open heart surgery. Numeric Need and the "350 Standard" HRS Rule 10-5.011(1)(f)8., Florida Administrative Code, provides the formula for determining a threshold numeric need for open heart surgery programs in a service area, defined for purposes of the rule as the entire HRS district. District 7 is comprised of Orange, Seminole, Osceola, and Brevard Counties, on Florida's east central coast. The formula is stated as follows: 8. Need Determination. The need for open heart surgery programs in a service area shall be determined by computing the projected number of open heart surgical procedures in the service area. The following formula shall be used in this determination: Nx - Uc X Px Where: Nx = Number of open heart procedures projected for Year X; Uc = Actual use rate (number of procedures per hundred thousand population) in the service area for the 12 month period beginning 14 months prior to the Letter of Intent deadline for the batching cycle; Px = Projected population in the service area in Year X; and, Year X = The year in which the proposed open heart surgery program would initiate service, but not more than two years into the future. Elizabeth Dudek is a health facilities and services consultant supervisor in HRS' Office of Regulation and Health Facilities. She was the Department's authorized representative at the hearing and was qualified, without objection, as an expert in health planning. The State Agency Action Report (SAAR), reflecting HRS' review of the CON proposals, applies the formula above as explained by Ms. Dudek. The planning horizon for the project under consideration is July, 1990, which, based on data from the Executive Office of the Governor, has a projected population of 1,492,327. The use rate of 202.53 per hundred thousand population for District 7 was derived from volume data provided by the local health council and from population data from the Executive Office of the Governor. The result of the formula is a projected number of 3022 procedures in the planning horizon. While the rule does not specify what is done with this figure, HRS looks to the 350 minimum number of procedures required in subsection 11. of the rule and divides 350 into the projected number of procedures, to derive a theoretical number of programs which could operate in the district. HRS found a need for 8.6 programs, rounded to 9. Since District 7 has four existing programs, this meant that 5 additional programs could be approved. HRS approved three, the two applicant parties in this proceedings and Wuesthoff, in central Brevard County. There is little, if any, dispute with HRS' application of its rule to this point. The parties do vigorously dispute the application of the following portions of Rule 10-5.011(1)(f), F.A.C.: 11.a. There shall be no additional open heart surgery programs established unless: the service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year or 130 pediatric heart cases per year, and, the conditions specified in Sub- subparagraph 5.6., above, will be met by the proposed program. b. No additional open heart surgery programs shall be approved which would reduce the volume of existing open heart surgery facilities below 350 open heart procedures annually for adults and 130 pediatric heart procedures annually, 75 of which are open heart. The volume of procedures performed at existing programs during the period, July 1987 to June 1988, was: Florida Hospital-Orlando 1612 Holmes Regional 333 Humana Lucerne 440 Orlando Regional 368 2753 At the time of this batching cycle, there were only "existing" and no "approved" (not yet operating) programs in District 7. Holmes Regional did not meet the 350 minimum, as reflected above. HRS, however, has consistently and over a period of years, interpreted the requirement of 11.a (I) to be that an average of 350 cases be performed by existing and approved programs, not that each program actually perform that minimum, annually. Under this interpretation, which assumes that all programs have equal capacity, there are sufficient procedures being generated in the district to allow for the existing programs to average over 688 procedures. Quality of Care Part of the rationale for the 350 minimum procedures per year is the widely-accepted view that mortality rates are lower when an open heart program experiences volume at a minimum level of 200-350 procedures annually. Dr. Harold Luft is a professor of Health Economics employed at the University of California in San Francisco, who has conducted extensive research into the correlation between volume of open heart surgery cases and quality of care. In his findings published in the Journal of the American Medical Association in 1987, in-house deaths were 5.2%, 3.9%, 4.1% and 3.1% in facilities conducting 20-100, 101-200, 201-350, and more than 350 annual operations, respectively. A strong correlation was also found between volume and "poor outcome", defined as patients who either died in the hospital or who stayed beyond 15 days in the hospital (the 90th percentile post operative length of stay). Poor outcomes occurred in 21.7%, 15.5%, 11.8% and 12% of the patients in facilities performing 20-100, 101-200, 201- 350, and more than 350 annual procedures, respectively. The correlations are even more dramatic for patients who received non-scheduled ("emergency") surgery, ranging from 7.7% deaths in hospitals performing less than 100 operations, to 4.6% deaths in hospitals performing more than 350 operations annually, and from 27.9% poor outcomes in the lowest volume hospitals to 16.3% poor outcomes in the highest volume hospital. Both applicants argue the advantages of having the open heart surgery in-house to avoid the trauma of transfer of an emergency patient from their facility to another existing open heart surgery program. Dr. Luft's study cited above suggests that, despite the trauma of transfer, an unscheduled case might still expect a better outcome in a higher volume facility. While it is sometimes necessary to transfer a patient from one hospital to another for coronary angioplasty or open heart surgery, those patients are most frequently medically stable and have been scheduled for the procedure. Where a patient in need of a diagnostic cardiac catheterization has a history placing him in a high risk category, the patient will generally be referred at the outset to a facility with full service back-up to avoid the chance of an emergency transfer. Emergency cases are rare in open heart surgery, and when they have occurred, they have been accommodated at existing programs, with little, if any, delay. The applicants presented ample hypothetical examples of elderly heart patients anxiously enduring emergency transfers by helicopter or ambulance with dangling IV tubes, balloon pumps or other support devices. No actual data was presented as to how many cases are transferred in this manner or to the mortality rates attributable to such transfers. Florida Hospital enjoys an excellent reputation for the quality of its large open heart surgery program. It regularly draws patients from areas beyond the boundaries of district 7. No evidence was produced to suggest that the other existing programs are of questionable quality. Quality of care in the district will not be enhanced by approval of these applications. Access: Geographic and Economic Rule 10-5.011(1)(f)4.a., F.A.C. requires that open heart surgery be available within a maximum automobile travel time of two hours under average travel conditions for at least 90% of a service area's population. It is uncontroverted that this standard is met by existing providers. The average driving time from Florida Hospital to CFRH is 29 minutes, and from Florida Hospital to WPMH is just over 15 minutes. Although CFRH would be the only program in Seminole County, the population is concentrated at the lower end of the county, closer to Orlando and closer to Florida Hospital than to CFRH at the northeast end of the county. It would undoubtedly be convenient for patients and their physicians to be able to administer and receive all medical services in a neighborhood center, but no one is suggesting that every community hospital should have an open heart surgery program. Open heart surgery and its associated services are expensive. These services are not used by many indigent or Medicaid patients and no data is available regarding the level of need by this group or the impediments to access. WPMH has a reputation of providing low cost medical services and CFRH has a commendable history of commitment to public health, but the numbers of medicaid patients and indigents proposed to be served do not alone-weigh in favor of approval of their applications. Availability of Staff A single seven-physician, open heart surgery group performs virtually all of the open heart surgery in District 7, at Orlando Regional Medical Center (ORMC), Humana and Florida Hospital. The group has also committed to providing services at Winter Haven Hospital, an applicant in District 6; Wuesthoff; and CFRH and WPMH. In addition to surgery, the group provides in-house back up to facilities performing coronary angioplasty in their catheterization labs. When new programs come on line the open heart surgeon must spend substantial time training and working with the new surgery team at the hospital. This would further strain a busy practice. There are already delays at existing facilities in obtaining back-up surgery coverage. The group has stated that it will expand, if the new programs are approved, but it is unreasonable to assume that the expansion will be timed to fully accommodate existing demand and the demand of three new programs. The shortage of critical care unit nurses nationwide and in central Florida, is widely acknowledged, and Dr. Meredith Scott, an eminent cardiac surgeon otherwise enthusiastically supporting the new programs, cautions that the dilution of a pool of highly qualified nurses detracts from his support. When hospitals are unable to recruit sufficient nursing staff they are left with reliance on temporary agency personnel, a less preferable alternative in terms of costs and quality of care. Financial Feasibility Both applicants have the funds required for capital expenditures and start-up costs. CFRH's parent corporation, HCA, has committed that it will fund the project costs and has the resources to do so. The interest expenses allocated by HCA are appropriately included in the applicant's pro forma projection of revenue and expenses. The pro formas of both applicants, reflecting no more than a best guess, are reasonable. To the extent that expenses are understated, the charges will no doubt be adjusted, and they will also rise in the event that use rates do not reach expectations. Open heart surgery is a highly profitable health care service. Competition/Need/Impact on Existing Programs District 7 has four existing providers and a fifth approved provider, Wuesthoff, for a total of 11 dedicated ORs for open heart surgery, ranging from 4 at Florida Hospital to one at Holmes. Competition in the market already actively exists and was not a notable factor in HRS' decision to approve the applications. Wuesthoff's projected average charge for the first year at $30,400.00 is $4-5,000.00 less than that projected by WPMH and CFRH. A single OR has a capacity of 500 cases per year. HRS Rule 1O- 5.O11(1)(f)3.d, F.A.C. requires that each open heart surgery program be able to provide 500 operations per year. Same programs, as Holmes, and as CFRH's proposed program, have only one OR, evidencing acceptance of that capacity principle. Eleven existing and approved ORs translate into a capacity of 5500 cases. The horizon year volume is projected at a mere 3,022 cases. Assuming, for argument's sake, and as proposed by the applicants, that the need methodology of Rule 10- 5.O11(1)(f)8., F.A.C. under-states utilization rates and, therefore, need; or that the number of "cases" should be more properly adjusted by a multiplier to derive the number of "procedures"; ample capacity still exists. In the period of July 1987 through June 1988, existing providers performed 2753 surgeries. The projected 3,022 cases will generate 269 additional surgeries - enough to support Wuesthoff, the approved provider, (assuming no increase by existing providers) - but inadequate to justify the approval of two additional programs in the same cycle. It is obvious from the above that the applicants, in order to achieve their projected utilizations, will draw heavily from existing providers. At 1589 cases in 1988, (more than half the cases performed that year in District 7), Florida Hospital is a leviathan, a mega-center. Approximately half of its patients come from counties outside of District 7. Among the in- district patients, substantial numbers of referrals are from CFRH and WPMH. In a 13-month period ending in April 1989, CFRH referred 82 open heart surgery cases to Florida Hospital and one case to Humana. In 1987 and 1988, WPMH referred 70 and 84 open heart surgery patients, respectively, to Florida Hospital and 4 and 5 patients to Humana Hospital. Whether population growth or increased utilization rates will make up those losses is a matter of conjecture. Utilization rates have remained relatively stable since 1983, gaining 13 cases per thousand in that period, from 196 in 1983, to 209 in 1988. New technology is making it possible to avoid open heart surgery by removing obstructions from the heart vessel, rather than bypassing them. Ultrasound and laser techniques are being tested, and drug treatments and more efficient use of balloon angioplasty are reducing the incident of by-pass operations. Consequently, it is the sicker patients who receive the more invasive open heart surgery. And, typically, the sicker patients are referred to the larger, longer- established programs, driving up their costs when the new programs are able to skim the more profitable cases. Size alone does not cushion the impact on a facility such as Florida Hospital. The cardiology program accounts for one-third of its revenue. It helps support a research center and extensive education programs . Loss of revenue will effect these programs, as they, rather than direct services to patients, will be cut to the detriment of the health care community at large. Impact on Humana and the other smaller facilities is likely to be more direct. Humana's open heart surgery program was set back recently when a group of cardiologists left its staff in a dispute over administration. Volume has dropped and Humana reasonably projects 250 surgeries or less in 1991 and 1992 if WPMH and CFRH are approved. Both Humana and ORMC lost volume and market share when Holmes began to operate, since these facilities rely heavily on in-district patients. Like Florida Hospital, Humana derives one-third of its revenue from its cardiology program. State and Local Health Plans Both applications are consistent with the State Health Plan's objective of maintaining an average of procedures per open heart surgery program in the district, although as demonstrated above, actual maintenance of such an average would decimate the program at Florida Hospital. The plan's primary goal of ensuring the availability and accessibility of open heart services is not advanced by these applications. The most current State Plan is dated 1985-87; it is effective through 1987. Although widely referred to in CON proceedings because of statutory and rule requirements for consistency, the utility of an out-of-date plan for health planning purposes is questionable. The District 7 local health plan, approved by the local health council in June 1988, is internally inconsistent. It provides: District VII existing open heart programs appear to be performing well both from the standpoint of volume efficiency and quality, and clearly, there is sufficient, accessible capacity in these programs to handle additional growth. Consider, too, that new open heart programs are being developed in surrounding districts, and these programs, once operational, will begin to draw back their local patient bases from this district's open heart providers. Lately, as angioplasty, laser and drug technology evolve, there is little doubt that the percentage of patients requiring open heart surgery to correct blockage problems will drop. In view of these aforementioned facts, the approval of any additional open heart programs in District VII is discouraged. (Florida Hospital Exhibit #9, P. AC- 45.) emphasis added. At the same time, the plan provides four recommendations for tertiary services, including open heart surgery: specifically, that priority be given to CON applications from teaching hospitals or regional health care centers (defined as non-teaching hospitals) of at least 300 acute-care beds, that priority be given to applicants which commit to serve patients regardless of ability to pay, that applications be reviewed on a districtwide or regional basis, and that review priority be given to open heart surgery applicants which provide clear documentation of the impact of their proposal on other similar service providers in the district and in adjourning districts serving the same geographical area. (Florida Hospital Exhibit #9, P. 11-67) As discussed above, these recommendations are only marginally met by the applicants, if at all, and CFRH is clearly not a regional health center. "Balancing the Criteria" and Summary of Findings Additional open heart surgery programs are not needed in District 7. The expenditure of approximately $5.8 million in construction and start-up costs, the dilution of scarce staffing resources, the real potential that existing programs will suffer substantial financial losses, the real risk that declining volume at existing programs will lead to poorer quality of care or that the new programs will fail to achieve their hoped for volume, are not outweighed by enhanced convenience to patients, their families and physicians. Access to good quality open heart surgery is not currently a problem and, as advocated by Dr. Ron Luke, the more prudent health planning course would be to wait to see what happens in the district with the additional two open heart surgery operating rooms at Wuesthoff.
Recommendation Based on the foregoing, it is hereby, RECOMMENDED: That a final order be issued denying CON number 5695 for Winter Park Memorial Hospital and number 5696 for Central Florida Regional Hospital. DONE AND RECOMMENDED this 12th day of December, 1989, in Tallahassee, Leon County, Florida. MARY CLARK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of December, 1989. APPENDIX The following constitute rulings on the findings of fact proposed by each party: CENTRAL FLORIDA REGIONAL HOSPITAL This party's proposal includes 68 separately numbered lengthy paragraphs combining argument with multiple findings. The arguments are well articulated and well organized. However, the format makes it impossible to accord a paragraph by paragraph ruling. The description of the parties, the description of HRS' application of its rule and the conclusions regarding financial feasibility of the CFRH application are accepted generally and substantially, or in summary form, have been adopted in this recommended order. Otherwise, the findings are rejected as unnecessary, immaterial or contrary to the weight of evidence. WINTER PARK MEMORIAL HOSPITAL Adopted in paragraph 2. Addressed in the Preliminary Statement. Adopted in paragraph 2. 4-6. Rejected as unnecessary. 7. Adopted in Statement of the Issues. 8-10. Rejected as unnecessary. Adopted in paragraph 9. Rejected as unnecessary. 13-17. Adopted generally in paragraph 9. 18 and 19. Rejected as unnecessary. 20-31. The current staffing at the facility and the level of staffing projected as necessary for the open heart program are not materially at issue. The issue is whether necessary staffing will be available and whether competition for existing staff will impact costs and quality of care. Rejected as contrary to the weight of evidence. See 20-31, above. Rejected as contrary to the evidence. There are delays in getting back-up surgery teams. The description of the group and its commitment is adopted in paragraph 30. That quality of care will not be affected was not established by the weight of evidence. 36-38. Rejected as unnecessary. 39-47. Adopted generally in paragraphs 34 and 35, except as to the finding that there is sufficient growth to assure 200 cases in the third year for all three applicants. This is rejected as contrary to the evidence. 48 and 49. Rejected as unnecessary. 50. Rejected as contrary to the weight of evidence. 51-53. Addressed in paragraph 23, otherwise rejected as immaterial. 54-58. Addressed in paragraph 28, otherwise rejected as immaterial. Adopted in substance in paragraph 29. Adopted in paragraph 14. 61 and 62. Adopted in paragraph 12. 63. Adopted in paragraph 14. 64 and 65. Rejected as unnecessary. 66. Adopted in paragraphs 16 and 17, except that the application meets the requirements of the rules, only as applied by HRS. 67-83. Rejected generally as contrary to the weight of evidence or immaterial. 84. Rejected as argument. 85-89. Rejected as immaterial or argument. 90. The comparison of Florida Hospital's mortality rate to that of Ormand Beach Hospital's is immaterial. There is no analysis of case mix and even Dr. Luft concedes that there may be isolated examples of high mortality rates with high volume or low rates in a low volume hospital. 91-93. Rejected as unnecessary or unsupported by the weight of evidence. Rejected as unnecessary. That the application meets the objectives of the local health plan is rejected as contrary to the evidence. The remaining portion of the paragraph is subordinate Rejected as unnecessary. Adopted in cart in paragraph 44, otherwise rejected as contrary to the evidence. Rejected as cumulative and unnecessary. 99-115. Rejected as unnecessary. That competition already exists is adopted in paragraph 36 otherwise rejected as unnecessary. Rejected as contrary to the evidence. THE DEPARTMENT OF HRS 1-3. Addressed in Preliminary Statement. 4 and 5. Adopted in substance in paragraph 12. 6-8. Adopted in paragraph 14. 9. Adopted in paragraph 45. 10 and 11. Rejected as unnecessary. Rejected as contrary to the weight of evidence. Adopted, as to the "averaging" method, in paragraph 44, otherwise rejected as unnecessary. Rejected as contrary to the weight of evidence, except as to the finding regarding drive time, which is adopted in paragraph 26. The quality of care stipulation is addressed in the statement of issues. The remaining finding regarding 200 procedures within 3 years is rejected as contrary to the weight of evidence. 16 and 17. Adopted, as to financial feasibility, in paragraphs 34 and 35, otherwise rejected as contrary to the weight of evidence. 18. Rejected as contrary to the weight of evidence. 19 and 20. Rejected as immaterial or unnecessary. HUMANA OF FLORIDA, INC. Adopted in substance in paragraph 9. Rejected as unnecessary. The original lack of pro forma is addressed in conclusions of law. Rejected as unnecessary. Adopted in paragraphs 6 & 7. 5 and 6. Adopted in Preliminary Statement. Adopted in paragraphs 14 & 16. Rejected as unnecessary. Adopted in Preliminary Statement. 10-12. Adopted in paragraph 4. Rejected as unnecessary. Rejected as subordinate. Adopted in substance in paragraph 30. 16 and 17. Adopted in paragraph 46. Adopted in paragraph 15. Adopted in paragraph 19. 20 and 21. Rejected as unnecessary. 22. Adopted in paragraph 14 and in conclusions of law. 23-25. Rejected as unnecessary. 26 and 27. Adopted in paragraph 38. Adopted in paragraph 37. Adopted in substance in paragraph 46. 30 and 31. Adopted in substance in paragraphs 26 and 27. 32-35. Rejected as unnecessary. 36. Adopted in substance in paragraph 41. 37 and 38. Rejected as unnecessary. 39 and 40. Adopted in paragraph 46. 41-44. Rejected as cumulative and unnecessary. 45-49. Adopted in substance in paragraphs 44 and 45. 50 -60. Rejected as contrary to the weight of evidence or unnecessary. 61-63. Adopted in substance in paragraph 36. 64-70. Rejected as cumulative or unnecessary. 71. Adopted in paragraph 24. 72 and 73. Adopted in paragraph 25. 74. Adopted in paragraph 19. 75-77. Rejected as unnecessary. 78-82. Adopted in substance in paragraphs 30-32. 83 and 84. Adopted in paragraph 33. 85-90. Rejected as unnecessary, except as adopted in paragraph 22. 91-1OO. Rejected as unnecessary. Adopted in paragraph 29. Rejected as unnecessary. 109-123. Rejected as contrary to the weight of evidence. 124-125. Rejected as unnecessary. 126-134. Adopted in summary in paragraph 43. 135-138. Rejected as cumulative. 139-143. Rejected as contrary, to the weight of evidence or unnecessary. FLORIDA HOSPITAL Adopted in paragraphs 1 & 2. Adopted in paragraph 4. Adopted in paragraph 5. Adopted in paragraph 16. 5-12. Rejected as unnecessary. Adopted in paragraph 12. Adopted in paragraph 14. Addressed in Preliminary Statement. Adopted in paragraph 17. Adopted in paragraph 38. Rejected as unnecessary. Adopted in paragraph 41. 20 and 21. Rejected as unnecessary. 22 and 23. Adopted in paragraph 45. Rejected as unnecessary. Adopted in paragraph 19. Adopted in paragraph 20. Rejected as cumulative and unnecessary. Adopted in paragraph 26. Adopted in paragraph 27. Adopted in paragraph 22. 31 and 33. Rejected as unnecessary. 34-39. Rejected as argument or unsupported by the record. 40. Adopted in summary in paragraph 33. 41 -46. Rejected as unnecessary. Rejected as immaterial. Rejected as contrary to the evidence or immaterial. Addressed in Conclusions of Law. Adopted in paragraph 39. 51-57. Rejected as unnecessary. 58-76. Impact is addressed in summary in paragraphs 42 and 43. 77. Adopted in paragraph 30. Adopted in paragraph 29. Rejected as unnecessary. COPIES FURNISHED: Jeffery A. Boone, Esquire Robert T. Klingbeil, Jr., Esquire P.O. Box 1596 Venice, FL 34284 James C. Hauser, Esquire P.O. Box 1876 Tallahassee, FL 32302 Richard A. Patterson, Esquire Ft. Knox Executive Center 2727 Mahan Drive Tallahassee, FL 32308 John Radey, Esquire Elizabeth McArthur, Esquire Monroe Park Tower Suite 1000 Tallahassee, FL 32314 Kenneth F. Hoffman, Esquire 2700 Blairstone Road Tallahassee, FL 32314 Gregory L. Coler, Secretary Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 John Miller, General Counsel Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 R. S. Power, Agency Clerk Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 =================================================================
The Issue Whether the Petitioner University Community Hospital's certificate of need application to establish a cardiac catheterization laboratory and open heart program in Tampa, Florida, should be approved.
