The Issue The central issues in these cases are: As to case no. 89-1293--whether Indian River Memorial Hospital (Indian River) meets the statutory and rule criteria for a certificate of need (CON) to operate an inpatient cardiac catheterization laboratory, and therefore, whether the Department of Health and Rehabilitative Services (Department) should approve CON application number 5726. This application is opposed by Lawnwood Medical Center, Inc. (Lawnwood). As to case no. 89-1294--whether Lawnwood meets the statutory and rule criteria for a CON to operate an open heart surgery program and an inpatient cardiac catheterization laboratory, and therefore, whether the Department should approve CON application number 5729. Indian River opposes the proposed approval of Lawnwood's inpatient cardiac catheterization laboratory in case no. 89-1295. St. Mary's Hospital, Inc. (St. Mary's) opposes the proposed approval of the inpatient cardiac catheterization laboratory in case no. 89-1297.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made: The Parties Indian River is a private, not-for-profit hospital which is operated pursuant to a lease between itself and the Indian River Hospital District, a special tax district. Indian River is located in Vero Beach, Indian River County, Florida, and has 347 licensed beds of which 293 are medical-surgery beds, with 18 intensive care and critical care beds. Ad valorem tax monies support indigent care for Indian River County residents. Lawnwood is a 335 bed acute care hospital located in Fort Pierce, St. Lucie County, Florida. Lawnwood is owned and operated by Lawnwood Medical Center, Inc., a wholly-owned subsidiary of Hospital Corporation of America (HCA). Lawnwood has an established outpatient catheterization laboratory located in a free-standing building on the hospital grounds. St. Mary's is an acute care hospital located in West Palm Beach, Palm Beach County, Florida. St. Mary's has an established inpatient catheterization laboratory program. The Department is the state agency responsible for administering those sections of Chapter 381, Florida Statutes, which govern the review process under which applications for CONs are either granted or denied. Indian River, Lawnwood, and St. Mary's are located within the Department's District IX. The geographical boundaries for District IX encompass Indian River, St. Lucie, Martin, Okeechobee, and Palm Beach Counties. With the exception of Martin Memorial Hospital (whose entitlement to inpatient cardiac cath is disputed by Lawnwood), all existing providers of inpatient catheterization services are located in Palm Beach County. The Applications On August 25, 1988, Indian River submitted a letter of intent to advise the Department of its plan to construct a cardiac catheterization laboratory within the hospital and to establish an inpatient cardiac cath program. The proposal set forth in that letter made reference to Indiarn River's patients who are generally routed to hospitals located in another district for cardiac cath services. The application submitted by Indian River on August 26, 1988, estimated that the capital expenditure of the project, $1,779,750, would provide for the construction of a second floor addition to the hospital which would accomodate the new laboratory. The application alleged that, in the majority of cases, residents of Indian River County in need of cardiac catheterization are sent out of district for such services. On October 13, 1988, the Department responded to Indian River's application by listing omissions from the proposal which the Department required in order to complete its review. This "omissions letter" specified that Indian River was to update its application utilizing the "new rule" for cardiac cath. The responses to the omissions were to be provided by November 14, 1988. Indian River timely responded to the omissions letter on November 9, 1988. The Department deemed Indian River's application to establish an inpatient cardiac cath laboratory complete effective November 14, 1988. On August 26, 1988, Lawnwood submitted a letter of intent to the Department to announce its intention to establish a cardiac cath and open heart surgery program. Lawnwood sought to be included in the application group for which the deadline was September 28, 1988. The timeline for this group required applications to be complete by November 14, 1988. Agency action on the applications submitted in the September, 1988 batch was scheduled for January 13, 1989. Lawnwood's application was received and reviewed by the Department. The omissions letter which outlined approximately six questions requiring further elaboration was issued on October 13, 1988. Lawnwood's omissions response was timely provided on November 14, 1988. The Department deemed Lawnwood's application for an inpatient cardiac cath laboratory and an open heart program complete effective November 14, 1988. Inpatient cardiac catheterization is not currently available in Indian River and St. Lucie Counties. As a result, potential patients residing in these counties are geographically isolated from the existing District IX providers of the same services. State Agency Action Report On January 20, 1989, the Department issued its State Agency Action Report (SAAR) which recommended the approval of an inpatient cardiac cath program for Lawnwood. The portion of Lawnwood's application which sought a CON for an open heart program was denied. The SAAR evaluated the applicants based upon the following criteria: Section 381.705, Florida Statutes; Rule 10-5.011, Florida Administrative Code; and the 1988 District IX Health Plan (DHP). The Health Plans Pertinent to these proceedings are the following portions of the DHP: B. In planning for the specialized services of cardiac catheterization laboratories and open heart surgical services, District IX, in its entirety, shall be the subdistrict. * * * Priority shall be given to area facilities for specialized services which can show a commitment to, or an historical record of, service to Medicaid/Indigent, Handicapped and Underserved population groups. * * * Priority shall be given to Certificate of Need applicants who propose to have both inpatient cardiac catheterization services and open heart surgical services in the same facility. However, should it become evident, at any time, that there is a need for one service and not for both services, then an applicant would not be expected to have to apply for both. The State Health Plan (SHP) sets a goal of ensuring the appropriate availability of cardiac catheterization and open heart surgery services at a reasonable cost. In pursuit of that goal two objectives are specified: Objective 4.1.: To maintain an average of 600 cardiac catheterization procedures per laboratory in each district through 1990. * * * Objective 4.2.: To maintain an average of 350 open heart surgery procedures per program in each district through 1990. The "Old Rule" Need determination for cardiac catheterization capacity under the version of Rule 10-5.011, Florida Administrative Code, which was effective on April, 1988, provided for a calculation whereby the number of catheterization procedures for the projected year equaled the 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 (the batching group) multiplied by the projected population in the service area for the projected year. The projected year was the year in which the proposed cardiac cath laboratory would initiate service (not more than two years into the future). The "old rule" further provided that no additional cardiac cath laboratories would be established in a service area unless the average number of caths performed per year by the existing and approved laboratories were greated than 600. This volume level contemplated inpatient and outpatient procedures. Consequently, applications for proposed cardiac cath laboratories may not be approved if they would reduce the average volume of procedures performed below 600. The Department did not publish a fixed need pool for this batch of applicants under the "old rule." The Department's goal under the "old rule" provided that it will not normally approve applications for new cardiac catheterization laboratories unless additional need is indicated based upon the calculations explained above. The number of cardiac cath procedures performed in District IX during the relevant time period was 4765. The population during the use rate period was 1,151,929. The historic use rate is therefore 413.65 per 100,000 population. The projected population for the planning horizon is 1,259,178. The projected use for the period is 5208.6. That number divided by 600 yields a total need for the planning period of 8.68 cath laboratories for this District. Applying the Department's historical practice of rounding the number to the nearest whole number establishes a need for 9 cardiac cath laboratories. By subtracting the existing cath laboratories (Boca Raton, JFK, St. Mary's, Palm Beach Gardens, and Delray) results in a need for an additional 4 cardiac cath laboratories. Pursuant to the "old rule," both applicants in this case have established numeric need for their proposed program. The "New Rule" The need formula expressed in the "new rule" is as follows: NN=PCCPV - ACCPV - APP Where: NN is the annual net program volume need in the service planning area projected 2 years into the future for the respective planning horizon. Net need projections are calculated twice a year. The planning horizon for applications submitted between January 1 and June 30, shall be July of the year subsequent to the following calendar year. The planning horizon for applications submitted between July 1 and December 31, shall be January of the year 2 years subsequent to the following calendar year. PCCPV is the projected adult cardiac catheterization program volume which equals the actual adult cardiac catheterization program volume rate (ACCPV) per thousand adult population 15 years and over for the most recent 12 month period available to the department 3 weeks prior to publication of the fixed need pool, multiplied by the projected adult population 15 years of age and over 2 years into the future for the respective planning horizon. The population projections shall be based on the most recent population projections available from the Executive Office of the Governor which are available to the department 3 weeks prior to the fixed need pool publication. ACCPV equals the actual adult cardiac catheterization program volume for the most recent 12-month period for which data are available to the department 3 weeks prior to the publication of the fixed need pool. APP is the projected program volume for approved programs. The projected program volume for each approved program shall be 300 admissions. The Department did not publish a fixed need pool for this batch under the "new rule." The projected program volume contemplates 300 admissions which relate to inpatient procedures. In addition to the formula set forth above, the "new rule" provides that the actual outmigration from