Findings Of Fact On August 11, 1982, the Petitioner University Community Hospital, a non-profit hospital, (hereafter Petitioner or UCH) filed an application for a certificate of need (hereafter CON) to expend some $934,000 to establish cardiac catheterization and open heart surgical services at its 404 bed facility located at 3100 East Fletcher Avenue, on the north side of Tampa, approximately 9 miles from the Intervenor Tampa General Hospital (hereafter TGH or Tampa General). Petitioner's CON application was reviewed by the Respondent Department of Health and Rehabilitative Services (hereafter Respondent or Department) under Rule 10-5.11, Florida Administrative Code, and compared with other facilities in the Health Systems Agency, Region IV, which consisted of Pasco, Pinellas, Manatee and Hillsborough Counties. On November 30, 1982, the Department denied the Petitioner's application. The basis for the Department's denial as reflected in the State Agency Action Report, was that two hospitals in Health Services Area IV, Medical Center and Morton Plant, were below the 350 open heart procedures threshold required by Rule 10-5.11(16), Florida Administrative Code. Since Petitioner was not entitled to a CON for open heart surgery, it was not entitled to a CON for cardiac catheterization because Rule 10-5.11(15), Florida Administrative Code, which was in existence when Petitioner's application was reviewed, required that an applicant for cardiac catheterization must be able to offer open heart surgery. Following the Department's denial of Petitioner's application and prior to the final hearing, the Legislature abolished the Health Systems Agency Regions and provided instead that health planning be based on HRS Districts. Intervenor TGH, a 611 bed public hospital located on Davis Island in downtown Tampa, in the same service area as the Petitioner, and presently offering cardiac catheterization and open heart surgical services, intervened in this proceeding on the side of the Department. The Need for Cardiac Catheterization Services In the Service District Prior to the final hearing, the Department admitted to the need for an additional cardiac catheterization laboratory in Hillsborough and Manatee counties. See Petitioner's Exhibit 17. There are presently three adult cardiac catheterization labs in Hillsborough-Manatee, two at TGH and one at St. Joseph's Hospital. In the five- county area, Lakeland Regional has an approved and existing program for a total of four programs. Applying the methodology set forth in Rule 10-5.11(15), Florida Administrative Code, the Petitioner has established that a need exists for at least one additional cardiac catheterization lab regardless of whether the service district is defined to include two or five counties. As projected and calculated by Thomas Porter, a Department witness who utilized the rule methodology, five catheterization labs are need in the five-county area by the year 1985. However, based on historical data, the need formulated pursuant to the rule is probably understated. Porter's testimony was confirmed by Dr. Warren Dacus, a hospital planning consultant, who after obtaining population and projection figures from the Department and the University of Florida, Bureau of Business and Economic Research, concluded that a need existed for one additional catheterization lab in 1985 in Hillsborough and Manatee Counties. On June 16, 1983, the Department approved a CON application filed by Tampa Heart Institute (hereafter THI) which authorized the establishment of three cardiac catheterization labs. The Department's proposed agency action to award a CON to THI was challenged by the Intervenor Tampa General and St. Joseph's Hospital and is presently the subject of a pending administrative proceeding. The CON granted to THI was based on the Department's assumption that most, if not all, of its patients would come from Latin America. THI's CON application presented a unique set of circumstances which fell outside the methodology normally considered during CON reviews. Since the CON proposed to be granted to THI was administratively challenged and was based on the assumption that patients would be drawn from outside any defined service district, it is logically inconsistent and legally inappropriate to consider THI's three cardiac catheterization labs in the instant proceeding. If the CON is granted to the Petitioner, there will be sufficient utilization of the cardiac catheterization laboratory to insure quality of services as required by Rule 10-5.11(15)(i), Florida Administrative Code. Based on previous referrals to other hospitals and historical data obtained from other hospitals in the district, the Petitioner can expect to perform in excess of 300 cardiac catheterization procedures annually for the next three years following initiation of the service. The Need for an Open Heart Surgical Program in the Service District In the Hillsborough-Manatee Service District, two open heart programs presently exist, one program is located at St. Joseph's Hospital, the other is at Tampa General. The formula found at Rule 10-5.11(16), Florida Administrative Code, provides that the number of open heart procedures projected to be done in a future year is determined by multiplying the number of procedures per 100,000 population performed in the service area in 1981 by the projected population in the service area in the future year. No additional programs will normally be approved if such program will reduce the volume of an existing program below 350 surgery cases. In the service distract represented by the two-county area, there is a need for four open heart surgical programs by 1985. Using the methodology found at Rule 10-5.11(16), Florida Administrative Code, the two-county area requires the capacity to perform 1,433 open heart surgeries in 1985, which establishes a need for four programs. Although the addition of an open heart program at UCH would draw certain patients from both St. Joseph's and Tampa General, the number of open heart surgeries performed at St. Joseph's and Tampa General would not fall below 350 per year if UCH were granted a CON. In the five-county area which includes Hillsborough, Manatee, Polk, Highlands and Hardee counties, 1,587 open heart surgical procedures are projected for 1984 and 1,623 for 1985. Applying the rule methodology a need exists for five open heart programs in 1984 and 1985. Three programs, Tampa General, St. Joseph's and Lakeland Memorial Medical Center, presently exist or are approved in the five-county area. The petitioner has demonstrated a sufficient projected volume of open heart surgeries to assure quality of service under Rule 10-5.11(16)(e)(4), Florida Administrative Code. UCH can expect to perform in excess of 200 adult open heart surgical procedures during its first year of operation and within three years after initiation of the service. Moreover, UCH's surgery program will be capable of providing 500 open heart operations per year. In 1981, Lakeland Memorial performed 81 open heart surgical procedures which is significantly below the 350 procedures required by the rule. UCH's proposed program would have little if any effect on the open heart program at Lakeland Memorial, or its ability to meet minimum service levels now or in the foreseeable future. The 350 procedures per year threshold is required to ensure that cardiac surgery teams and staff remain proficient so that patient care is not jeopardized. If, due to the low number of procedures performed at Lakeland Memorial, patient care is being jeopardized, the purpose of the rule is not served by denying a CON to the Petitioner on such a basis since the grant or denial of the instant CON would have no effect on Lakeland Memorial's ability to meet the threshold. UCH's non-invasive coronary procedures including echocardiograms, stress testing and halter monitoring have been utilized by patients to a noteworthy degree. The levels of utilization for these non-invasive tests at UGH in comparison to Tampa General and St. Joseph's are as follows for the period July, 1980 to June, 1981: echocardiogram, UCH 1021, Tampa General 1,175, St. Joseph's 539; stress testing, UCH 598, Tampa General 490, St. Joseph's 371; halter monitoring, UCH 618, Tampa General 328, and St. Joseph's 290. A direct relationship exists between the volume of non-invasive coronary procedures and invasive catheterization procedures that can be expected to be performed at UCH. Approximately 30 percent of the patients at UCH are referred to other hospitals for invasive procedures following non-invasive testing. Transferring patients between hospitals for invasive procedures after non-invasive testing lessens the quality of patient care and increases the probability of duplication of testing, thus increasing health care costs. The Adequacy of she Petitioner's Proposed Facility UCH's proposed facilities for open heart and cardiac catheterization services are adequate for their intended purposes. The proposed plans and equipment lists for the cardiac catheterization lab and open heart surgical program are acceptable from a medical and planning perspective, and are similar to other facilities offering such services. UCH has or if the CON is approved will have, the necessary staff and equipment to meet the requirements of Rules 10-5.11(15)(g) and 10-5.11(16)(c), Florida Administrative Code. The Petitioner will provide the training programs set forth at Rule 10-5.11 (15)(i)(3), Florida Administrative Code. The catheterization lab will maintain the hours of operation specified in Rule 10-5 11 (15)(h)(2), Florida Administrative Code, and the open heart surgery program will operate in accordance with the requirements of Rule 10- 5.11(16)(d)(2) and (3), Florida Administrative Code. The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals as required by Rules 10-5.11 (15)(i)(1) and 10-5.11 (16)(e)(1), Florida Administrative Code. The Petitioner has a written plan projecting case loads, and projecting space, support, equipment and supply needs as required by Rule 10- 5.11(16)(e)(5), Florida Administrative Code. The Financial Feasibility of the Petitioner's Proposed Cardiac Program UCH's proposed open heart surgery program and cardiac catheterization lab are financially feasible. Funds for the project are available and no long term debt exists since the projects are to be funded out of cash. Projected net income from the service is in the 5 percent range which is conservative for a not-for-profit hospital which requires a degree of profitability to ensure that sufficient revenue is generated to meet expenses. The projected costs for the proposed cardiac catheterization lab are reasonable. The proposed renovation of the lab is part of a general large scale renovation for which UCH has secured a binding contract for the amount specified in the application. The equipment and personnel budget for the lab is also reasonable. Based upon a comparison of the proposed charges at UCH with the projected 1984 charges at Tampa General, UCH offers the least costly alternative for providing cardiac catheterization and open heart surgery services. For example, at Tampa General, the projected charge for cardiac surgery, exclusive of charges for room and ancillary services, is $1,711 compared to $1,244.81 at UCH. For cardiac catheterization, the projected 1984 charge at Tampa General is $1,338 as compared to $1,093.75 at UCH. The Petitioner's charges and proposed charges for cardiac catheterization, open heart surgery and other hospital services are comparable to other similar hospitals in the service district, and accordingly, the Petitioner has established that the requirements of Rules 10-5.11(15)(j) and 10- 5.11(16)(f)(2), Florida Administrative Code have been met. Petitioner's Proposed Cardiac Program and its Effect on Tampa General The Hillsborough County Hospital Authority, a public agency which was created by special act of the Legislature, see Chapters 67-1498 and 80-510, Laws of Florida, is required by law to treat indigent patients who are in need of immediate or emergency medical treatment. Hillsborough County is required to reimburse the Hospital Board of Trustees for the full cost 2/ of any hospital or related services provided patients properly certified as indigent. Tampa General has experienced severe monetary problems as a result of its role as provider of free medical care to indigent residents of Hillsborough County. Unfunded patients have averaged 80-100 admissions per week at a cost of $280,000-$350,000 per week to the hospital. Approximately 30 percent of the claims that the hospital files with Hillsborough County for reimbursement of indigent expenses are rejected. As a result, Tampa General has been forced to subsidize its cost of providing indigent care through added charges passed on to paying patients. Since the Hospital Authority has no taxing power, Tampa General is dependent upon funds provided by the County. Among public hospitals in Florida's major urban areas, Tampa General receives the least amount of financial assistance from local government. Tampa General has budgeted $24 million worth of free care for 1984 and this amount is projected to increase through 1988. The amount of free care provided to indigents at Tampa General is approximately 16 percent of gross revenues. Tampa General utilizes the profits it derives from the operation of its cardiac programs to subsidize the considerable amount of free care that it provides to indigent residents of Hillsborough County. In 1981, Tampa General embarked on an ambitious expansion program in order to attract additional paying patients and to remain competitive with other private hospitals in the community. In order to finance this project, the Authority issued bonds in the amount of $160,260,000. In deciding to issue these bonds, the Authority considered the revenues generated by the hospital's cardiac programs which constitute 17-18 percent of total net revenues and the relative lack of competition from other coronary programs in the Hillsborough area. In the absence of adequate funding by the State and/or County, Tampa General's cardiac program is an essential element in the hospital's plan to continue to provide free care to indigents. The subsidization or contribution margin of the cardiac program helps offset the bad debt of indigent costs which are not being reimbursed by local government. The amount of subsidization or contribution margin for each cardiac procedure performed at Tampa General in 1984 was $3,721 and is projected to increase to nearly $5,700 in 1988. However, notwithstanding the monies projected by Tampa General which it expects to be contributed by its cardiac program, it is likely that third- party payers will follow the federal government in adopting a prospective payment system based on diagnosis related groups of illnesses which will limit the amount of revenues which can be collected from private pay patients. Assuming that this occurs, the amount of subsidization derived from cardiac programs at Tampa General will be significantly decreased regardless of the outcome of the instant proceeding. The evidence regarding the effect of UCH's proposed cardiac program on Tampa General's existing program is unclear. Unquestionably, some of the patients which would have gone to Tampa General for cardiac care will go to UCH if its program is established. However, since cardiac catheterizations are increasing in volume and a direct relationship exists between cardiac catheterizations and open heart surgery, it can be concluded that while Tampa General's rate of growth would decrease, it is unclear whether its present volume would decrease significantly below existing levels. No evidence was presented that Tampa General's cardiac catheterization and open heart programs would decline below the thresholds established by rule if UCH's application were granted. The financial problems facing Tampa General are clearly serious. The hospital has taken drastic steps to attempt to control costs including eliminating staff positions and severely restricting indigent access to health care. Tampa General's problems existed prior to UCH's application for a CON and will likely continue regardless of whether the Petitioner's CON is approved. The long-term solution of Tampa General's financial problems should not be dependent upon whether UCH prevails in this proceeding. If Tampa General is to fulfill its mission as a public hospital, it must be assured of reliable and consistent course of funding for all of its operations. In enacting Chapter 80-510, Laws of Florida, the Legislature intended that the cost of indigent hospital care in Hillsborough County be borne by all of the citizens of the County, and not primarily by paying patients who by circumstance or otherwise, find themselves at Tampa General. Tampa General's reliance on its cardiac programs to finance its long- term debt and offset its indigent care losses is dependent on the existence of two factors: first, Tampa General must maintain what is essentially a monopoly on the services to be guaranteed a supply of paying cardiac patients and second, it must have the ability to pass on to its paying cardiac patients the amount needed to subsidize its other operations. Tampa General, however, no longer maintains a monopoly on cardiac programs in the Hillsborough area as evidenced by the certificate of need awarded to St. Joseph's. Moreover, the Department has stated its intention to authorize another open heart program and three catheterization labs at Tampa Heart Institute. The prospective reimbursement system implemented by the federal government which is expected to be followed by private insurers will further limit Tampa General's ability to generate excess revenues from private-pay coronary patients. The result of the inability of Tampa General to secure a long-term solution to its problems of unreimbursed indigent care is reflected in the institution of a policy limiting indigent admissions to the most serious cases. Due to this new policy limiting admissions at Tampa General to emergencies, Tampa General's and UCH's policies regarding coronary care for indigents are essentially the same. The Petitioner's Compliance with Section 381.494(6)(c), Florida Statutes It was uncontroverted that UCH's proposed cardiac services are consistent with the state health plan. Since the Department has not yet promulgated as a rule the health systems' plan for the District, the parties agree that the question of the Petitioner's compliance with the local plan is not an issue in this case. See Section 381.494(6)(c)(1), Florida Statutes. The proposed cardiac program has been approved by UCH's Board of Directors, and is an appropriate progression considering the size of UCH and the mix of cardiologists and patients at the facility. See Rule 10-5.11(2), Florida Administrative Code. The Petitioner has carried its burden by demonstrating a need for cardiac catheterization and open heart surgical services regardless of whether the service district is defined as a two or five-county area. See Section 381.494 (6)(c)(2), Florida Statutes. Utilizing a two-county area including Hillsborough and Manatee counties, the projected population in 1985 is 890,000. The 1981 use rate was 276.4 cardiac catheterization procedures per 100,000 population. Multiplying the 1981 use rate by the projected population, 2,640 catheterization procedures are projected for 1985. Dividing 2,460 by the threshold number 600, results in a need for 4.1 catheterization labs in Hillsborough and Manatee counties in 1985. Presently, three existing and approved catheterization laboratories exist in Hillsborough and Manatee counties, one at St. Joseph's and two at Tampa General. A need, therefore, exists for an additional catheterization laboratory in the two-county area. 3/ In the five-county area which includes Hillsborough, Manatee, Polk, Hardee and Highlands counties, the projected population for 1985 is 1,330,400. The 1981 use rate was 207 procedures per 100,000 population. A total of 2,693 and 2,754 procedures are projected for 1984 and 1985, respectively. Dividing 2,754 by 600 demonstrates a need in 1985 for five laboratories while four presently exist or are approved in the five-county area, one at St. Joseph's, two at Tampa General and one at Lakeland Memorial. Petitioner has therefore demonstrated a need for an additional cardiac catheterization services in the five-county area. In considering the need for open heart surgery services in the two- county area and utilizing the projected population of 890,000 and a use rate of 160.99, the projected number of open heart procedures in 1985 is 1,433. When 1,433 is divided by 350, a need exists for four open heart surgery programs in Hillsborough and Manatee counties in 1985. Since there are only two existing and approved programs in the two-county area, the Petitioner has demonstrated a need for two additional open heart surgical programs by 1985. In the five-county area, the projected 1985 population is 1,330,400. The 1981 use rate was 122 procedures per 100,000 population. Multiplying the projected population by the use rate results in 1,623 open heart procedures projected in 1985. When 1,623 is divided by 350, a need is established for five open heart surgical programs by 1985. Since only three existing or approved programs are in place, the Petitioner has demonstrated a need for two additional open heart programs in the five-county area by 1985. The Petitioner presently performs a significant number of non-invasive cardiac procedures. It was uncontroverted that UCH provides quality of care to its patients. If the Petitioner's application is approved, it can be assumed that present acceptable quality of care standards will be met in the operation of the program. See Section 381.494(6)(c)(3), Florida Statutes. The proposed project is financially feasible, and UCH has the ability to attract sufficient nurses and support staff to operate both programs. See Section 381.494(6)(c)(8) and (9), Florida Statutes. The Petitioner has argued throughout this proceeding that the initiation of cardiac service at its facility will foster competition thereby reducing health care costs in Hillsborough County. If price competition in fact existed under the present system of health care delivery, lower costs would be expected. However, with rare exception, health care consumers do not select hospitals nor do they pay their own hospital bills. Rather, third-party payers, including the federal government and private insurance companies, are responsible for reimbursing hospitals for patient costs and physicians generally determine which hospital is utilized by a patient. In an understandable effort to control health care costs, the federal government and the state have enacted a complex regulatory scheme for health care providers which limits competition and places the burden on providers of establishing that a need exists in a given area for a proposed service. To a significant extent, this scheme protects the financial interests of existing providers. This process can have an unfortunate side-effect of limiting the choices available to health care consumers and eventually could result in a diminished quality of health care. 4/ While the presence of additional hospitals in an area does not necessarily result in lower health care costs, it does create potential competition for patients through physician referrals. Hospitals have an incentive to provide quality care including state of the art equipment and competent staff, to ensure that they attract their share of patients. As a result, the preferences of physicians and health care consumers should have a greater impact in an area where health care services exist at more than one facility. The difficulty encountered in CON proceedings is attempting to balance the legitimate needs of health care consumers with the state's efforts to control costs by discouraging the duplication of unnecessary services. The Petitioner has demonstrated that its proposal is cost-effective, and should foster innovation and improvement in the delivery of health services in the service area as required by Section 381.494(6)(c)(12), Florida Statutes. The assertion by Tampa General that the expansion of its facility represents a less costly alternative is too speculative to be considered in this proceeding. While TGH is in the process of a $300,000 conversion of a pediatric catheterization lab to an adult lab, this fact was apparently either unknown or not considered by the Department at the time of the final hearing since HRS witnesses stated that Tampa General has only two adult labs.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Health and Rehabilitative Services enter a Final Order granting a CON to Petitioner University Community Hospital to establish a cardiac catheterization laboratory and open heart surgical program in Tampa, Florida. DONE and ENTERED this 5th day of March, 1984, in Tallahassee, Florida. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of March, 1984.
Findings Of Fact General On October 15, 1986 Plantation General Hospital (Plantation) filed an application to establish adult and pediatric open heart surgery programs and a pediatric cardiac catheterization program. On October 16, 1986 North Broward Medical Center filed an application to establish an open heart surgery program. Both applications were denied by the Department of Health and Rehabilitative Services for reasons stated in its state agency action report issued on February 27, 1986. Both North Broward Medical Center and Plantation sought formal proceedings on their applications. North Ridge General Hospital, Memorial Hospital, Holy Cross Hospital and Florida Medical Center intervened in the proceedings. North Broward Medical Center updated its application on September 1, 1986. Plantation General Hospital updated its application on September 29, 1986, and deleted the pediatric open heart and pediatric cardiac catherization portions of the application. The Parties North Broward Medical Center (North Broward) is a 419-bed acute care hospital in Pompano Beach owned by the North Broward Hospital District (District), a special taxing district created by the Legislature to provide hospital services to residents of the northern two-thirds of Broward County. The District operates a multi-hospital system. The other hospitals, are Broward General Medical Center (Broward General), a 715-bed acute care hospital in east central Broward County, Imperial Point Medical Center, a 200-bed acute care hospital, and Coral Springs Medical Center, a 200-bed acute care hospital which opened in early 1987. The District has a single medical staff for all four hospitals. North Broward offers many cardiac services, including cardiac catheterization and some cardiac surgery procedures. Its catheterization lab opened in January, 1986. The lab will perform between 350 and 400 catheterizations during its first year. Broward General, the largest of the District hospitals, has a full cardiology program including a catheterization lab in which not only diagnostic catheterizations are performed, but also therapeutic catheterizations, (including balloon angioplasties) and has an open heart surgery program. It is not a party to this case. Plantation is a 264-bed full service general medical surgical hospital in Plantation, Florida. It offers many cardiac services, including diagnostic cardiac catheterization. It began its catheterization services in April, 1985 and in the first eight months performed 300 catheterizations. Approximately 500 catheterizations were performed its first year. South Broward Hospital District is the special taxing district created to provide hospital services to residents of the southern one-third of Broward County. It owns a single hospital, Memorial Hospital. Memorial is a 737-bed tertiary care hospital. It began operating an open heart surgery program in 1983 and provides a complete range of cardiac services, excluding heart transplants. Holy Cross Hospital is a 597-bed not-for-profit acute care hospital sponsored by the Sisters of Mercy, an order of nuns based in Pittsburg, Pennsylvania. It provides cardiac services including open heart surgery, but not including heart transplants. Its open heart surgery program began in 1976. North Ridge General Hospital is a 395-bed acute care hospital located in Fort Lauderdale. It offers full cardiac services excluding heart transplants; 34 percent of its hospital admissions are cardiac related. It has had an open heart surgery program for 11 years. Florida Medical Center is a 459-bed acute care hospital located in Fort Lauderdale approximately three and one half miles from Plantation. It provides a broad range of cardiac surgery excluding transplants and was the first open heart surgery program in Broward, opening in December, 1974. II. Statutory Criteria For Evaluating The Application Under Section 381.494(6)(c), Florida Statutes. Consistency with the State Health Plan and Local Health Plan. Section 381.494(6)(c)1. Florida Statutes. The State Health Plan specifically addresses both cardiac catheterization services and open heart surgery. The plan recognizes a large body of research demonstrating a relationship between the number of procedures performed and surgical death rates; programs with low volume have higher mortality. One of the plan objectives is to maintain an average of 350 open heart surgery procedures per program in each district through 1990. The State Plan recognizes it is not advisable to open cardiac catheterization units in a facility which does not provide open heart surgery, and that "consideration" should be given to applications for open heart surgery facilities which provide cardiac catheterization. The State Plan does not state or imply, however, that every facility with a catheterization program should also have open heart surgery. The State Plan specifically recognizes there is support within medicine for cardiac catheterization labs not associated with open heart surgery programs. Florida currently has a significant number of hospitals with catheterization programs which do not perform open heart surgery. Neither the State nor Local Health Plans link approval of open heart surgery programs at a facility to the number of catheterizations being done at an institution. The District X (Broward County) Health Plan for 1985 states that each existing open heart surgery program must be performing at least 350 cases annually before additional programs will be considered. The parties have stipulated that each existing and approved open heart surgery program in Broward County is not currently operating at 350 open heart surgery cases per year. The District X Health Plan concludes that accessibility to either catheterization or open heart surgery is not a problem for residents of District X. The District plan recommends that "[N]ew cardiac catheterization or cardiac surgery programs should not be approved unless they meet or exceed the standards and criteria set forth by HRS." The plan does not specify circumstances which the Local Health Council identifies as justifying a departure from those standards. Nowhere in the District X Health Plan's examination of available cardiac services is evaluation based on anything other than a district-wide basis. The Local Health Council has neither adopted subdistricts for cardiac services nor manifested through its plan any indication that new cardiac services should be examined on anything less than a district-wide basis. Division of the county north and south or east and west should not be done in determining the need for open heart surgery in Broward; the county should be looked at as a unit. Plantation has argued that there are different medical communities in the east and west portions of Broward County and that physician referral patterns are such that State Road 441 is a dividing line between east and west medical communities. It maintains that Florida Medical Center is the only open heart provider located in the west, and thus operates almost without competition in western Broward, and without competitive stimulus to affect cost or quality of service. In the absence of sub-districting by the Local Health Council, ad hoc balkanization of the county is inappropriate. Neither of the applications satisfy the criteria of the Local Health Plan. Insofar as Rule 10-5.0ll(1)(f)7., Florida Administrative Code, requires applications to be consistent with the Local Health Plan and the State Health Plan, both applications failed to meet that portion of the rule. Availability, Utilization, Geographic Accessibility and Economic Accessibility Of Facilities In The District. Section 381.494(6)(c)2., Florida Statutes. As to service accessibility, open heart services are available within two hours under average travel conditions for at least 90 percent of the District X population. The Local Health Council has found that accessibility does not present a problem to the residents of District X. Open heart surgery is available to patients in Broward County, including indigents who are able to receive treatment at Broward General without regard to ability to pay. As to utilization, none of the five existing providers of open heart surgery in Broward operates at capacity. North Ridge can easily handle 150 more open heart surgery cases per year with its current staffing. Broward General is working 4 hours per day 4 days a week to do 230 open heart surgeries. Holy Cross performs only 235 procedures per year in its two operating rooms dedicated to open heart surgery. Florida Medical Center performs about 400 open heart surgeries in its two dedicated operating rooms. Memorial Hospital can handle twice its 1986 rate of 355 open heart procedures without difficulty. The record as a whole indicates there is currently substantial excess capacity in the existing open heart surgery programs in District X. This will continue through the planning horizon. While there may be occasional scheduling problems at any of the 5 current providers of open heart surgery at times of peak demand, these anecdotal problems do not support a finding that open heart surgery is inaccessible or that current providers are overutilized. North Broward failed to demonstrate that there is any concentration of hispanic migrant workers in northwest Broward in need of open heart surgery services that are not receiving them and which it, as a tax supported institution, would serve. There is no issue as to the applicants' ability to meet the standard enacted in Rule 10-5.011(1)(f)(3), Florida Administrative Code, which implements Section 381.494(6)(c) 2., Florida Statutes. Quality of Care Section 381.494(6)(c)3., Florida Statutes Additional open heart programs would reduce the number of procedures done in the existing programs and thereby affect quality of care, for an open heart surgical team needs to perform a considerable number of procedures to remain proficient. Efficiency and communication among the entire surgical team is important to lower operating time and time under anesthesia. The team consists of the surgeon, an assistant surgeon, surgical nurses, the pump profusionist, the anesthesiologist, the hospital intensive care unit, the monitoring units, and physical and respiratory therapy units. In 1986 North Ridge performed about 600 open heart procedures. Florida Medical Center performed about 404; Memorial performed approximately 355, Broward General Medical Center performed 235, and Holy Cross performed 235. All provide high quality care. Holy Cross Hospital and Broward General Medical Center have not reached the 350 procedure volume required by Rule 10-5.011(1)(f)11. (I), Florida Administrative Code. Memorial and Florida Medical Center are just over the 350 procedure volume set in the rule and will drop below that number if Plantation is approved, which would degrade the quality of care at those institutions. Economies And Improvement In Services Derived From Shared Health Care Resources Section 381.494(6)(c)51 Florida Statutes. Plantation did not contend that its proposal would result in economies and improvements from joint, cooperative, or shared health care resources. North Broward proposes to share the same open heart surgical team that is now being using by Broward General, a larger hospital owned by the North Broward Hospital District. North Broward has no contract with the surgeons at Broward General to insure that they will staff its open heart surgery program if it is approved. If the volume of open heart surgery at North Broward grows to occupy its current open heart surgeons full time, additional surgeons can be added to the group of surgeons who serve Broward General. A witness for North Broward testified that this would still constitute a shared service program. Such an elastic definition of a "shared service", based on whether all surgeons are in a group practice together rather than on whether actual procedures are done together, is useless. National Health Planning Guidelines published in the Federal Register on March 28, 1978 state than an open heart surgery program should reach 200 cases within three years in order to be cost effective and to have a high level of care, and that additional programs should not be approved unless all existing programs have reached the level of 350 cases per program. 43 Fed.Reg. 13048. These standards are generally incorporated in Rule 10-5.011(1)(f) governing open heart surgery programs. The federal regulation also states that in special circumstances, a shared surgical team may perform fewer than 200 cases if they are performing open heart surgery in more than one institution; in such cases procedures at each institution may be aggregated to reach the 200 case level. The Federal Register states "In some areas open heart surgical teams, including surgeons and specialized technologists, are utilizing more than one institution. For these institutions the guidelines may be applied to the combined number of open heart procedures performed by the surgical team where an adjustment is justifiable in line with Section 121.6(B) and promotes more cost effective use of available facilities and support personnel. In such cases, in order to maintain quality care a minimum of 75 open heart procedures at any institution is advisable. . . ." 43 Fed. Reg. 13048 Section 121.6(B) states that adjustments may be made by local health systems agencies (now local health councils) to the standards set in the Federal guidelines for important reasons, e.g. increased cost of care for a substantial number of patients in the area if the guidelines are followed, or if residents of the service area do not have access to necessary health services. Special circumstances which have justified the use of a shared surgical team under the federal guidelines have been to provide indigent care, geographic accessibility, trauma service, or to meet the needs of a teaching hospital. While special circumstances may justify the use of a shared team, a shared team is not a special circumstance in and of itself. A reading of the entire portion of the federal guidelines dealing with shared surgical teams leads to the conclusion that the circumstances in which those guidelines authorize the use of shared surgical teams to operate open heart surgery programs that would not otherwise meet the National guidelines are not present. North Broward's proposal to use a shared open heart surgical team with Broward General does not enhance its application. The Extent To Which The Proposed Services Will Be Accessible To All Residents Of The Service District. Section 381.494(6)(c)8., Florida Statutes The parties stipulated that the Petitioners' meet the considerations of criteria 8 regarding health manpower, management personnel and funds for capital and operating expenditures, and that the other portions of subsection 8 are inapplicable, except for the clause concerning the extent to which the proposed services are accessible to all residents of the service district. The proposed services at North Broward would be economically accessible to the residents of the service district. North Broward serves patients without regard to their financial resources. It currently cares for indigents in its cardiac catheterization laboratory. Its filings with the Hospital Cost Containment Board for 1987 budget 19.5 percent of its charges as unpaid because rendered to indigents. The budget also projects Medicaid deductions as 5.2 percent of total revenue. By comparison, North Ridge and Holy Cross project 0 percent Medicaid deductions in their 1987 budgets. North Ridge projects only 3.7 percent and Holy Cross 4.5 percent for uncompensated indigent care. Florida Medical Center's performance shows only 0.1 percent Medicaid and 6.1 percent uncompensated care, which includes bad debt. None of the current open heart surgery providers which are privately owned has a particularly good record in providing access to indigents. On the other hand, indigents generally do not significantly utilize open heart surgical services. Plantation's current Medicaid utilization approximates 2 percent. There is no indication that Plantation's proposal will significantly enhance economic accessibility of open heart surgery services to indigents in District X. It has given no undertaking that it will provide any particular level of service to indigents. While Plantation will accept patients when a physician with staff privileges chooses to admit the patient, there is no showing that physicians at Plantation have any significant indigent patient load. Probable Impact Of The Proposed Projects On The Cost Of Providing Open Heart Surgery Services. Section 381.494(6)(c) 12., Florida Statutes There is no need in the district for a new program and the approval of additional programs will have an adverse economic impact on existing providers by diluting the number of procedures now being performed by existing programs. For example, Plantation is physically near Florida Medical Center. Much of the cardiac surgery and therapeutic catheterization (angioplasty) performed on patients who receive diagnostic catheterization at Plantation is now being done at Florida Medical Center. Patients who have diagnostic catheterization usually have their open heart surgery or angioplasty at the hospital where their catheterization was performed. Thus if Plantation receives approval for its open heart surgery program, most of those patients who receive cardiac catheterizations at Plantation would have their angioplasty or open heart surgery done there rather than at Florida Medical Center. Florida Medical Center has not attached a particular dollar loss figure to the impact of the approval of Plantation's open heart surgery program. Approval of the Plantation program will result in a pre-tax income decrement to North Ridge of approximately $416,000 in the 12 months ending December 31, 1989. Memorial Hospital would probably lose $690,000 in net revenue if Plantation is approved. Holy Cross would lose about 15 percent of its heart patients. II. Factual Findings Concerning The Rule Criteria Against Which The Application Must Be Evaluated Rule Hethodology. Rule 10-5.011(f)8. The parties have stipulated that applied on a District-wide basis, the formula set in Rule 10-5.011(f)8., using the 1984 or 1985 District X open heart surgery use rate applied to the 1987 population forecast for Broward County by the Governor's Office results in an average of less than 350 procedures annually for the existing providers in Broward County. Moreover, each existing and approved open heart surgery program in Broward is not currently operating at 350 open heart surgery cases per year. According to the evidence from the Department of Health and Rehabilitative Services, the methodology shows need for 4.4 open heart programs in Broward County. HRS Exhibit 1. Minimum Service Volume For Existing Applicants, Rule 10-5.011(1)(f)ll. Florida Administrative Code. The rule also requires that the service volume of each existing and approved open heart program be at least 350 adult open heart surgery cases per year. Holy Cross and Broward Medical Center have not reached the 350 minimum service volume in 1986. Memorial and Florida Medical Center just reached that level in 1986. The Abnormal Circumstance Exception Rule 10-5.011(1)(f)2., Florida Statutes The rules of the Department of Health and Rehabilitative Services provides that the "Department will not normally approve applications for new open heart surgery programs in any service area unless the conditions of sub- paragraphs 8. and 11. . . . are met". As shown in the discussion above, those sub-paragraphs are not met by the applications and unless an abnormal situation prevails in Broward County, the applications should be denied. Service Accessibility Rule 10-5.011(1)(f)4., Florida Administrative Code The parties stipulated that each of the Petitioners meets the requirements of service accessibility involving travel time, hours of operation and waiting. The only issue remaining is the criterion dealing with underserved population groups. There is no persuasive evidence that there are any underserved population groups in Broward County, i.e. Medicare, Medicaid or indigent patients. Broward General has additional capacity to serve such patients. Service Quality Rule 10-5.011(1)(f) 5., Florida Administrative Code The parties stipulated that Petitioners' applications meet the criteria of this rule, except as logistically affected by North Broward's shared surgical concept, and the applicant's ability to achieve a minimum service volume. The application of North Broward meets the rule criteria insofar as having an adequate number of appropriately trained personnel for the program. The problem is that with the shared surgical team it is physically impossible for the team to be in two hospitals at the same time. Both applicants would achieve the necessary volume of 200 procedures within 3 years. Cost Effectiveness Rule 10-5.011(1)(f)6., Florida Administrative Code The parties stipulated that both applicants' proposed equipment lists and costs are not in dispute. The charges to be made for open heart surgery at Plantation and North Broward would be comparable with charges established by similar institutions in the service area. Mere competition, given five existing providers, would insure this. There is, however, a less costly alternative to the institution at Plantation and North Broward of open heart surgery programs: Further use of the existing programs which do not meet the minimum 350 procedure service level required by Rule 10-5.011(1)(f)11., Florida Administrative Code. The cost effectiveness component of Rule 10-5.011(1)(f)6. has not been met by either applicant.