one service planning area to another shall be considered in the review of a CON application. In this case, the actual number of cardiac cath procedures for District IX is understated. The actual number utilized by the Department in the evaluation of these applicants failed to consider the outmigration of patients residing in Indian River County who travelled out of the district for services. The actual number of Indian River patients who travelled out of the District for cardiac catheterization during the period was understated by at least 500. Prior to the evaluation of these applicants, neither the Department nor the applicants had data to calculate the outmigration for cardiac cath services from District IX. That it was occurring was obvious--there were no inpatient facilities in the northern counties. Further, the established referral patterns suggest that patients in the northern counties preferred the outside facilities which were geographically closer than existing programs within District IX. However, no study quantifying the number of residents receiving services elsewhere had been performed. Regardless of the net need calculated under the "new rule" formula above, the rule further provides that no additional cardiac catheterization programs shall normally be granted unless ACCPV, divided by the number of operational programs for the service planning area, is at or exceeds a program volume of 300 patient admissions. Utilizing the most conservative ACCPV (4133) divided by the number of operational programs (5) would yield an average program volume well in excess of 300. In that instance, the average volume per program would be 827. That assessment assumes a translation of "admissions" to equal "procedures." In contrast, utilizing the 600 figure set forth in the SHP, yields a program need for 7 facilities. That figure confirms that two additional cardiac catheterization programs would be appropriate and adequately supported by District use. In reaching this conclusion, the cardiac catheterization program located at Martin Memorial Hospital has not been included in the number of existing programs. The program at Martin was reportedly approved in the settlement of a prior batch CON case. As such, it may not reduce the number of facilities calculated in this case under the pertinent rule. Based upon the "new rule," both of these applicants have established numeric need for their proposed program. The number of projected procedures (4565) divided by 600 further establishes a need for 7 programs. Open Heart Need Pursuant to the Rule 10-5.011, Florida Administrative Code, the need for open heart surgery programs is determined by computing the projected number of open heart surgical procedures in the service area for a projected year. That number equals the 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 multiplied by the projected population in the service area for the year in which the proposed open heart surgery program would initiate service (not more than two years into the future). Based upon the open heart need formula there is no numeric need for additional open heart surgery programs in District IX. Further, the approval of an additional open heart program would reduce the average volume of existing open heart surgery facilities to below 350 open heart procedures annually. The Department will not normally approve applications for new open heart surgery programs in any district unless there is a finding of numeric need coupled with a finding that the additional program will not reduce the volume of existing providers below 350. Not Normal Circumstances Reviewed There are three open heart programs currently operating in District IX (Palm Beach Gardens, Delray, and JFK). All of these programs are located within Palm Beach County which is south of Lawnwood's service area. The closest of these programs (Palm Beach Gardens) is approximately 44.3 miles from Lawnwood. Another open heart program which is located outside of District IX, Holmes Regional Medical Center (located in Brevard County to the north), is approximately 49.8 miles from Lawnwood. Not normal circumstances warranting the approval of an open heart program require a showing of financial, programmatic or geographical conditions which establish that residents of the given service area are unable to access the service. In this case, District IX must be examined and considered as a whole. It is inappropriate to "subdistrict" for purposes of reviewing not normal circumstances. While a number of the residents of the northern counties do avail themselves of services outside of District IX, the basis for that outmigration may be the physicians' established referral patterns, patient preference, or the provider's reputation in the medical community for quality care. Open heart services are available and accessible to all residents of District IX. Consequently, no persuasive not normal circumstances have been established. Ouality of Care Indian River and Lawnwood are properly accredited and have established records of providing quality care in their existing programs and departments. Lawnwood's outpatient cardiac catheterization laboratory has operated without question to its quality of care. Since neither applicant currently provides open heart services, it is anticipated that both will operate their inpatient cardiac cath laboratories in accordance with a transfer agreement for emergency patients. Such agreement could provide for the relocation of patients to a hospital authorized to provide open heart