Recommendation The applications of North Broward Medical Center and Plantation General Hospital for approval of open heart surgery programs should be denied. DONE and ORDERED this 6th day of August, 1987, in Tallahassee, Florida. WILLIAM R. DORSEY, JR. 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 6th day of August, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-1535, 86-1536 Rulings on the Joint Proposals of the Applicants: 1-6. Covered in Findings of Fact 1-3. 7-10. To the extent appropriate, covered in Finding of Fact 4. Rejected as unnecessary. Rejected as a conclusion, not a finding. Rejected for the reasons stated in Finding of Fact 10. Rejected because to the extent that the State Plan speaks of maintaining an average of 300 open heart surgery procedures, it is inconsistent with the portion of Rule 10-5.11(1)(f)1l. a. (I) which requires each program to have a volume of 350. Rejected for the reasons stated in Findings of Fact 10- 12. Rejected because to the extent that the State Plan speaks of maintaining an average of 300 open heart surgery procedures, it is inconsistent with the portion of Rule 10-5.11(1)(f)11. a. (I) which requires each program to have a volume of 350. Covered in Finding of Fact 41. Covered in Finding of Fact 32. Covered in Finding of Fact 40. Rejected because whether the "350" standard relates to economic efficiency or other issues it still applies, and is not met. The allegation that Holy Cross has not met the standard due to its own constraints is rejected. Rejected because the concept of a shared surgical team is rejected. See Findings of Fact 30-33 and 40. Rejected as unnecessary. Rejected as unnecessary because existing providers do not perform 350 procedures per year as the rule requires. Rejected because Holy Cross performed 235 procedures. See Finding of Fact 21. Rejected as unnecessary and irrelevant. 25-30. Rejected because the attempt to use a use rate other than that prescribed in Rule 10-5.011(1)(f)8. is improper. 31-34. The evidence that other providers have operational constraints which impede expansion of the number of procedures at their facilities are unpersuasive. 35-37. Covered in Finding of Fact 35. Covered in Finding of Fact 35. This attempt to create a subdistrict for open heart services is rejected as inconsistent with the Local Health Plan. Covered in Finding of Fact 18. Rejected as legal interpretation not a fact. Rejected as legal interpretation not a fact. Rejected as unnecessary. Subparagraph 11. of the rule does not speak in terms of averages. This finding is rejected. To the extent HRS may have, in the past, used averages rather than absolute numbers, that was a misapplication of the rule. Rejected because the contention concerning operational constraints of Holy Cross is rejected as unpersuasive. Rejected as unnecessary. 47-53. Rejected because although the applicants can meet the 200 procedure minimum service volume they cannot meet the other requirements of subparagraph 11, rendering further findings on minimum service volume unnecessary and subordinate. 54-61. Rejected because although cardiologists would prefer to have open heart surgery available so that they can also provide therapeutic catheterizations, they are not necessary for operation of a diagnostic catheterization laboratory. See Finding of Fact 11. 62-71. Covered in Finding of Fact 35 and 36. 72. The necessary findings concerning shared services are made in Findings of Fact 30-33. The additional information in these proposals is unnecessary. 79-83. Covered in Finding of Fact 41, to the extent necessary. 84-164. The findings concerning lack of adverse impact on intervenors are generally rejected. The approval of additional programs will necessarily have the effect of diluting the number of procedures performed by existing providers, which has an adverse financial impact on them. The losses the opponents will experience are not especially significant, in the sense that they would cause existing providers to cease providing open heart surgery services. The factor is not so significant in the balancing to justify the extensive proposed findings made by the applicants, which are therefore rejected as subordinate and unnecessary. Ruling on Proposals of the Department of Health and Rehabilitative Services: The Proposed Recommended Order submitted by the Department of Health and Rehabilitative Services is quite brief. All of the proposals have essentially been adopted in the Recommended Order. Rulings on the Proposed Findings of Florida Medical Center: Covered in introductory paragraph. Covered in statement of issue. 3-5. Covered in Finding of Fact 1. 6. Rejected as unnecessary because capital costs are not an issue. 7-8. Covered in Finding of Fact 1. 9. Covered in Finding of Fact 8. 10. Covered in Finding of Fact 1. 11-13. Rejected as unnecessary. 14. Covered in Finding of Fact 4. 15. Rejected as unnecessary. 16-17. Covered in Finding of Fact 4. 18. Rejected as unnecessary. 19. Discussed in Conclusion of Law 12. 20-24. Rejected as unnecessary. 25-27. Covered in Finding of Fact 8. 28. Rejected as subordinate. 29. Covered in Finding of Fact 8. 30-31. Rejected as unnecessary. 32. Covered in Finding of Fact 37. 33-41. Rejected as unnecessary. 42-43. Covered in Finding of Fact 9. 44. Rejected as unnecessary. 45. Covered in Finding of Fact 9. 46. Covered in Finding of Fact 10. 47-48. Covered in Finding of Fact 11. 49. Covered in Finding of Fact 12. Covered in Finding of Fact 13. Covered in Finding of Fact 14. Covered in Finding of Fact 15. Covered in Finding of Fact 16. Covered in Finding of Fact 17. Covered in Finding of Fact 18. 56-58. Rejected as cumulative. Rejected as unnecessary. Rejected because testimony of East-West communities is legally irrelevant. 61-62. Rejected as unnecessary. Rejected as irrelevant. Rejected as unnecessary. 65-66. Rejected as subordinate and cumulative. Covered in Finding of Fact 22. Rejected as unnecessary. 69-70. Subordinate to Finding of Fact 27. 71-75. Covered in Finding of Fact 22. 76-77. Rejected as unnecessary. Covered in Finding of Fact 27. Implicitly dealt with in Finding of Fact 21. Rejected as unnecessary. Covered in Finding of Fact 40. 82-84. Rejected as unnecessary. 85. Covered in Finding of Fact 29. 86-87. Covered in Finding of Fact 36. 88-109. Covered in Finding of Fact 37 to the extent necessary. 110-119. Rejected because Section 381.494(6)(d) does not apply because the project does not reach the capital expenditure threshhold of $600,000. 120. Covered in Finding of Fact 38. 121-124. Covered in Conclusions of Law. Covered in Finding of Fact 20. To the extent necessary, covered in Finding of Fact 36. Covered in Finding of Fact 36. 128-129. Covered in Finding of Fact 41. Covered in Finding of Fact 19. Rejected as unnecessary. Covered in Conclusion of Law 10. 133-141. Rejected as unnecessary. Covered in Finding of Fact 37. Rejected as not constituting a Finding of Fact. Rejected as irrelevant whether HRS practice reflects what is found in the rule or not, HRS is required to follow its rules. Rejected as subordinate. Covered in Finding of Fact 36. Rejected as subordinate. 148-150. Rejected as unnecessary. 151. Covered in Finding of Fact 36. Rulings on Findings by North Ridge: Covered in Finding of Fact 1. Covered in Findings of Fact 9, 13 and 16. Covered in Findings of Fact 13 and 33. Covered in Finding of Fact 7 to the extent necessary. Covered in Finding of Fact 27 to the extent necessary. Covered in Finding of Fact 21 to the extent necessary. 7-8. Rejected as unnecessary. 9. Covered in Findings of Fact 25 and 26. 10-11. Rejected as unnecessary. Covered in Finding of Fact 5 to the extent necessary. Covered in Findings of Fact 6 and 21, to the extent necessary. Covered in Findings of Fact 8 and 21. Covered in Finding of Fact 30 to the extent necessary. 16-17. Rejected as unnecessary. Covered in Finding of Fact 30. Covered in Finding of Fact 31. 20-26. Rejected as unnecessary. 27. Implicitly adopted in Finding of Fact 31. 28-30. Rejected as unnecessary. Covered in Findings of Fact 2 and 23. Rejected as unnecessary. Rejected as unnecessary. This is governed by Rule 10- 5.011(1)(f). Rejected as unnecessary. To the extent appropriate, covered in Finding of Fact 37. 36-43. Covered in Finding of Fact 37. The specific impact of the opening of the North Broward Program in North Ridge has not been determined by the Hearing Officer because it is unnecessary to do so. An additional program will dilute the number of procedures already being provided, which clearly will have a negative financial impact on North Ridge. 44-47. To the extent necessary, covered in Findings of Fact 32 and 33. 48-50. Rejected as unnecessary. Rejected because the shared surgical team concept has been rejected as the basis for the Certificate of Need, economic access is already adequate, demographic factors do not require a new program and rate of increase in utilization in Broward is not relevant because the rule requires a specific use rate. Rejected as a recounting of contentions and is not a Finding of Fact. Rulings on Holy Cross Hospital and South Broward Hospital District: Covered in Finding of Fact 36. Rejected as subordinate. Covered in Finding of Fact 37. Covered in "Stipulation concerning applicable statutes." Rejected as a Conclusion of Law, not a Finding of Fact. Rejected as a statement of position, not a Finding of Fact. Covered in Finding of Fact 2. Covered in Finding of Fact 4. Covered in Finding of Fact 5. Covered in Finding of Fact 6. Covered in Finding of Fact 8. Covered in Finding of Fact 7. Rejected as a statement of law, not a Finding of Fact. Covered in Finding of Fact 20. Covered in Findings of Fact 23 and 35. Rejected as unnecessary. Covered in Finding of Fact 36. Rejected as unnecessary. 19-20. Rejected as cumulative. 21. Rejected as unnecessary. 22-25. Covered in Finding of Fact 21. 26-27. Rejected as unnecessary. Rejected as a statement of law, not a Finding of Fact. Covered in Finding of Fact 21. Covered in Findings of Fact 37 and 28. Rejected as unnecessary. Covered in Finding of Fact 9. Covered in Finding of Fact 25. 34-35. Covered in Finding of Fact 26. 36-37. Rejected as unnecessary. Rejected as a statement of a position, not a Finding of Fact. Rejected for the reasons proposal 38 was rejected. Covered in Conclusion of Law 10. Rejected as unnecessary. Covered in Conclusion of Law 10. 43-46. Rejected as unnecessary. 47. To the extent appropriate, covered in Findings of Fact 10 and 11. 48-50. Rejected as unnecessary. 51-52. Covered in Finding of Fact 9. Covered in Finding of Fact 10. Covered in Finding of Fact 11. Covered in Finding of Fact 15. Covered in Finding of Fact 14. 57-58. Covered in Finding of Fact 18. 59-69. Rejected as unnecessary. 70-107. Covered in Finding of Fact 37. COPIES FURNISHED: Ronald K. Kolins, Esquire Post Office Box 3888 West Palm Beach, Florida 33402 John Parker, Esquire J. Marbury Rainer, Esquire John Rue, Esquire 1200 Carnegie Building 133 Carnegie Way Atlanta, Georgia 30303 R. Bruce McKibben, Jr., Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Kenneth F. Hoffman, Esquire Eleanor Joseph, Esquire Oertel & Hoffman, P.A. Post Office Box 6507 Tallahassee, Florida 32314-6507 Steve Ecenia, Esquire Post Office Drawer 1838 Tallahassee, Florida 32301 Eric B. Tilton, Esquire Kenneth D. Kranz, Esquire Post Office Drawer 550 Tallahassee, Florida 32302 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 John Miller, Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700
Findings Of Fact Application Process Humhosco is a wholly owned subsidiary of Humana, Inc. Humhosco owns Humana Hospital Brandon and other hospitals in Florida. The record does not disclose thee number of such hospitals or whether Humhosco owns other assets. On February 26, 1988, Humhosco submitted to HRS a letter of intent to apply for a certificate of need for open heart services at Humana Hospital Brandon. The letter of intent included a certificate dated February 26, 1988, authorizing Humhosco to file the application for the project estimated to cost nearly $2 million, making available "sufficient funds" for the project, certifying that Humhosco shall accomplish the project within the time allowable by law at or below the costs stated in the application, and certifying that Humhosco shall license and operate the facility. The certificate was signed by Alice F. Newton, as Secretary of Humana, Inc. She certified that the representations contained in the preceding paragraph were resolutions of the Board of Directors of Humana, Inc. approved on February 26, 1989. On or about March 14, 1988, Humhosco submitted to HRS an application for a certificate of need to install and operate an open heart center at Humana Hospital Brandon. The projected cost was about $1.9 million. The application included a certificate dated March 16, 1988, containing resolutions similar to those contained in the certificate of February 26, 1988. The certificate was again signed by Alice F. Newton, but this time in her capacity as Secretary of Humhosco. The resolutions, which were dated as of March 16, 1988, were adopted by the Board of Directors of Humhosco. The application contained no financial statement of Humhosco. Instead, the application contained an audited financial statement for "Humana Hospital- Brandon (a division of Humhosco, Inc., a wholly-owned subsidiary of Humana Inc.)." The financial statement, which was for fiscal year ending August 31, 1987, reflected an examination of the financial records of Humana Hospital Brandon, not Humhosco. The financial statement disclosed a shareholder's equity of about $24 million and net income of about $6.2 million based on net revenues of about $47 million and income before income taxes of about $12.2 million. The record does not explain the basis for a shareholder's equity in a division of the corporation in which it owns shares. However, nothing in the record suggests that the financial statement is mislabelled. The financial statement appears to reflect the operations and net worth of a division of Humhosco, not Humhosco itself. The financial statement is of little value in assessing the financial condition of Humhosco. Nothing in the record supports an inference that Humhosco's other hospitals, as well as any other operating assets that Humhosco might own, are profitable or, if unprofitable, whether their losses are exceeded by the profits of Humana Hospital Brandon. By letter dated April 14, 1988, HRS requested additional information from Humhosco. The letter requested, among other things, a financial statement for the prior year and an original certificate rather than a copy. HRS never commented on the fact that the certificate accompanying the letter of intent evidenced resolutions from the corporate parent of the applicant or that the financial statements were of a division of the applicant. By letter dated May 12, 1988, Humhosco responded to the above- described omissions letter. In its response, Humhosco provided the earlier financial statement, which was for Humana Hospital Brandon and not Humhosco. The letter did not include any material information regarding either certificate. By letter dated July 11, 1988, HRS informed Humhosco of its intent to issue Certificate of Need 5537 for the establishment of the open heart program described in the application. The accompanying State Agency Action Report, which was dated July 8, 1988, recommended that the certificate of need be issued in its entirety. The report stated that the need methodology described by Rule 10-5.011(1)(f) justified seven open heart programs in District VI, which has only six such programs, and the Humhosco proposal was in substantial compliance with all criteria. The Hospital Humana Hospital Brandon is a 220-bed general hospital in Brandon, which is in eastern Hillsborough County. Humana Hospital Brand on is fully accredited by the Joint Commission of the Accreditation of Health Care Organizations. The hospital, which is a Level II trauma center with eastern Hillsborough County as its catchment area, contains 16 intensive-care and cardiac-care beds and 35 progressive-care beds, in addition to its regular medical-surgery beds. The hospital offers a wide range of services, including medicine, pathology, anesthesiology, radiology, neurology, intensive care, and emergency care available at all times for cardiac emergencies. The hospital provides cardiac catheterization services through its cardiac catheterization lab and noninvasive cardiographics lab. Open heart surgery is cardiac surgery during which a cardiopulmonary bypass procedure is used. Cardiac catheterization is a diagnostic/therapeutic procedure used in connection with heart and circulatory conditions. Coronary angioplasty is the expansion of narrowed segments of the coronary vessels. The proposed open heart suite would be adjacent to the existing cardiac catheterization lab, and the two facilities would share the same recovery/support area. The proposed program would provide a wide range of procedures, including the repair or replacement of heart valves, repair of congenital heart defects, cardiac revascularization, repair or reconstruction of intrathoracic vessels, and the treatment of cardiac truama. The program would have the ability to implement and apply circulatory assist devices such as the intra- aortic balloon assist and prolonged cardiopulmonary partial bypass. Need District and State Health Plans The 1985 District VI Health Plan reports that most cardiac surgeries are open heart with the most common of these being coronary bypass surgery. The plan acknowledges that an important use of cardiac catheterization is evaluation for open heart surgery. According to the plan, open heart surgery, particularly coronary bypass surgery, has been controversial with respect to its risk- and cost- effectiveness and the fairness of its distribution among the entire population. Noting a decline in procedures in District VI from 1983 to 1984, the plan concluded that the application of the present rule methodology could exaggerate need if the decline continued. Otherwise, however, the proposed program satisfied the policies of the district plan broadly relating to need. The State Health Plan stated that an inverse relationship exists between the volume of open heart procedures and surgical death rates. The state plan added, however, that no clear agreement exists as to the minimum number of procedures necessary to maintain staff skills. The plan endorsed the rule requiring that a new program project a minimum of 200 procedures annually within three years of opening. The State Health Plan reported the controversy concerning the efficacy of open heart procedures, at least at their current rate. The plan concluded that further study would be required before the issue could be resolved. The plan stated that new types of cardiac catheterization procedures may replace some open heart surgery, "while necessitating the availability of open heart programs on standby basis within the same facility." The plan also anticipated a reduction in the rate of open heart surgery with the introduction of new procedures, such as balloon angioplasty, clot-dissolving substances, and calcium blockers. The plan noted the recommendations of two groups that cardiac catheterization laboratories be located only in facilities providing open heart surgery. The plan suggested that catheterization laboratories without connected open heart programs would suffer lower utilization rates than catheterization laboratories with open heart programs. The State Health Plan concluded by establishing an objective "to maintain an average of 350 open heart surgery procedures per program in each district through 1990." HRS Rules Rule 10-5.011(1)(f), Florida Administrative Code, sets forth the HRS numeric need methodology. Rule 10-5.011(1)(f)8 provides a formula to estimate the number of open heart procedures for the horizon year, which, in this case, is 1990. Rule 10-5.011(1)(f)11 prohibits the approval of new open heart programs unless certain conditions are met, including satisfying the requirement of Rule 10-5.011(1)(f)5.d that 200 procedures annually be performed within three years after commencement of the service. The proposed open heart program would generate a minimum of 200 adult open heart procedures annually within three years after commencement. Ultimately, the program could handle as many as 500 procedures annually. Under the formula contained in Rule 10-5.011(1)(f)8, the estimated number of open heart procedures in District VI is 2555 in 1990, which is when the proposed program would become operational. The projected population of District VI on January 1, 1990, is 1,563,354 persons. For the 12-month period ending two months prior to the deadline for letters of intent for the subject batching cycle, the use rate per 100,000 persons in District VI was 163.45. This figure is based on a population of 1,469,572 persons residing in District VI as of July 1, 1987, and 2402 open heart procedures performed during calendar year 1987. (The number of procedures includes 1050 procedures performed at Tampa General for the one-year period ending September 30, 1987, rather than calendar year 1987.) Rule 10-5.001(1)(f)11.b requires that the projected number of procedures in 1990 be divided by 350 in order to generate the number of programs needed to exist in 1990. The result of this calculation is that seven open heart programs are needed in District VI. That means that there is a net need for one program because there are presently six existing and approved open heart programs in District VI. However, Rule 10-5.011(1)(f)11.a.I prohibits the approval of any new open heart programs unless "each existing and approved" program is "operating at" and "expected to continue to operate at" a minimum of 350 adult open heart cases annually. The meaning of this rule is unclear, and HRS apparently interprets it merely to require that all existing programs average 350 procedures annually at the time of determination of the actual use rate. Another interpretation of the rule is that each existing and each approved program must be operating at the requisite rate before new programs could be approved. This interpretation is impractical because approved programs that are not yet in operation are not operating at any rate. If the intent of the rule were to prohibit the establishment of more than one open heart program at a time, HRS could have simply stated as much. The most likely interpretation is one that addresses the universally recognized relationship between volume of open heart procedures (up to a certain level) and patient mortality. The rule requires that each existing and approved facility in the district be operating at 350 procedures annually before new open heart programs are licensed. The rule does not authorize averaging the total number of procedures among the licensed facilities in a district. The inverse relationship between the number of procedures and surgical deaths is not dependent upon an average number of procedures performed in a geographical area. The safety of an open heart patient is dependent upon the actual number of open heart procedures being performed at the hospital that he or she has selected for open heart surgery. The presence in District VI of a hospital performing 1400 open heart procedures annually is of no relevance to the patient who has unwittingly selected a hospital in the same district that performs only, say, 50 such procedures annually. The six existing and approved open heart programs in District VI are identified below by facility, location, and numbers of procedures in 1987 and the first six months of 1988. Facility County 1987/1988 Procedures Tampa General Hillsborough 1050/714 St. Joseph's Hillsborough 887/514 University Community Hillsborough 0/0 Manatee Memorial Manatee 0/70 L. W. Blake Manatee 0/0 Lakeland Regional Polk 465/292 TOTAL DISTRICT VI PROCEDURES--1987 2402/1590 The 1988 procedures for Manatee Memorial cover the period of February, when the program became operational, through June. The State Agency Action Report indicates that Manatee Memorial is an approved but not yet existing program, although the program had already accounted for 70 procedures by the time of the report. The reason for this apparent discrepancy is that HRS uses the 1987 data used for calculating the use rate when determining the status of other programs. HRS offered little explanation of why it used 1987 data for determining in 1988 whether other programs were existing. Rule 10-5.011(1)(f), Florida Administrative Code, which covers open heart programs, does not define "approved and existing programs" or establish the time at which the status of a program should be determined. However, given the critical role of patient safety in the licensing process, the rule does not justify the reference to obsolete data. The Manatee Memorial open heart program was existing and approved at the time of the letter of intent and application of Humhosco and the State Agency Action Report. It was not then operating at 350 open heart procedures annually. Its approximate annualized rate of 168 procedures is materially below even the annual rate of 200 procedures often cited as the minimum number at which the mortality rate levels out. Additionally, there was no evidence that Manatee Memorial would attain such a volume of open heart procedures. Conclusions Regarding Need According to the numeric need methodology, exclusive of Rule 10- 5.011(1)(f)11.a.I, District VI could support an additional open heart program. Although in the long run the rate of open heart procedures may decrease for the reasons set forth above, the rate of such procedures will probably increase at least through 1990 and probably several years thereafter. For reasons set forth elsewhere in this recommended order, the Humana Hospital Brandon program would successfully satisfy this need. However, the requirement of Rule 10-5.011(1)(f)11.a.I has not been met, and thus need under the rule does not exist. Of the six current open heart programs in District VI, three performed no procedures in 1987. During the first six months of 1988, one of these three programs became operational, but the other two had yet to perform their first procedure. Although the first-year rate of procedures at Manatee Memorial was not insubstantial, the program is not operating at and expected to continue to operate at the minimum annual rate of 350 procedures set forth in the rule. The likelihood of the Manatee Memorial program attaining such a rate is especially difficult to predict in view of the unknown consequences of the initiation of another open heart program in Manatee County and another elsewhere in District VI. On balance, the proposed program at Humana Hospital Brandon is not needed or authorized due to the existing volume of procedures at Manatee Memorial as of the time of the application and approval and the adverse effect of reduced volumes upon patient safety. Rule 10-5.011(1)(f)11.a.I makes it clear that District VI needs time to absorb the recently approved open heart programs before a new one should be established. Quality of Care Humhosco has the ability to provide high quality of care and has done so in the past. An open heart program at Humana Hospital Brandon would improve the quality of care at the hospital. The new program would have limited effect upon the hospital's trauma services due to the limited number of trauma-related open heart procedures. However, the new program would complement the cardiac catheterization lab at the hospital. The addition of an open heart program would permit Humhosco to add cardiac angioplasty services in the cardiac catheterization lab at the hospital. Continuity of care and patient safety and convenience would be enhanced by the establishment of an open heart program at Humana Hospital Brandon. Strong physician support exists for an open heart program at Humana Hospital Brandon. Many existing staff persons already have the necessary skills and experience to participate in the open heart program. The staff includes 10 cardiovascular surgeons certified by the Medical Board of Thoracic Surgery or board-eligible for certification and three board-certified or board-eligible anesthesiologists trained in open heart surgery. Humhosco would add the additional staff needed to operate the proposed program. Humana Hospital Brandon has the capacity to accommodate the projected patient volume from the open heart program. Service Accessiblity Rule 10-5.011(1)(f)4.a provides that open heart programs shall be available within a maximum automobile travel time of two hours under average conditions for at least 90% of the district's population. The two-hour standard reflects the fact that open heart surgery is a tertiary service that is ordinarily performed on a scheduled rather than emergency basis. Hillsborough County is the largest county within District VI. The growth rate of eastern Hillsborough is higher than the growth rate of the remainder of the county. No open heart program is presently located in eastern Hillsborough County. A program at Humana Hospital Brandon would reduce the travel time for the persons living in eastern Hillsborough County. However, the two-hour standard is presently met in District VI, and the improvement in geographical access resulting from the establishment of a program at Humana Hospital Brandon is not substantial. The proposed program would satisfy the requirements of Rule 10- 5.011(1)(f)4.b and c regarding hours of operation and waiting periods. Humhosco has projected for the open heart program a payor mix of 55% Medicare, 2% Medicaid, and 5% indigent. If these projections were realized, Humhosco would achieve the objective of making open heart surgery available to these classifications of patients. Humhosco's record of serving these patient classifications at Humana Hospital Brandon suggests that these projected goals would be achieved. Financial Feasibility The immediate financial feasibility of the proposed project is good. The source of construction funds is a reasonable mix of 25% equity and 75% debt. The borrowed funds will come from Humana, Inc., which has ample resources to make a loan of this magnitude. The terms are 10 years at 12% with 120 equal monthly payments of $20,575.89 principal and interest. The availability of the equity portion of construction costs, which amounts to a little over $475,000, is uncertain due to the lack of information concerning the financial condition of the applicant. It is unlikely, however, that the unavailability of any or all of these funds would interfere with the project. Humana, Inc. has in any event committed by resolution to make available to the applicant sufficient funds to accomplish the project. The long-term financial feasibility of the proposed project is good. Even after total interest payments of about $168,000 and $158,000 in the first two years of operation, Humhosco projects, based on reasonable assumptions, that the open heart program would produce after-tax income of about $250,000 on first-year gross revenues of about $6.2 million and $345,000 on second-year gross revenues of about $7 million. Cost Effectiveness The implementation of an open heart program at Humana Hospital Brandon would encourage competition among health care providers of open heart services. Humhosco projects the average charge per open heart admission when the program would open in 1990 to be $29,000. This figure is about $3600 less than the average charge per open heart admission at Tampa General in 1987 and compares favorably with the charges of other providers in the area. In the long term, the effect of an open heart program at Humana Hospital Brandon could have an adverse effect on cost effectiveness if the program at Tampa General lost substantial volume due to the presence of this competition. Tampa General is a major provider of medical services to the medically indigent. Although publicly supported, Tampa General expends more on indigent-related costs than it receives in public funds for the medically indigent. Tampa General therefore must subsidize its unreimbursed indigent services with revenues from paying patients. In 1980, after a period of serious financial strains, Tampa General commenced a modernization program to attract paying patients. The program, together with a $160 million bond issue and new marketing efforts, has significantly improved the financial condition of the hospital. The approval in the past of new open heart programs in the area has coincided with the reduction of open heart procedures at Tampa General. In fiscal year ending 1983, Tampa General performed 1671 procedures. The following year, during which St. Joseph's began performing open heart surgery, Tampa General performed 878 procedures. In fiscal year ending 1985, Tampa General performed 802 procedures. The following two years, during which no new programs became operational, Tampa General performed 1050 and 1428 (projected) procedures, respectively. Undoubtedly, a new open heart program at Humana Hospital Brandon would have some effect on existing programs, including that at Tampa General. However, the record does not support a finding that the establishment of an open heart program at Humana Hospital Brandon would have a more lasting effect upon the program at Tampa General than did the other programs established in recent years. Other Factors The record does not demonstrate that there are less costly, more efficient, or more appropriate alternatives to the in-patient services proposed in the subject application. With one exception, existing in-patient facilities providing open heart services are being used in an appropriate and efficient manner. The exception is that there is nothing in the record to suggest that the open heart programs at Manatee Memorial, University Community, and L. W. Blake are being utilized efficiently. To the contrary, the only program in existence at the time of the application was not operating at the optimal minimum level. The costs and methods of proposed construction are reasonable and appropriate. There is nothing in the record to suggest that practical alternatives exist to the construction program contemplated by Humhosco. Open heart patients will not experience serious problems in obtaining in-patient care if the proposed application is not approved. There is nothing in the record to suggest that joint, cooperative, or shared resources could be used to provide the open heart services for which Humhosco has applied. The proposed program would not have any significant effect on research and educational facilities or health professional training programs.
Recommendation Based on the foregoing, it is RECOMMENDED that a Final Order be entered dismissing the petition of University Community Hospital in Case No. 88-4366 on the grounds that it dismissed its petition, and denying the application of Humhosco for Certificate of Need 5537. DONE and ENTERED this 18th day of April, 1989, in Tallahassee, Florida. ROBERT E. MEALE 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 18th day of April, 1989. APPENDIX Treatment Accorded proposed Findings of Humhosco and HRS 1-29. Adopted or adopted in substance. 30. Rejected as against greater weight of the evidence to the extent that the requirement of 350 procedures at each facility is part of the numeric need methodology. 31 and 33. Adopted in substance. However, the resulting determination of need or no need is tentative. Rule 10-5.011(1)(f)11 provides a general prohibition against the establishment of programs under normal circumstances even though, under the other portions of the rules, there would otherwise be a numeric need. 32. Adopted. Rejected as legal argument. To the extent factual, rejected as against the greater weight of the evidence. Adopted in substance. Rejected as unnecessary. 37-38. Rejected as subordinate. Adopted in substance at least as to the maintenance or slight increase of the present use rate for the immediate future. This fact does not justify a deviation from the rule requirement of the historic use rate, which in any event would justify another program. Nor does this fact justify a not normal condition for the reasons set forth in the recommended order. It should be noted that Humhosco did not offer evidence to this effect at the hearing for either of these improper purposes. This fact is only relevant in assessing the impact of the establishment of the proposed project upon existing providers, especially Tampa General and, to a lesser extent due to the greater amount of speculation involved, the new providers such as Manatee Memorial. Rejected as unsupported by the greater weight of the evidence. An increase in the number of programs has historically been accompanied by an increase in the number of procedures. It is conjecture whether or to what degree the addition of programs caused such an increase. 41-45. Adopted in substance. 46-48. Rejected as subordinate. 49-52. Adopted or adopted in substance. 53-55 and 60. Rejected as legal argument. 56-58 and 61. Adopted or adopted in substance. 59. Rejected as recitation of evidence. 62-64. Rejected as subordinate. 65. Rejected as legal argument. 66-69. Adopted. 70 and 72. Rejected as unsupported by the greater weight of the evidence. 71. Rejected as irrelevant. 73-76. Rejected as subordinate. Concerning the "overcrowded" conditions at Tampa General, the evidence showed only that the Tampa General program was, at times, quite busy, but not overutilized. The periodic high level activity at Tampa General is subordinate to the findings in the recommended order concerning the limited impact upon Tampa General of the approval of the proposed project. 77. Adopted in substance. 78-82. Rejected as subordinate. 83. Adopted in substance. 84-86. Rejected -as subordinate. Rejected as unsupported by the greater weight of the evidence. The proposed payor mix is reasonable insofar as providing access to the medically indigent and Medicaid patients. The record is unclear, however, that the approval of the application would improve the existing access of such patients to open heart services. Adopted in substance. 89 and 91. Rejected as subordinate. 90. Adopted, except that the last sentence is rejected to the extent that it suggests that Humhosco's commitment to financial access is greater than the commitment of existing providers. 92-94. Adopted. 95-96. Rejected as irrelevant. A hospital has no financial strength. A lender or investor assesses the legal entity that owns or operates the hospital. The net worth and profitability of the hospital may have a material impact on the net worth and profitability of the owner or operator of the hospital. However, it is impossible to make that determination without assessing the assets, liabilities, profits, and losses of the legal entity and not simply one of its assets. The immediate financial feasibility may be inferred by the activity of Humana, Inc. with respect to the proposed project. Rejected as legal argument. Adopted in substance. 99-100 and 108. Adopted. 101-107. Rejected as subordinate and cumulative. 109 and 123. Rejected as legal argument. 111-122. Adopted in substance. 123. Rejected as legal argument. and 126. Adopted. and 127-128. Rejected as subordinate. Adopted in substance. Rejected as cumulative. 131-133. Rejected as cumulative and, for the purpose offered, irrelevant. 134-137. Adopted in substance. 138-150. Rejected as subordinate. Treatment of Proposed Findings of Tampa General 1-3. Adopted. Rejected as legal argument and, as to the policy of HRS, irrelevant insofar as such policy might deviate from the clear requirements of the statute. First two sentence rejected as legal argument. Remainder adopted. 6-7. Rejected as legal argument except that last sentence of Paragraph 7 is adopted. First two sentences adopted. Remainder rejected as irrelevant. Adopted in substance. 10-11. Adopted. 12. Rejected as legal argument and, to the extent factual, against the greater weight of the evidence. 13-14. Adopted in substance. 15-16. Rejected as unnecessary. 17. Rejected as against the greater weight of the evidence. 18-20. Adopted in substance. Adopted insofar as Humhosco provides quality cardiac care services at Humana Hospital Brandon without an open heart program. Remainder rejected as against the greater weight of the evidence. Rejected insofar as the proposed finding suggests that a slight improvement in geographic accessibility should, as a matter of law, be ignored in this case. Adopted in substance if, like the proposed finding in Paragraph 19 concerning trauma-center status, this proposed finding means only that the slight improvement in geographic accessibility is alone insufficient to justify granting the certificate of need. Rejected as subordinate. 24-25. Rejected as recitation of evidence and subordinate. Rejected as unsupported by the greater weight of the evidence. Adopted. 28-29. Adopted in substance. Rejected as irrelevant given the interpretation adopted in the recommended order concerning the meaning of Rule 10-5.011(1)(f)11.a.I. Adopted in substance. 32-33. Rejected as unsupported by the greater weight of the evidence. 34. Rejected as subordinate. 35-40. Rejected as unsupported by the greater weight of the evidence. 41-42. Rejected as unsupported by the greater weight of the evidence and subordinate. Treatment Accorded proposed Findings of St. Joseph's 1-4. Adopted or adopted in substance. First sentence adopted except that the tax status of Humhosco as a "holding company" is rejected as a legal conclusion, irrelevant, and unsupported by the greater weight of the evidence. Second sentence adopted. Third sentence rejected as irrelevant. Third sentence rejected as a legal conclusion, irrelevant, and unsupported by the greater weight of the evidence, although it appears to be true that the identities of the persons occupying the named positions are the same between the two companies. Last sentence rejected as irrelevant. Adopted. Rejected as irrelevant. Adopted. Rejected as irrelevant. 10-13. Rejected as legal argument and unnecessary, given the finding in the recommended order that, even ignoring the additional beds that have been approved at Humana Hospital Brandon, the hospital is not overutilized. 14-15 and 17 and 19. Rejected as legal argument. 16. Rejected as subordinate. 18. Adopted in part and rejected in part. The existence of a cardiac catheterization lab does not mandate the authorization of an open heart program. However, the record in this case supports the finding that the addition of an open heart program would complement existing services in the cardiac catheterization lab, and nothing in the law prohibits the consideration of such a factor. 20-21. Rejected as irrelevant. See Paragraph 18 above. Rejected as irrelevant. Rejected as legal argument. Rejected as unsupported by the evidence. 25-26. Rejected as subordinate to the finding contained in the recommended order that the status as a trauma center is not a significant factor in considering the subject application. 27-28. Rejected as legal argument. 29-30. Adopted in substance. 31-33. Rejected as recitation of evidence. 34. Rejected as against the greater weight of the evidence. 35-39. Rejected as subordinate. 40. Adopted in substance. 41-49. Rejected as subordinate. 50. Rejected as irrelevant. 51-52. Rejected as against the greater weight of the evidence. 53-55. Rejected as subordinate. 56. Rejected as legal argument. 57-58. Rejected as recitation of testimony. Rejected as legal argument. Adopted. 61-69. Rejected as unnecessary. Rejected as legal argument. Adopted except that the last sentence is rejected as legal argument. Rejected as legal argument. Rejected as recitation of testimony. Rejected as legal argument. Adopted in substance. 76-78. Rejected as recitation of evidence. COPIES FURNISHED: Ivan Wood, Esquire Sam Power Wood, Lucksinger & Epstein Clerk Four Houston Center Department of Health and 1221 Lamar, Suite 1440 Rehabilitative Services Houston, TX 77010 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Radey, Esquire Elizabeth McArthur, Esquire Gregory L. Coler Aurell, Fons, Radey & Hinkle Secretary Post Office Drawer 11307 Department of Health and Tallahassee, FL 32302 Rehabilitative Services Tallahassee, FL 32399-0700 Cynthia S. Tunnicliff, Esquire Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A. John Miller Drawer 190 General Counsel Tallahassee, FL 32302 Department of Health and Rehabilitative Services 1323 Winewood Boulevard John Rodriguez, Esquire Tallahassee, FL 32399-0700 Assistant General Counsel 2727 Mahan Drive Fort Knox Executive Center Tallahassee, FL 32308 James C. Hauser, Esquire Joy Thomas, Esquire Messer, Vickers, Caparello, French and Madsen, P.A. Post Office Box 1876 Tallahassee, FL 32302 =================================================================
The Issue Whether the adult open heart surgery rule in effect at the time the certificate of need (CON) applications were filed, and until January 24, 2002, or the rule as amended on that date is applicable to this case. Which, if any, of the applications filed by Martin Memorial Medical Center, Inc. (Martin Memorial); Bethesda Healthcare System, Inc., d/b/a Bethesda Memorial Hospital (Bethesda); and Boca Raton Community Hospital, Inc. (BRCH) meet the requirements for a CON to establish an adult open heart surgery program in Agency for Health Care Administration (AHCA) Health Planning District 9, for Okeechobee, Indian River, St. Lucie, Martin, and Palm Beach Counties, Florida.
Findings Of Fact The Agency for Health Care Administration (AHCA) is the agency which administers the certificate of need (CON) program for health care facilities and programs in Florida. It is also the designated state health planning agency. See Subsection 408.034(1), Florida Statutes. For health planning purposes, AHCA District 9 includes Indian River, Okeechobee, St. Lucie, Martin, and Palm Beach Counties. See Subsection 408.032(5), Florida Statutes. AHCA published a fixed need pool of zero for additional open heart surgery programs in District 9, for the January 2002, planning horizon. The mathematical need formula in the rule, using the use rate for open heart surgery procedures in the district as applied to the projected population growth, indicated a gross numeric need for 7.9 programs in District 9. After rounding off the decimal and subtracting four, for the number of existing District 9 open heart surgery programs, the formula showed a numerical need for four additional ones. The need number defaulted to zero, however, because one of the existing programs, at Lawnwood Medical Center, Inc., d/b/a Lawnwood Regional Medical Center (Lawnwood), had not reached the required minimum of 350 surgeries a year, or 29 cases a month for 12 months prior to the quarter in which need was published. Having initiated services in March 1999, the Lawnwood program had not been operational for 12 months at the time the applications were filed in October 1999. The other existing providers of adult open heart services in District 9, in addition to Lawnwood, are Palm Beach Gardens Community Hospital, Inc., d/b/a Palm Beach Gardens Medical Center (PBGMC); Columbia/JFK Medical Center Limited Partnership, d/b/a JFK Medical Center (JFK); and Tenet Healthsystem Hospitals, Inc., d/b/a Delray Medical Center (Delray). All are intervening parties to this proceeding. In the Pre-Hearing Stipulation, the parties agreed that the Intervenors have standing to participate in this proceeding. Despite the publication of zero numeric need, five hospitals in District 9 applied for CONs to establish new adult open heart programs asserting need based on not normal circumstances. Three of those applications are at issue in this case: CON Number 9249 filed by Martin Memorial Medical Center, Inc. (Martin Memorial); CON Number 9250 by Bethesda Healthcare System, Inc., d/b/a Bethesda Memorial Hospital (Bethesda); and CON Number 9248 by Boca Raton Community Hospital, Inc. (BRCH). AHCA initially reviewed and denied all of the applications. After changing its position before the final hearing, AHCA supports the approval of the applications filed by Martin Memorial and BRCH. Martin Memorial Martin Memorial, the only hospital in Martin County, and the only party/applicant not located in Palm Beach County, operates two facilities, a total of 336 beds, on two separate campuses under a single license. The larger hospital, in Stuart, has 236 beds and is located approximately 20 miles south of Lawnwood and 30 miles north of PBGMC. Martin Memorial owns and maintains, at the hospital, its own ambulance service used exclusively for hospital-to-hospital transfers. The drive from Martin Memorial to Lawnwood averages 38 minutes. The drive time to PBGMC averages 48 minutes. By helicopter, it takes 11 or 12 minutes to get from Martin Memorial to PBGMC. The remaining 100 Martin Memorial Hospital beds are located on its southern campus, approximately six miles south of the Stuart facility. Martin Memorial is a private not-for-profit hospital, established in 1939. The parent corporation also operates an ambulatory care center, physician group, billing and collection company, and a foundation. Martin Memorial is applying to operate an open heart program at its Stuart location, where it currently offers cardiology, hematology, nephrology, pulmonary, infectious disease, pathology, blood bank, anesthesiology, diagnostic nuclear medicine, and intensive care services. Martin Memorial has a 25-bed telemetry unit, a 14-bed medical intensive care unit, a nine-bed surgical intensive care unit, and a 22-bed progressive care unit, with an identically equipped 16-bed overflow unit used only for high seasonal occupancy, from approximately December to April. If its CON is approved, Martin Memorial will dedicate four surgical intensive care unit beds and six progressive care beds for post-open heart surgery patients. Martin Memorial agreed to condition its CON on the provision of 2.4% of the project's gross revenues for charity care and 2% for Medicaid. The total estimated project cost is $6.5 million. Martin Memorial intends to affiliate with the University of Florida and its teaching facility, Shands Hospital, to assist in establishing the program and training staff. The cardiovascular surgeon is expected to be a full-time faculty member who will live and work in Martin County. Although initially opposed, AHCA now supports Martin Memorial’s application primarily because (1) it has the largest cardiac catheterization (cath) program at any hospital in this state which does not also provide open heart services; (2) it has a medium size and growing Medicare population, which constitutes the age group most likely to require open heart surgery and related services; (3) Martin County residents now must receive open heart and related services at hospitals outside Martin County, primarily in areas ranging from Palm Beach County south to Dade County; (4) emergency heart attack patients who present at Martin Memorial-Stuart could receive primary angioplasties without transfer; and (5) it is a not-for-profit hospital, while all of the existing open heart providers in the District are for- profit corporate subsidiaries. Of the applicants, Martin Memorial is also located the greatest distance from the existing providers. Bethesda Memorial Bethesda has 362 licensed beds located in Boynton Beach. JFK is nine miles north or an average drive of 18 minutes from Bethesda. Delray is nine miles south or an average drive of 17 minutes from Bethesda. Established in February 1959, Bethesda is a not-for- profit subsidiary of Bethesda Health Care Systems, Inc., which also operates some for-profit subsidiaries, including Bethesda Medical/Surgical Specialists, Bethesda Management Services, and Bethesda Comprehensive Cancer Institute. Bethesda is a disproportionate share provider of Medicaid and Medicare services. The services currently available at Bethesda include obstetrics, Level II and III neonatal intensive care, cardiology, orthopedics, pediatrics, neurological and stroke care, peripheral vascular surgery, wound care, pulmonary and infectious disease care. Bethesda recently eliminated a 20-bed unit for adult psychiatric services, and a 20-bed skilled nursing unit. Currently, at Bethesda, the sickest patients are placed in a 10-bed critical care unit. The hospital also operates a 12- bed surgical intensive care unit, an eight-bed medical intensive care unit, and 30 and 25-bed telemetry units. Bethesda was planning to open a 20-bed extension to the telemetry unit, all in private rooms, in January 2002. If an open heart surgery program is established, Bethesda, will add an eight-bed cardiovascular intensive care unit to care post-operatively for the patients. Bethesda offered to condition its CON on the provision of 3% of total open heart surgeries to Medicaid and 3% of total open heart surgeries to indigent patients. Bethesda's estimated total project cost is $4 million, $1.7 million for equipment, and $2.24 for construction. Bethesda will receive assistance from Orlando Regional Medical Center in training personnel and developing protocols for an open heart program. At Orlando Regional, a statutory teaching hospital, the number of open heart cases ranges from 1,300 to 1,600 a year. Bethesda has a contract with a physicians' group to provide a board-certified cardiovascular surgeon to serve as medical director for the open heart program. AHCA’s position is that the Bethesda application is "approvable" but, of the Palm Beach County applicants, less desirable than that of BRCH. By contrast, Bethesda's experts emphasized (1) the absence of any overlap with the Lawnwood market; (2) the greater need for a new program, based on the volume of cases, in Palm Beach County than elsewhere in the District; (3) the size, growth, and age of the population within Bethesda's market area, and (4) the ability of Bethesda to enhance access for underserved groups, particularly Medicaid patients. Boca Raton Community Hospital BRCH is licensed for 394 beds. Located in southern Palm Beach County, close to the Broward County line, BRCH is from eight to nine miles south of Delray and approximately 15 miles north of North Ridge Medical Center (North Ridge), in adjacent Broward County. On average, the drive from BRCH to Delray takes 20 minutes. The drive from BRCH to North Ridge takes about 25 minutes. Founded in the late 1960's, BRCH operates as a not-for- profit corporation. BRCH has a staff of 750 physicians and 1,600 employees. Services at BRCH include cardiology, a 10-bed Level II neonatal intensive care unit, hematology, nephrology, pulmonology, radiology, nuclear medicine, and neurology. If approved and issued a CON for adult open heart surgery, BRCH will build a new facility for the program, including two new cath labs, an electrophysiology lab and 12 intensive care beds. In the CON, the estimated construction cost was $16.5 million and the estimated equipment cost was $2.7 million of the $20 million estimated for the total project. BRCH agreed to having conditions on its CON (1) to provide 5% of open heart cases in year two to uninsured patients, (2) to establish an outreach program to increase the utilization of open heart services among the uninsured, and (3) to relinquish the CON if it fails to perform at least 350 open heart surgery procedures a year in any two consecutive years after the end of the second year of operations. AHCA determined that it should change its initial position opposing the approval of the BRCH application to one of approval because of (1) the large Medicare population in the service area; (2) the volume of emergency room heart attack patients; (3) the district out-migration for services primarily to North Ridge; (4) the large, well-developed interventional cardiology program; and (5) the not-for-profit organizational structure. When AHCA decided to support the approval of the BRCH application, it did so, in part, based on erroneous data. The cath lab volume was assumed to be approximately 1,800 caths a year, as compared to the actual volume of 667 caths for the year ending March 2001. Having considered the corrected data, AHCA’s expert described BRCH’s application as significantly less compelling, but still preferable to that of Bethesda. BRCH is the largest hospital in number of beds in Florida which does not have an open heart surgery program. AHCA also responded favorably to identified "cultural" access issues, described as underservice to demographic groups, based on race, gender, and class. BRCH presented a plan to equip a mobile unit to provide diagnostic screenings and primary care in underserved areas. Pre-Hearing Stipulations The parties stipulated that all of the applications met the statutory requirements concerning the application content and filing procedures of Sections 408.037 and 408.039, Florida Statutes (1999), and Rule 59C-1.033, Florida Administrative Code. Martin Memorial, Bethesda, and BRCH have a history of providing quality care. See Subsection 408.035(1)(c), Florida Statutes (1999). There are no existing outpatient, ambulatory or home care services which can be used as alternatives to inpatient adult open heart and angioplasty services. See Subsection 408.035(1)(d), Florida Statutes (1999). Martin Memorial and Bethesda have sufficient available funds for capital and operating expenses required for their proposed open heart surgery programs. See Subsection 408.035(1)(h), Florida Statutes (1999). Martin Memorial complied with the requirements related to costs and methods of construction, and equipment for the proposed project. Except for the contention that it omitted $1,687,180 in fixed equipment costs and that the proposed construction project is excessively large and expensive, the parties stipulated that BRCH reasonably estimated construction and equipment costs, including costs and methods of energy provision. See Subsection 408.035(1)(m), Florida Statutes (1999). The parties agreed that Subsections 408.035(1)(p), and 408.035(2)(e), Florida Statutes, related to nursing home beds, are not at issue at in this proceeding. If Bethesda, BRCH, and Martin Memorial can recruit the necessary, competent nursing and surgical staff, they will meet the requirements of Rule 59C-1.033(3), (4)(b), (4)(c), and (5)(c), Florida Administrative Code. Adult open heart surgery services are currently available to District 9 residents within the two-hour travel standard of Rule 59C-1.033(4)(a), Florida Administrative Code. Bethesda, BRCH, and Martin Memorial are accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), assuring quality as required by Rule 59C-1.033(5)(a), Florida Administrative Code. The parties agreed that if Bethesda, BRCH, and Martin Memorial can recruit the necessary nursing and surgical personnel, their programs would meet the requirements of Rule 59C-1.033(4)(b), (4)(c), (5)(b), and (5)(c), Florida Administrative Code, except that JFK and Lawnwood did not agree that the applicants satisfied the requirements related to cardiovascular surgeons. Martin Memorial will be able to obtain perfusionist services, as required by Rule 59C-1.033(5)(b)5, Florida Administrative Code. Bethesda and BRCH projected reasonable staffing patterns, in their CON schedules 6A, given projected census levels, although the ability to recruit staff and adequacy of projected salaries are at issue. The rule criteria related to pediatric open heart surgery are not applicable to this proceeding. Disputed Statutory and Rule Criteria The following statutory criteria and applicable in this case: Subsections 408.035(1)(a), (b), (c) - for comparison; (e), (f), (g), (h) - related to funding for BRCH, and related to staff recruitment and salaries; (i), (j), (k), (l), (m) - for Bethesda, and related to the size, scope, and fixed equipment cost for BRCH, (n), and (o); and Subsections 408.035(2)(a), (b), (c), and (d), Florida Statutes. The criteria in Rules 59C-1.030, and of Rule 59C-1.033(5)(b) - related to staffing, except as stipulated - are at issue. The parties have also raised the issue of whether AHCA is consistent in applying its agency rules related to open heart cases. The District 9 health plan contains two preferences for open heart applicant hospitals, the first for hospitals with established cardiac cath programs, the second for applicants with a documented commitment to serve patients regardless of their ability to pay or county of residence. All of the applicants have established diagnostic cardiac cath programs and related cardiology services. During the cardiac cath procedure, a catheter is inserted into a cardiac chamber to diagnose heart disease. During a therapeutic cardiac cath procedure, or angioplasty, the catheter with a balloon-tip is inserted into a coronary artery and inflated to open blockages. The latter requires open heart surgery back-up in case a vessel is ruptured and thus, an open heart surgery certificate of need. Martin Memorial operates the largest cardiac cath program at a hospital in Florida which does not also offer open heart surgery. At Martin Memorial, 1,885 inpatient and outpatient caths were performed in 1999, 1,770 in 2000, and 1,286 in the first nine months of 2001. Cardiac caths are only performed at the Stuart facility. Non-invasive cardiology services began in the 1970's at Martin Memorial. A CON to establish the first cardiac cath lab was issued in 1989, and a second, CON-exempt cath lab opened in 1998. Martin Memorial also offers pacemaker implants and peripheral angioplasties to eliminate clots in other areas of the body, for example, in the legs, electrocardiography, echocardiography, stress tests, and cardiac rehabilitation. Neither electrophysiology studies nor defibrillator implants are performed at Martin Memorial. Martin Memorial has an open staff of cardiologists, meaning that its cath lab is available for use by any of the invasive cardiologists on staff. The facilities include two cardiac cath procedure rooms, a control room for the laboratory, a five-bed holding room and a two-bay inpatient recovery area. Bethesda also has an established cardiac cath program with an open staff. Seventeen cathing physicians were listed on the Bethesda roster for the month of March 2001. Of those, five were also the only cardiologists allowed to perform caths at the closed lab at JFK. Some of these cardiologists are permitted to perform emergency angioplasties at Bethesda. Bethesda has, at least, two cardiovascular surgeons on staff. From 1995 to 1998, the volume of cardiac caths at Bethesda increased over 60%, from 133 to 213. For the 12 months ending August 31, 2000, Bethesda cardiologists performed 428 caths. For the 12 months ending September 30, 2001, the cath volume was 506 cases. Currently, cath procedures at Bethesda are performed in one lab with recently upgraded digital equipment. As part of the planned expansion of the hospital, the existing lab will be relocated and a second one added. Permanent pacemakers are implanted at Bethesda, but internal cardioverter defibrillator procedures, electrophysiology, and table studies are not performed. Cardiac cath services, at BRCH, started in 1987. Two cath labs with state-of-the-art digital equipment are used. In the 12 months ending March 31, 2001, there were 667 inpatient and outpatient caths performed at BRCH. Currently, cardiac services at BRCH are the largest source of admissions, approximately 20% of total admissions. The available services include echocardiography, tilt table studies, electrocardiography, stress tests, cardiac wellness and rehabilitation programs, electrophysiology studies, and internal cardioverter defibrillator implants. Each year, one or two "rescue" or salvage angioplasties are performed in extreme, life- threatening circumstances at BRCH. Forty-nine cardiologists are on the closed "invitation-only" medical staff at BRCH, 47 are board-certified and approximately half are invasive cardiologists. The staff also includes seven electrophysiologists, five of whom are board-certified, and seven thoracic surgeons, five of whom perform open heart surgeries at other hospitals. For the first two years of operating an open heart program, BRCH intends to have a closed program, by virtue of an exclusive contract with a single group of cardiovascular surgeons. Subsection 408.035(1)(a) - district health plan preference for serving patients regardless of county of residence or ability to pay; and Subsection 408.035 (1)(n) - history of and proposed services to Medicaid and indigent patients Martin Memorial, Bethesda, and BRCH will serve patients regardless of residence and, they contend, will enhance access for Medicaid, indigent, charity and/or self-pay patients. Each applicant has offered to care for patients in some of these categories as a condition for CON approval. The proposed conditions, are, for Martin Memorial, 2.4% of total project revenues for charity and 2% of admissions for Medicaid patients. Martin Memorial provides a number of services without charge, including follow-up education to former inpatients to assist them in managing diseases such as asthma, diabetes, congestive heart failure and chronic obstructive pulmonary disease. Obstetric care includes one free home visit by a nurse/midwife to check the health of newborns and mothers. Office space is provided for a free clinic for the "working poor" of Martin County, which receives approximately 10,000 annual visits from a patient base of about 2,000 patients. Over $100,000 a year is provided for an indigent pharmacy program. Combining the outreach services with other charitable contributions, including charity care, Martin Memorial valued "community benefits" at $24 million in 1998, $30.5 million in 2000. When Martin Memorial received an inpatient cardiac cath CON, it agreed to provide a minimum of 2.5% of total cardiac caths to Medicaid patients and 3% to charity care. Due to changes in state regulation, Medicaid and charity care for cardiac caths no longer needs to be reported to the state. That data, representing as it does, the base of patients from which open heart cases will come, is useful in evaluating Martin Memorial's projections. In 1999, seven-tenths of one percent of the patients in Martin Memorial's cath lab were Medicaid and four-tenths of one percent were indigent. In 2000, seven-tenths of one percent were Medicaid and two-tenths of one percent were indigent. Martin's cath lab data indicates that its projected open heart levels of Medicaid and indigent care are not attainable. Bethesda offered a commitment to provide 3% of total open heart cases for Medicaid patients and 3% to indigent patients annually. Historically, Bethesda has cared for a relatively large number of Medicaid, minority, and indigent patients. It is recognized as a disproportionate share provider of Medicaid care under the Florida program and of Medicare under the Federal program. The Palm Beach County Health Department provides approximately $1 million a year to Bethesda for charity care. As a percentage of gross revenue, Bethesda provided 8.8% Medicaid and 3.46% charity care in 1999. Approximately 54% of the charity care is attributable to obstetrics and pediatric services. Bethesda's younger patient base and the number of adult open heart Medicaid cases from Bethesda's service area, 2.4% or 7 cases in the year ending September 2000, raise the issue of its ability to generate sufficient cases to meet the proposed commitment. In 1995, 20 of the 36 total resident Medicaid open heart surgeries were performed at the three providers in District 9, Delray, JFK, and PBGMC. In 1999, when Lawnwood began open heart care, the Medicaid volume at the District providers increased to 51 of the 64 total Medicaid resident cases. In 2000, the four programs treated a net number of 56 of 60 resident Medicaid cases. A program at Bethesda also could reasonably be expected to increase the number of Medicaid and charity cases performed in the District, in volume and by reversing outmigration, but the patients must come from a base of patients with cardiac diagnoses. For the year ending September 2000, in Bethesda's service area, 4.9% of cardiac patients were Medicaid and charity patients combined, 1.6% Medicaid and 3.3% charity. Assuming that the same proportions could be maintained for open heart surgeries, Bethesda cannot achieve 3% Medicaid and, although unlikely, has a chance of reaching 3% charity only in the best case scenario. If approved, BRCH commits to providing 5% of total OHS in the second year to uninsured patients and to establish an outreach program to increase utilization by uninsured patients. BRCH has, over the past three and a half years, established outreach programs, which include having nurses and social workers in schools, providing free physical examinations to children who do not have primary care doctors, and performing echocardiograms for high school athletes, equipping police and fire rescue units with portable defibrillators, and operating mobile units for mammography screenings and vans to transport patients to and from their homes for hospital care. A free dental screening program is operated in conjunction with Nova Southeastern University. BRCH also operates a family medical center approximately seven miles west of the hospital. Recently, the Foundation for BRCH purchased, for $1.8 million, a large bus to equip as a mobile clinic. The mobile diagnostic unit is intended to reach uninsured patients to provide primary care and ultimately open heart surgery care to those who might not otherwise be screened, diagnosed and referred. No information was available and no decisions had been made about the staff and equipment, or service areas for use of the van. Because of the lack of more specific plans, it is impossible to determine whether the outreach effort has any reasonable prospects for success in meeting any unmet need. For the years ending June 1996, 1997, and 1998, BRCH provided six-tenths of one percent, and five-tenths of one percent of gross revenues for charity care. In 2000, BRCH provided one-half of one percent for charity care and, in 2001, twenty-seventh hundreds of a percent. The historical levels do not support the proposed commitment of 5% of open heart surgeries for uninsured patients in the second year of the program. Although worded to apply only to the second year, BRCH's President and CEO testified concerning the condition without limiting it to the second year. In Boca Raton Community Hospital, Inc.'s Proposed Recommended Order (Reformatted), filed on July 5, 2002, the condition is described as follows: 49. As conditions of CON approval, Boca will, beginning in the second year of operation of the program and continuing thereafter, provide a minimum of five percent each year of OHS cases to uninsured patients, and establish an outreach program to locate and provide OHS and cardiology services to uninsured patients in Palm Beach County. (Boca Ex. 3 at Schedule C; Pierce, 1899). Boca reasonably decided to focus on the needs of the uninsured, rather than Medicaid patients, because of the low volume of Medicaid patients who require OHS services. (Pierce, 1902). At BRCH, Medicaid and Medicaid health maintenance organization (HMO) care as a percent of total ranged from 1.3% to 1.4% from 1996 through 1998. BRCH projected serving 1.2% to 1.3% open heart Medicaid cases, or four patients in the first year and 1.5% to 1.6%, or seven Medicaid patients in the second year. The projections are consistent with its history although BRCH offered no Medicaid condition. Bethesda and BRCH also claimed not normal circumstances exist in District 9 due to the disparity in open heart care for uninsured and Medicaid patients as compared to the insured. For uninsured residents of Palm Beach County during the twelve months ending June 30, 2000, the use rate was 4.7 per 1000, as compared to 21.8 per 1,000 for insured open heart patients. For angioplasty patients, the insured use rate was 38.2, but the uninsured rate was only 8.9. Assuming that the use rates should not be so different, the discrepancy in access for the uninsured is significant and unfortunate but was not shown to be a not normal circumstance in the health care delivery system. The applicants' proposals, unlikely as they are to meet even the proposed conditions, are inadequate to increase access materially for the uninsured. Comparisons of the level of Medicaid provided statewide to that provided in District 9 without consideration of other factors, including age and income levels, were not useful in analyzing access. Assertions that any discrepancy in care for potential Medicaid open heart patients constitutes a not normal circumstance are not substantiated by this evidence. Subsection 408.035(1)(b) and (2)(b) - availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing facilities in District Nine In 2006, the population in District 9 is projected to reach 1.2 million people, of which approximately 992,378 will reside in Palm Beach County, 119,573 in Martin County, 181,406 in St. Lucie County, 106,790 in Indian River County, and 31,140 in Okeechobee County. In District 9, throughout Florida, and in the United States, heart disease is the leading cause of death. In 2000, heart disease was the cause in 522 of 1,560 total deaths in Martin County, and 4,337 of 12,795 total deaths in Palm Beach County. From 1995 to 2000, the number of Florida residents having open heart surgeries increased 15.1%. During the same period of time, the number of District 9 resident cases, regardless of where the surgeries were performed, increased from 3,119, to 3,938, an increase of 755 OHS cases, or 24%. Palm Beach County residents represented 427 of the 755 increase, and 2,633 of the total of 3,938 resident cases. The distribution of the remaining 1,305 District resident cases by county was as follows: 597 from St. Lucie, 339 from Martin, 269 from Indian River, and 100 from Okeechobee County. More recent data, however, indicates trends towards a leveling off or even decline in the number, but an increase in the complexity of open heart procedures. Some experts describe open heart volumes having reached a "plateau" in the United States, in Florida, and in District 9. Last year, the number of open heart surgeries in the United States declined 22%. The statewide volume of cases was 32,199 in 1996, 33,507 in 1997, 34,013 in 1998, and 32,097 in 1999. At District 9 hospitals, open heart volumes were 1,670 in 1994, 1,841 in 1995, 2,152 in 1996, 2,407 in 1997, 2,527 in 1998, 2,656 in 1999, and 2,650 in 2000. Cardiac Catheterizations and Angioplasties The major reason given for the stable and declining open heart volume is the increase in the utilization of angioplasty, or therapeutic cardiac cathing, an alternative which costs less and is less invasive. Angioplasty procedures increased from 1995-2000, by over 2,500 cases for District 9 residents, and over 2,600 cases in District 9 hospitals, from 2,104 cases in 1995, to 4,714 in 2000. Among the procedures generally referred to as angioplasties are percutaneous transluminal angioplasty (PTCA) or balloon angioplasty, percutaneous transluminal coronary rotational atherectomy (PTCRA), and the insertion of scaffolding- like devices, called stents, to prevent re-occlusion of coronary arteries. In Florida, diagnostic cardiac caths may be performed at facilities which do not have angioplasty and open heart surgery programs, but angioplasties must be performed, except in rare emergency circumstances, only at hospitals which are licensed to provide open heart services, in case back-up surgery is needed. Lawnwood Regional Lawnwood is located in Fort Pierce, in St. Lucie County, which is second to Palm Beach County in population and in District 9 resident open heart cases. Lawnwood is owned by a subsidiary of HCA, the Hospital Corporation of America, formerly known as Columbia. HCA is a for-profit, investor-owned corporation which owns and operates approximately 200 hospitals in the United States. A $17 million addition at Lawnwood, designed for the open heart program, includes two dedicated operating rooms and a 12-bed intensive care unit. The Lawnwood program has a full-time staff of two surgeons and one additional surgeon who divides his time between Lawnwood and PBGMC. Lawnwood, having opened its program early in 1999, is not considered a mature program. In addition, Lawnwood has had some difficulties with accreditation and disputes with cardiologists. Lawnwood reported one open heart case in the first quarter of 1999, and 143 or 144 for the year. In calendar year 2000, between 330 to 340 open heart surgeries were performed at Lawnwood. In calendar year 2001, the volume was between 333 and 336 cases. Depending on the source of the data, the volume at Lawnwood was reported to be as high as 364 for the twelve months ending September 30, 2000; in a range from 336 to 396 for the twelve months ending March 31, 2001; and up to 412 for the twelve months ending July 2001. The variances result from seasonal patient utilization, and from AHCA’s use, for the fixed need pool, of the most current available data which it receives from the various local health councils. That data is submitted on handwritten or typed forms which are not uniform across districts. Subsequently, the hospitals provide electronic data tapes directly to AHCA, which if properly decoded, should provide more accurate statistics. While there may be variances either way, in this case, the lower volumes for Lawnwood were derived from the more reliable electronic tapes. Based on that data and the testimony of the cardiac surgeon who is the director of the program at Lawnwood, the annual volume of open heart surgeries was approximately 330 in 2000, and 348 in 2001. The new rule, adopted on January 24, 2002, reduces the minimum number required for existing programs to 300 a year, or 25 adult operations a month. The number of angioplasties performed at Lawnwood increased from 465 in 1999, to 845 in 2000. Palm Beach Gardens Medical Center South of the four relatively small northern counties in District 9, PBGMC has 204 beds located in northern Palm Beach County. It is a subsidiary of Tenet Healthsystem Hospitals (Tenet). Adult open heart surgery has been available at PBGMC since 1983. The surgeries are typically performed in two or three of the 11 operating rooms, although five are equipped to handle open heart cases. PBGMC has 94 telemetry beds, and 32 intensive care beds, eight designated for cardiovascular intensive care patients. PBGMC has four cardiac cath labs and separate electrophysiology labs. The medical staff of approximately 400 physicians includes about 200 cardiologists, 24 invasive cardiologists and seven cardiac surgeons. The number of open heart cases at PBGMC was 700 in 1994, 801 in 1995, 913 in 1996, 1,028 in 1997, 1,045 in 1998, 1,124 in 1999, 940 in 2000, and 871 in 2001. The number of angioplasties increased from 552 in 1994, to 1,019 in 1997, to 1,431 in 2000. JFK JFK, which has 387 beds, is located roughly in the center of Palm Beach County, in the City of Lake Worth. Like Lawnwood, JFK is an HCA's subsidiary, having been purchased by that corporation in 1995. Open heart services and cardiac cath services began simultaneously at JFK in 1987. JFK has three open heart operating rooms. JFK, after a major expansion, has a separate entrance to its three cardiac cath laboratories, a dedicated electrophysiology suite, for treatment of arrhythmias, and 17- patient holding area. JFK provides all cardiac services, except heart transplants. The average age of patients at JFK is 74 years old. The medical staff of 504 board-certified or board- eligible physicians includes 25 cardiologists, five invasive cardiologists, two electrophysiologists, and three cardiac surgeons. JFK has recently accepted applications from but not yet extended privileges to three additional cardiovascular surgeons. Volumes of open heart cases at JFK were, with some variances depending on the data source, approximately 428 in 1994, 434 in 1995, 630 in 1996, 674 in 1997, 711 in 1998, 613 in 1999, 621 in 2000, and 610 in 2001. The number of angioplasties ranged from 709 in 1994, to 1,152 in 1997, to 1,281 in 2000. Delray Delray, with 343 beds, in Delray Beach, is the trauma center for southern Palm Beach County. Open heart care began at Delray in 1986. The surgeries are currently performed in three of ten, but soon to be a total of twelve operating rooms with shelled-in spaces set aside for two more. Patients recover in a 15-bed surgical intensive care unit. The Delray medical staff of over 600 physicians has close to 60 cardiologists, including 15 invasive cardiologists and six cardiovascular surgeons. Delray has three cath lab rooms and seven bays for holding patients pre- and post-procedure. For the years 1994 through 2001, open heart volumes at Delray were 542, 606, 609, 705, 771, 758, 759, and 738, respectively. During the same period of time, the annual number of angioplasty procedures increased from 591 in 1994, to 810 in 1997, to 929 in 2000. The existing CON-planned and approved programs in the District are well distributed geographically and allocated appropriately based on population. Considering the declining utilization, the like and existing open heart surgery programs are available and accessible. Subsection 408.035(1)(f) - services that are not reasonably and economically accessible in adjoining areas Over 30% of District 9 resident open heart cases are performed in other districts, the vast majority at North Ridge in District 10 (Broward County). The district outmigration for a service when excessive or difficult can indicate access or quality concerns and constitute a not normal circumstance for approval of a new program. In this case, with adequate available services in District 9 and its close proximity, the outmigration to North Ridge, which is 15 miles or 25 minutes from BRCH is not a not normal circumstance. There is also substantial overlap in the medical staff at both hospitals which allows continuity of care for patients despite transfers. The argument that families, particularly an older spouse, will necessarily have to drive farther to visit the patient is rejected, since that depends on where in the district the person resides not on the distances between hospitals. North Ridge has 391 licensed beds, with 260 to 270 acute care beds in use. At North Ridge, cardiovascular surgeons usually use three OHS operating rooms, although a fourth is also available. Open heart patients recover in a six-bed cardiovascular intensive care unit. The reported volumes of open hearts at North Ridge have been from 1994 through 2001, respectively, 864, 935, 893, 826, 882, 890, 905, and 795. The total number of open heart cases in District 10 has been declining since 1998. The volume of angioplasties at North Ridge increased from 793 in 1994, to 829 in 1997, to 1,155 in 2000, consistent with a rising District 10 use rate from 2.95 to 3.66 over the same period of time. The staff at North Ridge includes 107 cardiologists, 27 interventional cardiologists, and 17 cardiovascular surgeons, many of whom also regularly perform open heart surgeries at Holy Cross, which is approximately a mile south of North Ridge in Fort Lauderdale. At Holy Cross, which also has established referral networks from District 9, open heart volumes declined from a high of 753 in 1998 to 693 in 2000. All of the open heart services proposed by the applicants are reasonably available in adjoining areas, in Districts 10 and 11 to the south and in the other districts to the north. Subsection 408.035(1)(c) - comparisons of quality; and Subsection 408.035(1)(e) - joint, cooperative or shared resources; and Subsection 408.035(1)(g), (h), and (k) - need for research, educational and training programs or facilities for medical and health care professionals; and Subsection 408.035(1)(h) and Rule 59C-1.033 - recruitment, training and salaries for staff The parties stipulated that the applicants have a history of providing quality care. Martin Memorial was accredited with commendation by the JCAHO in 1997, which is now called accreditation without Type I Recommendations. That was followed, in July 2001, with a score of 93 on survey items with some follow-up improvements required related to patient assessment and nutrition. Martin Memorial offers internships, and residencies for training non-physician medical personnel from Barry University, Indian River Community College, and Florida Atlantic University. The cancer center at Martin Memorial is affiliated with the Moffitt Center. Despite the absence of an open heart program, Martin Memorial has participated in clinical trials of cardiac drugs. The Shands Healthcare System of nine affiliated hospitals, including two research and teaching hospitals, is the model for the relationship proposed with Martin Memorial. The partnerships are intended to upgrade the care available in community hospitals and to establish, for complex cases, referral networks for the Shands teaching hospitals. Shands has already satisfied itself that Martin Memorial meets its due diligence test for the quality of its existing program and philosophical compatibility. If Martin Memorial's CON is approved, Shands will assist in training staff for the program. Initially, the program will have one cardiovascular surgeon, a University of Florida medical school faculty member, in Martin County. When that surgeon is ill or on vacation, others from the University of Florida will be available. The logistics of the plan raises questions about the adequacy of coverage to meet the 24-hour requirements of Rule 59C-1.033, Florida Administrative Code. In the JCAHO survey process, Bethesda received a score of 97, as a result of its survey in June 2000, and was accredited for the maximum allowable time, three years. Personnel for a Bethesda program can be appropriately trained at Orlando Regional, a statutory teaching hospital with a high volume open heart program. In June 2000, BRCH received a JCAHO score of 96. BRCH maintains a scholarship program for new nurses making a two-year commitment, and an on-site educational department with a preceptorship for training operating room and emergency room nurses. Nursing students from Florida Atlantic University (FAU), which is located across Glades Road from BRCH, rotate at BRCH. FAU is in the process of establishing a medical school. There is a severe shortage of nurses in the United States, in Florida, and in District 9. All of the hospitals in District 9 have resorted to highly competitive and innovative recruitment and retention strategies, including international recruiting, signing bonuses, child care and, of course, rising salaries and benefits. The demand is greater and shortages more severe in highly specialized areas, such as critical care, telemetry and open heart surgery nursing. The average age of nurses has also increased to 46 or 47 years old, while enrollment in nursing schools and the number of nursing school professors have declined. All of the applicants concede that recruiting and retaining nurses for new open heart program will be a challenge. The likely results are a loss of experienced nurses from existing programs, an increase in total health care costs, an increase in vacancies, and, at least temporarily a decline in the quality of experienced nursing care in existing open heart programs. At this time, there is no evidence that declining open heart utilization will eventually alleviate the shortage of experienced nurses. It has, so far, only eased the need to resort as frequently to other extreme and expensive alternatives, including pay overtime, contracting with private agencies, and bringing in traveling nurses. Subsection 408.035(1)(m) - size, scope and fixed equipment cost at BRCH; Subsection 408.035(2)(c) - alternatives to new construction; and Subsection 408.035(1) (h) - funding for BRCH BRCH plans to construct a 74,000 square-foot cardiac care facility, which will include two open heart operating rooms and two cardiac cath labs, an electrophysiology lab, 12 cardiovascular intensive care beds, and 18 cardiac cath lab bays. Only 18,568 square feet are attributable to the open heart operating rooms and cardiovascular intensive care unit which compares favorably with Bethesda's estimate of 17,759 square feet for the same functions. It is not possible, therefore, to conclude that the size of the BRCH project is excessive as compared to that proposed by Bethesda. BRCH underestimated the cost for fixed equipment for the open heart project by approximately $1.6 million. That omission resulted in understated estimates of depreciation by approximately $275,000. The total project cost for BRCH is approximately $2.2 million when almost $2 million in omitted equipment costs is added to the original estimate of $20 million. All pending capital projects, as shown on Schedule 2 of the BRCH application, total $54 million. With combined cash and investments of $160 million, the BRCH foundation has sufficient funds for the hospital's projects. Although BRCH earned profits of $6.6 million and $7.3 million in 1998 and 1999, respectively, the hospital lost $30 million from operations due to billing and collection errors in 2000. BRCH has a donor who has stated a willingness to donate $20 million for the cardiac care center. BRCH has the funds necessary to build the facility. With Medicare capital cost reimbursement completely phased out, there is insufficient evidence of a direct impact on health care costs based on this proposed capital expenditure. Subsection 408.035(1)(i) - short and long term financial feasibility Martin Memorial initially projected that its program would perform 360 open heart surgeries in year one and 405 in year two. As a result of changes in the use rate, Martin Memorial lowered its second year projection to 375 surgeries while increasing staffing levels. Even if projected open heart surgery revenues of $264,000 in the second year decline in proportion to expected lower utilization, estimated angioplasty revenues of $468,000, are sufficient to make up the deficit and to keep the combined program financially feasible in the short and long term. Bethesda projected volumes of 165 open heart surgeries in the first year and 270 in the second year. Assuming Bethesda's revenues are 90% of the district average, the combined net profit for open heart and angioplasty services is reasonably expected to be approximately $750,000 in the second year operations. The project is profitable, therefore, financially feasible in the short and long term. BRCH's expert projected volumes of 308 open heart surgeries and 289 angioplasties in the first year, and 451 open heart surgeries and 422 angioplasties in the second year. If utilization projections are correct, then BRCH will receive incremental net income of $1.6 million from the open heart surgery program and $825,000 from the angioplasty services. Factoring in claims that the Medicare case weight was overstated and depreciation underestimated, the BRCH project is, nevertheless, financially feasible for the short and long term. Typically, any open heart surgery program that can reach volumes in the range of 200 to 250 cases, will be financially feasible. The establishment of an open heart program also has a "halo effect," for the hospital, attracting more patients to the cardiac cath labs and other related cardiology services. Open heart surgery and angioplasty tend to be profitable, generating revenue which hospitals use to offset losses from other services. Subsection 408.035(1)(j) - needs of HMOs All of the applicants will enter into contracts with, but none is a health maintenance organization. Subsection 408.035(1)(l) - probable impact of fostering competition to promote quality assurance and cost-effectiveness Hospitals with higher volumes of open heart surgeries and angioplasties usually have higher quality as measured by lower mortality rates and fewer complications. The open heart surgery rule, in effect at the time the applications were filed, established a minimum volume of 350 annual admissions for existing providers. In the rule as amended on January 24, 2002, the minimum volume for existing programs was reduced to 300. The divisor in the formula for determining need, which represents the average size of a program in the district, was 350 prior to amendment and 500 subsequently. The minimum and average volumes in the rule set, in effect, the protected range for existing programs, not the optimal size, or "cut point" at which outcomes are worse below and better above. According to the American College of Cardiology and American Heart Association (ACC/AHA) the evidence is clear that outcomes are better if an individual performs at least 75 procedures at a high volume center with more than 400 cases. The ACC/AHA guidelines indicate, although more controversial and less clearly established, that acceptable outcomes may be achieved if the individual operator performs at least 75 procedures in centers with volumes from 200 to 400 cases. Because the relationship between higher volumes and better outcomes is continuous and linear, and because research showing the benefits of primary angioplasty with or without open heart surgery back-up is preliminary and limited, the position of the ACC/AHA is, in summary, as follows: The proliferation of small angioplasty or small surgical programs to support such angioplasty programs is strongly discouraged. (Journal of the American College of Cardiology, Vol. 37, no. 8 June 15, 2001, pp. 2239xvii (Tenet Exhibit 5)) An open heart program at Martin Memorial will redirect cases that would otherwise have gone to Lawnwood, PBGMC, and JFK. The proposed Martin Memorial Service area overlaps that of Lawnwood in southern St. Lucie County, an area which generates one quarter of the open heart cases at Lawnwood. Lawnwood is reasonably expected to lose 56 open heart cases a year with total volume going down below 300, resulting in loss of $1.8 million, or 20% of its total revenues. Lawnwood would have unacceptably low volumes threatening the quality of the open heart program. PBGMC, as a result of a new program at Martin Memorial, will lose approximately 170 and 180 open heart cases annually and an equal number of angioplasties reducing its open heart volume to approximately 700 a year. The financial loss would range from $4 to $5 million a year, as compared to total net income which was between $20 and $30 million a year for past three years. PBGMC would not suffer an adverse impact sufficient to threaten either the quality or the financial feasibility of the open heart program or total hospital operations. JFK, which currently receives most of the angioplasty referrals from Martin Memorial, is expected to lose from 25 to 30 open heart cases, and 65 to 70 angioplasties each year during the first two years of a Martin Memorial program. The estimated financial loss to JFK is $1.7 million, a significant detriment when compared to $2.8 million in net income from operations in calendar year 2000. Approval of open heart program at Bethesda will adversely affect case volumes at JFK and Delray. Bethesda projected that, in its first year, 75% of its cases would have gone to Delray and 25% to JFK, and that by the third year, the split would be even at 50% from Delray and 50% from JFK. JFK, depending on the approach to the impact analysis, will lose from 40 to 60 open heart cases in the first year, from 90 to 110 in the second year, and from 115 to 170 in the third year of a program at Bethesda. The volumes of lost angioplasties is expected to be slightly higher. The resulting combined open heart and angioplasty financial loss is $6.6 million, far greater than the significant detriment expected from a Martin Memorial program alone. The annual volume of open heart cases at JFK would be approximately 400 to 500, assuming flat not continued declining utilization. If Bethesda offered the service, Delray's open heart volumes would decline by 124 cases in the first year and by 248 cases in the third year of operations, decreasing total volume to 500 or 600 annual surgeries. Delray had a net income from operations of approximately $24.7 million in 2000, which would indicate that neither quality nor financial stability would be significantly adversely affected. If an open heart program is approved for BRCH, the volumes of cases at Delray and North Ridge will decline. Delray would be expected to lose 163 open heart cases and 235 in years one and two, respectively, and equal numbers of caths and angioplasties, resulting in annual open heart cases reduced from the low 700s to approximately 500 cases. Delray's pre-tax revenue was $39 million in 2001. In terms of quality and financial stability, Delray can withstand the adverse impact of a new program at BRCH. North Ridge would lose approximately 124 open heart cases in year one and 178 in year two, and similar numbers of caths, reducing open heart volumes from the upper 700s to approximately 600 annual cases. North Ridge's pre-tax income was $21 million for the year ending May 31, 2001. It appears that North Ridge could, even with the adverse impact of BRCH, maintain a quality, financially viable open heart program. Subsection 408.035(l) - probable impact on costs The applicants, all not-for-profit corporations, contend that the fact that District 9 has only for-profit open heart hospitals affects charges and is a not normal circumstance for the approval of one or more not-for-profit. District 9 is the only district in Florida in which all open heart providers are for-profit corporations. Statewide, not-for-profit open heart hospitals charge 31% less than for-profit. Martin Memorial's CON proposal includes a charge structure below that at existing programs. Bethesda's planned charges are 10% less than the District 9 average for open heart and angioplasty services. BRCH is the applicant which is most likely to increase competition in District 9, based on the Herfindahl-Hirschman Index (HHI). The HHI's measurement of competition in a market used by economists frequently to analyze anti-trust issues. Charges are not a factor in up to 75% of open heart/angioplasty cases reimbursed by payors, such as Medicare, at set flat rates. In approximately 10% of cases, including complex "outlier" cases exceeding the range for flat rate reimbursement and for other payors on a percent-of-charges basis, charges are not irrelevant. But, the evidence to demonstrate lower charges were applicable to patients of the same severity was questionable. Subsection 408.035(1)(o) - continuum of care There is insufficient evidence the any applicant is preferable based on its ability to promote a continuum of care in a multilevel system. Subsection 408.035(2)(a) - alternatives to inpatient services There are no alternatives to inpatient services for open heart surgery and angioplasty patients. Subsection 408.035(2)(d) - patients who will experience serious problems in the absence of the proposed new service The applicants and AHCA determined that new open heart surgery programs are needed mainly to provide emergency or "primary" angioplasty to patients suffering heart attacks (acute myocardial infections). Primary angioplasty is an alternative to "clot busting" medications, or thrombolytics, and to open heart surgery. Performed on an emergency basis, the three different treatments are used to restore blood flow before heart muscle dies. Because "time is muscle," patients benefit only if treated within a relatively short time after the onset of symptoms. The goal is 90 minutes from door-to-balloon for angioplasty. The decision to treat a patient with a particular therapy is based on a number of factors assessed during triage. Paramedics in consultation with ER doctors at the receiving hospital frequently begin triage and administering medications and oxygen in ambulances equipped with sophisticated diagnostic equipment. As the statistical data demonstrates, angioplasty, whether scheduled or emergency, is increasingly becoming the preferred therapy. Some studies have shown improved outcomes, higher survival rates and fewer complications, from primary angioplasty as compared to thrombolytics. Comparisons have not been made over extended periods of time, and the apparent benefits of angioplasty have not been duplicated in community hospitals as compared to clinical trials in high volume research centers. Estimates of the number of people who could benefit from the availability of angioplasty services at the applicants vary based on the number of elderly in the service area, the number of non-traumatic chest pain ER visits, delays in transfers of emergency patients, and the number of patients being transferred to existing providers for angioplasties or open heart surgeries. Martin Memorial selected five patients as examples of those who could be served in an open heart program at Martin Memorial. The anecdotal evidence of transfer "delays" is insufficient to demonstrate bed unavailability or capacity constraints. Martin Memorial-Stuart and Martin Memorial South transferred 240 heart attack patients to open heart surgery hospitals. Only 18 of the emergency heart attack patients who presented at the Martin Memorial ER were transferred from the ER. Approximately ten patients a year are so unstable that an intra- aortic balloon pump is required during transfer. Martin Memorial presented evidence of delays of two hours or more in transfers of 84 patients from its cath labs to open heart surgery hospitals. The transfer records, created for subsequent certificate of need litigation, were of questionable probative value. The case studies were inadequate to establish whether "delays" were reasonable or not. Factors such as physician consultation time, time to stabilize a patient for transfer and the assumed travel time seem to have been included in the time periods. Bethesda transferred 270 patients for cardiac care from October 1999 through September 2000. Thirty patients were transferred, from November 2000 to July 2001, for angioplasties or open heart surgery after having cardiac caths at Bethesda. Bethesda failed to establish that transfers were delayed due to capacity problems at existing hospitals because emergency patients were not classified separately, and the causes of the time lapses were not identified. Of the applicants, BRCH has the busiest ER, with 50,000 to 52,000 annual visits compared to approximately 48,000 at the two Martin Memorial locations combined. BRCH admitted 439 heart attack patients through its ER during the year ending June 30, 2000. The majority of patients are treated with thrombolytics at BRCH. BRCH transfers approximately one emergency heart attack patient a week on average, or from 30 to 50 a year, for interventional cardiac procedures. BRCH's presentation of evidence of delays in transfers was flawed. The data was collected and used only for litigation, and was incomplete. Some patient records were lost and others were deleted due to inaccurate data. Of the applicants, BRCH is located in an area with the largest percentage of the population age 65 and older, approximately 35%, as compared to 24% in Martin Memorial's service area. Agency Consistency Martin Memorial, through expert witness testimony, compared its situation to that of Brandon, a hospital in AHCA District 6, which was issued an open heart surgery CON in 2001. The expert noted that Martin Memorial and Brandon are both in five county health planning districts, and that they are 19 and from 15 to 17 miles, respectively, from the nearest open heart provider. Three of the counties in District 6 have open heart programs, including Hillsborough County where Brandon is located, as compared to two District 9 counties, St. Lucie and Palm Beach, but not Martin. The Martin Memorial primary service area projected population is 238,861 for 2004, 24.1% aged 65 and older. The Brandon service area population projection is 309,000 for 2004, with 10.5% aged 65 and older. Brandon has 255 beds, Martin Memorial-Stuart has 236. Brandon had 53,000 emergency room visits, and Martin Memorial, at both locations, had 48,503 in 1999. Before defaulting to zero, the numerical formula yielded a need for 3.27 additional open heart programs in District 6 as compared to 3.9 in District 9. Other specific comparisons favorable to Martin Memorial included the number of heart attack patients presenting at its ER, cath lab volumes, patient transfers for open heart and angioplasty procedures. Among others, there are several significant distinguishing facts in Florida Health Sciences Center, Inc. v. Agency for Health Care Administration, Case No. 00-0481CON, (R.O. Mar. 30, 3001, F.O. Oct. 17, 2001) aff'd per curiam sub nom, University Community Hospital v. Agency for Health Care Administration, Case No. 1DO1-3592, et al. (Fla. 1st DCA Sept. 19, 2002), the Brandon case. In that case, the two existing providers performing fewer than 350 cases a year, Blake Medical Center, and Manatee Memorial Hospital, both in Manatee County, were mature programs located 40 miles from Brandon with no service area overlap. By contrast, Lawnwood which is not a mature program and, therefore, has not reached its potential volume, is 20 miles from Martin Memorial, and has an overlapping service area. Martin Memorial's ER volume and the number of transfers from its ERs are the combined experience from two locations. The more accurate comparison is 27,000 ER visits at Martin Memorial-Stuart to 53,000 at Brandon. Emergency heart attack patients presenting at Martin Memorial South would continue to require transfers for primary angioplasty. Finally, the decision in Brandon was based, in large part, on transportation difficulties, inadequate interfacility ambulances and traffic congestion, which are not factors in District 9. Factually, the case of Halifax Hospital Medical Center, d/b/a Halifax Medical Center v. Agency for Health Care Administration, et al., Case No. 95-0742 (AHCA Jan. 14, 1997) is also distinguishable. The applicant could have no effect on the low volume providers located 80 miles to the north. That was one not normal circumstance. Need existed because of another not normal circumstance, i.e., capacity constraints at the only other provider in the same primary service area. In Oak Hill Hospital v. AHCA, Case No. 00-3216CON (R.O. Oct. 4, 2001, F.O. Jan. 22, 2002), appeal dismissed sub nom Hernando HMA, Inc. v. HCA Services of Florida, Inc., Case No. 1DO2-854 (Fla. 1st DCA June 6, 2002), the two approved applicants were in separate counties which constituted entirely separate health care markets. Neither applicant would adversely affect the low volume providers. After the Administrative Law Judge recommended approval of the Citrus County applicant, AHCA, engaging in what appears to be a comparative review of the two remaining applicants from Hernando County, approved a second applicant from the same district at the same time. Some facts are similar to those in this case: The average drive time between hospitals was 30 minutes; transfers and admissions procedures required additional time; there was a recognition of increasing preferences for reperfusion of heart muscle using primary angioplasty; patients and families experience stress and anxiety as a result of transfers. Institution-specific issues included the transfer of 600 cardiac patients by ambulance from Oak Hill, the size of the cardiology and cardiac cath programs (1,641 caths in 1999), the larger elderly population in the service area, and the hospital's size.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying Certificate of Need Application Number 9248 filed by BRCH, Certificate of Need Application Number 9249 filed by Martin Memorial, and Certificate of Need Application Number 9250 filed by Bethesda. DONE AND ENTERED this 11th day of November, 2002, in Tallahassee, Leon County, Florida. S 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 11th day of November, 2002. COPIES FURNISHED: Lealand McCharen, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Gerald L. Pickett, Esquire Agency for Health Care Administration 525 Mirror Lake Drive, North Sebring Building, Suite 310K St. Petersburg, Florida 33701 Lori C. Desnick, Esquire Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Stephen A. Ecenia, Esquire David Prescott, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 W. David Watkins, Esquire R. L. Caleen, Jr., Esquire Watkins & Caleen, P.A. 1725 Mahan Drive, Suite 201 Post Office Box 15828 Tallahassee, Florida 32317-5828 H. Darrell White, Esquire William B. Wiley, Esquire McFarlain & Cassedy, P.A. 305 South Gadsden Street Post Office Box 2174 Tallahassee, Florida 32316-2174 Paul H. Amundsen, Esquire Amundsen, Moore & Torpy, P.A. 502 East Park Avenue Post Office Box 1759 Tallahassee, Florida 32302 Robert D. Newell, Jr., Esquire Law Firm of Newell & Terry, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 C. Gary Williams, Esquire Michael J. Glazer, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Seann M. Frazier, Esquire Michael J. Cherniga, Esquire Greenberg Traurig, P.A. 101 East College Avenue Tallahassee, Florida 32302
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Petitioner, Lakeland Regional Medical Center (LRMC), is a 897-bed private, not-for-profit, general acute care hospital located at 1324 Lakeland Hills Boulevard, Lakeland, Florida. It is considered a major regional referral hospital and provides a wide range of tertiary services, including open heart surgery. The facility is located in District 6 and is one of six facilities in the district having an existing open heart surgery program. Respondent, Department of Health and Rehabilitative Services (HRS), is the state agency charged with the responsibility of administering the Health Facility and Services Development Act, also known as the Certificate of Need (CON) law. On September 26, 1988 intervenor, Winter Haven Hospital, Inc. (WHH), filed with HRS an application for a CON seeking authority to establish an open heart surgery program at its facility in Winter Haven, Florida. After reviewing the application, on February 3, 1989, HRS published notice of its intent to issue the requested CON. If approved, this program would be in competition with similar programs operated by LRMC and intervenor, Hillsborough County Hospital Authority d/b/a Tampa General Hospital (TGH). Those two parties have initiated formal proceedings in Case Nos. 89-1286 and 89-1287 to contest the proposed grant of authority. Intervenor, Venice Hospital, Inc. (Venice), has a pending application for authority to establish an open heart surgery program in a separate administrative proceeding and has intervened in opposition to LRMC's rule challenge. It is noted that LRMC, WHH and TGH are located in District 6 while Venice is located in an adjoining, but separate, district. All parties have standing in this proceeding. In order for HRS to grant a certificate of need, it is necessary for an applicant to satisfy all relevant rule and statutory criteria. In this vein, the agency has promulgated Rule 10-5.011(1)(f), Florida Administrative Code (1987), which contains certain criteria pertaining to open heart surgery programs. That rule provides in relevant part as follows: (f)2. Departmental Goal. The Department will consider applications for open heart surgery programs in context with applicable statutory and rule criteria. The Department will not normally approve applications for new open heart surgery programs in any service area unless the conditions of Sub-paragraphs 8. and 11., below, are met. * * * 11.a. There shall be no additional open heart surgery programs established unless: (1) the service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year or 130 pediatric heart cases per year, (Emphasis added) * * * The requirements of this rule, which are unambiguous, and other pertinent statutory and rule criteria, are to be applied by HRS to all applicants, including WHH, during the CON review process. Although the rule itself is not being challenged by LRMC, subparagraph 11.a. of the rule is at the heart of this controversy. Petitioner and TGH contend that the clear language of the rule requires that, absent the existence of not normal circumstances, HRS may not award a CON unless each existing and approved open heart surgery program in the service area is operating at and is expected to continue to operate at 350 procedures per year. Because there are now six approved and existing open heart surgery programs in the district, petitioner argues that the rule mandates that, before a new program can be authorized, each of the six programs must meet the required level of 350 procedures per year. They contend further that the particular policy applied by HRS to WHH's application is not apparent on the face of rule 10-5.011(1)(f)2. and thus it constitutes an unpromulgated rule. In preliminarily approving WHH's application, HRS admits that it used a so-called averaging policy which it agrees may be described in the following manner: HRS has formulated and is applying in reviews of Certificate of Need ("CON") applications for new open heart surgery services a policy of general applicability that is uniformly and consistently applied, which calls for the averaging of the utilization of existing and approved adult open heart surgery programs in the applicable service area, and which deems subparagraph 11.a.(I) of Rule 10-5.011(1)(f), Fla. Admin. Code, to be met if the average utilization of all such existing and approved programs in that service area is at least 350 cases (the "Averaging Policy"). Pursuant to its Averaging Policy, HRS will approve a CON application for a new adult open heart surgery program under Rule 10- 5.011(1)(f), Fla. Admin. Code, even if each existing and approved program in the proposed service area is not operating at a minimum of 350 adult cases per year, and even if no "not normal" circumstances are presented in the application or found to exist in the State agency Action Report. Stated another way, HRS deemed subparagraph 11.a. to have been met in WHH's case because, after dividing the total number of procedures performed district wide by the number of existing and approved programs, there were an average number of procedures in excess of 350 for each program in the district. It used this averaging process even though two programs were not operational at the time the review process took place, and only two (LRMC and TGH) of the six programs had actually performed more than 350 procedures during the specified time period being measured. 1/ Thus, the averaging policy used by HRS allows approval of a CON application for open heart surgery even if only some programs in a district, rather than each, have the required 350 case volume. The averaging technique has not been reduced to writing in a memorandum, manual or agency policy directive, and it has not been formally adopted as a rule. In this regard, HRS, but not WHH and Venice, has admitted that the policy is indeed a rule. The results of applying that "rule" are contained in the state agency action report issued by HRS and made a part of this record. HRS has consistently and uniformly applied this averaging technique in every open heart surgery case except one since the rule was adopted in substantially its present form on February 14, 1983. 2/ It has been applied without discretion by those HRS personnel who have the responsibility of administering the CON law and regulations. The proponents of the averaging policy argued first that the language in subparagraph 11.a. authorized its use. However, nothing in the language of the existing rule expressly refers to an averaging process. They also contended that when other provisions within the rule are read, the use of the policy becomes apparent. More particularly, they pointed to subsection (7) of the rule which requires that the provision of open heart surgery be consistent with the state health plan. That plan provides in part that one of its objectives is to maintain an average volume of 350 procedures at all programs in the state. However, the state health plan is not mentioned in subparagraph 11.a., subsection (7) does not track or mirror the averaging technique, and the same subsection does not alert the user of the rule to the fact that an averaging process will be applied.
Findings Of Fact St. Mary's Hospital, Inc. ("St. Mary's"), is a certificate of need ("CON") applicant for an adult open heart surgery program in Department of Health and Rehabilitative Services ("HRS"), District IX. The Agency for Health Care Administration ("AHCA") is the state agency responsible for the administration of CON laws. Intervenor, Martin Memorial Hospital Association, Inc., d/b/a Martin Memorial Medical Center ("Martin Memorial") has standing to intervene as a CON applicant for an open heart surgery program in HRS District IX. Intervenors, JFK Medical Center, Inc., ("JFK") and Palm Beach Gardens Community Hospital, Inc., d/b/a Palm Beach Gardens Medical Center ("Palm Beach Gardens") have standing to intervene as existing providers of open heart surgery services in HRS District IX. AHCA published a net need projection for zero additional adult open heart surgery programs in HRS District IX, with the following notice: Any person who identifies any error in the fixed need pool numbers must advise the agency of the error within ten (10) days of publication of the number. If the agency concurs in the error, the fixed need pool number will be adjusted prior to or during the grace period for this cycle. Failure to notify the agency of the error during this ten day time period will result in no adjustment to the fixed need pool number for this cycle and a waiver of the person's right to raise the error at subsequent proceedings. See, Volume 18, Number 32, Florida Admiministrative Weekly, at page 4501 (August 7, 1992). By letter dated August 14, 1992, St. Mary's notified AHCA that it believed an error had been made in the fixed need pool projection for adult open heart surgery programs in HRS District IX. This letter was hand delivered to AHCA on August 14, 1992, within the ten days required by the fixed need pool publication. All of the parties to this proceeding agree with St. Mary's that the numeric need formula in Rule 10-5.033(7), Florida Administrative Code (subsequently, renumbered as Rule 59C-1.033(7), showed a need for one additional adult open heart surgery program in District IX, except that AHCA determined that the provisions of subsection 7(a)2. were not met. St. Mary's letter also asserted that there was evidence that all existing adult open heart surgery providers performed in excess of 350 adult open heart surgery operations during the applicable base period calendar year 1991. The minimum of 350 operations in each existing program is an additional prerequisite to the publication of need for a new open heart surgery program in subsection 7(a)2. of Rule 59C-1.033, which the parties refer to as a "default" provision. The default provision is invoked in this case because JFK reported fewer than 350 operations. The subsection provides that a new adult open heart surgery program will not normally be approved if: One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 6 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the 12 months ending 6 months prior to the beginning date of the quarter of the publication of the fixed need pool. (Emphasis added). In its letter of August 14, 1992, St. Mary's stated that: According to the information provided by JFK to the local health council JFK performed 347 adult open heart surgery operations during the applicable base period (calendar year 1991). Notwithstanding the data reported by JFK to the local health council, data obtained from the Health Care Cost Containment Board for the same 12 month period reflects a total of 356 adult open heart surgery discharges from JFK. All parties agree that for calendar year 1991, JFK Medical Center, Inc. ("JFK"), reported a total of 356 discharges within DRG's 104 through 108 to Florida's Health Care Cost Containment Board and, for the same period of time, JFK reported 347 adult open heart surgery operations to the Treasure Coast Health Council, Inc. Based on the data provided by JFK to the HCCB, St. Mary's requests that AHCA enter a final order finding that there is a need for one additional open heart surgery program in District IX in the September, 1992 review cycle. The determinative factual issue, in this proceeding, is whether the term "discharge" is equivalent to the term "operation" and, if it is, should the HCCB data be accepted as more reliable than the Health Council data. The term "open heart surgery operation" is defined by Rule 59C- 1.033(2)(g), Florida Administrative Code, to mean: Surgery assisted by a heart-lung by-pass machine that is used to treat conditions such as congenital heart defects, heart and coronary artery diseases, including replacement of heart valves, cardiac vascularization, and cardiac trauma. One open heart surgery operation equals one patient admission to the operating room. Open heart surgery operations are classified under the following diagnostic related groups (DRGs): DRGs 104, 105, 106, 107, 108, and 110. (Emphasis added). The definition of "open heart surgery operation" was also considered in Humhosco, Inc. v. Department of Health and Rehabilitative Services, 14 FALR 245 (DOAH 1991). The hearing officer found that: [D]iagnostic related groups, or "DRGs," are a health service classification system used by the Medicare System. The existing rule does not include the reference to DRG classifications. Some confusion had been expressed by applicants as to whether certain organ transplant operations which utilized a bypass machine during the operation should be reported as open heart operations or as organ transplantation operations. The amendment was intended to clarify that only when the operation utilizes the bypass machine and falls within one of the enumerated categories should it be considered an open heart surgery operation. The inclusion of the listed DRGs was meant to clarify the existing definition by limiting the DRG categories within which open heart surgery services may be classified. There is no dispute that the primary factor in defining an open heart surgery procedure is the use of a heart-lung machine. Florida Hospital argued that the proposed definition is ambiguous and vague because not all procedures which fit into the listed DRG categories necessarily involve open heart surgery. Florida Hospital's fear that the new language would seem to indicate that each procedure falling into the listed DRGs qualifies as an open heart surgery operation is unfounded. While the provision could have been written in a simpler and clearer manner, the definition adequately conveys the intent that the use of a heart-lung bypass machine is an essential element to classify an operation as open-heart surgery. Humhosco, supra, at 255. (Emphasis added).
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order determining that the fixed need pool publication, dated August 7, 1992, for Department of Health and Rehabilitative Services District IX for the July 1994 planning horizon is accurate. DONE and ENTERED this 22nd day of December, 1992, at Tallahassee, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of December, 1992. APPENDIX Both parties have submitted Proposed Recommended Orders. The following constitutes my rulings on the proposed findings of fact submitted by the parties. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. Accepted in Findings of Fact 5 and 6. Subordinate to Findings of Fact 13. Accepted in Findings of Fact 11, conclusion rejected in Findings of Fact 13-15. Accepted in Findings of Fact 15, conclusion rejected in Conclusions of Law 18-19. Rejected in Conclusions of Law 17-19. Rejected in Findings of Fact 13-15. Accepted in Conclusions of Law 1. Accepted in Findings of Fact 7 and 9. Accepted in Findings of Fact 7 and 9. Accepted, in part, and rejected, in part in Findings of Fact 10 and 11. Rejected in Findings of Fact 11 and 13-15. The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. Accepted in Findings of Fact 5. Accepted in Findings of Fact 5. Accepted in Findings of Fact 6. Preliminary Statement Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Findings of Fact 7 and 9. Accepted in Findings of Fact 10 and 11. Accepted in relevant part in Findings of Fact 4. Subordinate to Findings of Fact 9 and 11. Subordinate to Findings of Fact 7. Subordinate to Findings of Fact 12. Subordinate to Findings of Fact 12. Subordinate to Findings of Fact 12. Subordinate to Finding of Fact 11. Accepted in Conclusions of Law 17. Accepted in Findings of Fact 13-15. Accepted in Findings of Fact 13-15. COPIES FURNISHED: W. David Watkins, Esquire Oertel, Hoffman, Fernandez & Cole, P.A. 2700 Blair Stone Road Tallahassee, Florida 32301 Lesley Mendelson, Esquire Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Byron B. Mathews, Jr., Esquire 201 S. Biscayne Boulevard Suite 2200 Miami, Florida 33131 Gerald M. Cohen, P.A. Steel Hector & Davis 4000 Southeast Financial Center Miami, Florida 33131-2398 Robert A. Weiss, Esquire John M. Knight, Esquire Parker, Hudson, Rainer & Dobbs The Perkins House 118 N. Gadsden Street Tallahassee, Florida 32301 Sam Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, General Counsel Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
Findings Of Fact Petitioner's name and address are North Broward Hospital District d/b/a North Broward Medical Center, 201 E Sample Road, Pompano Beach, Florida 33604. The North Broward Hospital District is a Special Taxing District created by the Florida Legislature. It currently owns and operates three public, nonprofit hospitals in Broward County including Broward General Medical Center ("BGMC") and North Broward Medical Center Respondent, Department of Heath and Rehabilitative Services ("HRS"), is responsible for the administration of Section 381.493 through 381.499, Fla. Stat. ("the CON statute"), and Fla. Administrative Code Ch. 10-5 ("the CON rules"). Under the foregoing, authorities, HRS reviews applications for CONs to construct, purchase or otherwise implement certain new health care facilities and new institutional health care services, as defined by the CON statute. One of these new institutional health care services subject to HRS' review under the CON statute and CON rules is open-heart surgery service, as defined in Fla. Admin. Code Rule 10-5.11(16)(a). By formal application under the CON statute and CON rules which was deemed complete by HRS effective October 16, 1985, NBMC applied for a certificate of need ("CON") to institute an open-heart surgery service at 201 E. Sample Road, Pompano Beach, Florida 33604. Exhibit "A" is a true, correct, and authentic copy of NBMC's application for certificate of need for open-heart surgery. NBMC's application was denied by HRS by letter dated February 28, 1986, received by NBMC open March 10, 1986. Exhibit "B" is a true, correct, and authentic copy of said letter. Publication of the denial appears at Vol. 12; No. 11, Florida Administrative Weekly (March 14, 1986). HRS' basis for denying the application is contained in the "State Agency Action Report". Exhibit "C" is a true, correct, and authentic copy of HRS' State Agency Action Report pertaining to NBMC's application. NBMC has petitioned HRS for formal Section 120.57(1), Fla. Stat., administrative proceedings challenging the denial of its application for open- heart surgery. Exhibit "D" is a true, correct, and authentic copy of that petition. In its application, NBMC stated that one of its sister hospitals, BGMC, currently provided open-heart surgical services. NBMC proposed in its application to utilize the same open-heart surgical team at NBMC as was then practicing at BGMC. Applicants for CONs for open-heart surgery services must satisfy certain regulatory standards prescribed in CON Rule 10-5.11(16). These standards include: (k)1. There shall be no additional open- heart surgery programs established unless: The service volume of each existing and approved open-heart surgery program within the service area is operating at and is and expected to continue to operate at a minimum of 350 adult open-heart surgery cases per year or 130 pediatric heart cases per year; and The conditions specified in (e)4., above will be met by the proposed program. (E.S.) Rule 10-5.11(16)(e)4. provides in pertinent part as follows: There shall be a minimum of 200 adult open- heart procedures performed annually, within three years after initiation of service, an any institution in which open-heart surgery is performed for adults. (E.S.) Exhibit "E" is a true, correct, and authentic copy of CON Rule 10-5.11(16). 10. In 43 Fed. Reg. 13040, 13048 (March 28, 1978) (42 C.F.R. 121.207), the Secretary of the United States Department of Health and Human Services ("HHS") set forth the federal CON standards for open-heart surgery, as part of the National Guidelines for Health Planning. The National Guidelines for Health Planning are referenced in HRS's State Agency Action Report. Exhibit "F" is a true, correct, and authentic copy of that portion of the Nation Guidelines for Health Planning which pertain to the implementation of open-heart surgery services. The National Guidelines for Health Planning also provide that approval of new open-heart surgery services should be contingent upon existing units operating and continuing to operate at a level of at least 350 procedures per year. The National Guidelines for Health Planning further provide as follows: In some areas, open-heart surgical teams, including surgeons and specialized technologists, are utilizing more than one institution. For these institutions, the guidelines may be applied to the combined number of open-heart procedures performed by the surgical team where an adjustment is justifiable in line with Section 121.6(B) and promotes more cost effective use of available facilities and support personnel. In such cases, in order to maintain quality care a minimum of 75 open-heart procedures in any institution is advisable, which is consistent with recommendations of the American College of Surgeons. (E.S.) HRS' CON Rule 10-5.11(16); which contains the "350" standard, does not contain any comparable exception for institutions sharing open-heart surgical teams. NBMC's application for CON projects 200 open-heart surgeries by the end of the third year of operations and, when combined with BGMC's open-heart procedures satisfies the exception contained in the National Guidelines for Health Planning, as described above. There are no disputed issues of material fact that will require an evidentiary hearing in this matter. The parties therefore agree that the matter shall be submitted pursuant to legal memoranda and oral argument. The parties' legal memoranda will be due on June 17, 1986, and oral argument will be held on the scheduled hearing date of June 19, 1986. The parties agree to allow responses to the legal memoranda, which responses shall be submitted no later than June 26; 1986.