surgery. By rule, the receiving hospital must be located within 30 minutes travel time by emergency vehicle to the inpatient cath facility. In this case, Indian River intends to transfer emergency patients to Holmes Regional Medical Center, a hospital currently authorized to provide open heart surgery services. That hospital is within 30 minutes emergency travel time of Indian River. Lawnwood also proposes to transfer emergency patients to Holmes Regional Medical Center. In order to meet the 30 minute travel time criteria, transfer in this instance must be by helicopter. Lawnwood intends to meet this requirement by agreement with Holmes. Holmes has four pilots, two mechanics, one full-time helicopter, and one backup helicopter to provide this service. By helicopter, the travel time from Lawnwood to Holmes is within 30 minutes. Availability and Access With the addition of the programs at Indian River and Lawnwood, residents in the northern counties of District IX will have an increased access to inpatient cardiac cath. This geographic accessibility will lessen the outmigration for these services by providing more convenient, locally situated programs. It is anticipated that local programs will reduce patient anxiety incidental to the travel associated with attaining the services. Further, when considered in connection with the outpatient programs (existing at Lawnwood and planned for Indian River), a significant volume of cath procedures will be performed without requiring travel to adjacent counties/hospitals. Increased volume will improve the efficiency and skill of personnel administering the procedures. Since the service areas for Indian River and Lawnwood have not, historically, conflicted, it is anticipated that patients of each facility will access their respective hospital for the service required. Personnel Availability and Costs The staffing, training and costs of providing same proposed by Indian River and Lawnwood are reasonable and adequate to fully support inpatient cardiac cath laboratories. Both hospitals have established procedures to monitor and to provide for quality assurance in connection with the services to be performed. Additionally, both have ongoing educational training to enhance their programs. Both hospitals have a cardiologist or other appropriately credentialed physician on staff to anchor the cardiac cath team. Financial Feasibility There are sufficient procedures anticipated to be performed by these hospitals to assure a level of utilization which will provide for the financial feasibility of the inpatient cardiac cath programs. Indian River currently refers approximately 500 cardiac cath procedures to facilities outside District IX. Lawnwood has commenced an aggressive outpatient progrom. With the availability of extending that program (in Lawnwood's case) and recapturing its referrals (in Indian River's case), both of these hospitals should have no financial difficulty in establishing their inpatient programs. Effect on Competition and Costs There should be no appreciable impact on costs or competition in the health care community within District IX if these applications for cardiac cath are approved. While there will be a decline in the service utilization of other facilities outside the district when referrals cease, there is no data from which it must be concluded that such decrease will adversely affect the health care community as a whole. Further, the increased service availability within District IX should not affect competition or costs since historically these facilities do not compete for patients. Similarly, since the potential patients do not currently utilize existing and approved programs (for the most part) within District IX, the approval of these applications for inpatient cardiac cath will not adversely affect the ability of existing providers to attract and retain the personnel or patients for their programs. In the case of Lawnwood's proposal for open heart, such program would, however, detract from the existing providers. Since, on average, the existing providers are not operating at appropriate levels, the creation of an additional provider would significantly affect the existing programs' abilities to attract patients. Theoretically, the existing providers should have the first opportunity to secure outmigrating patients. This would assure that their programs develop and retain a volume to assure quality of care. Indigent Care As stated previously, Indian River is a tax-supported hospital which pledges tax revenues to provide health care for the indigent. It is anticipated that such practice will continue and that those residents of Indian River County who are unable to afford inpatient cardiac cath services will obtain indigent care according to Indian River's historical record. Lawnwood's historical record for providing indigent care (as supported by its outpatient cardiac cath data) is less than exemplary. It is anticipated that as a conditon upon the issuance of the CON, Lawnwood will be required to provide a minimum of 2 percent of the total annual visits to Medicaid patients and a minimum of 3 percent of total annual visits o medically indigent/charity care patients. Those amounts are an appropriate commitment to assist the medically needy within Lawnwood's service area. Miscellaneous Criteria The applicants did not propose the operation of joint, cooperative, or shared health care resources. The applicants did not predicate need for their requested service on the need for research and educational facilities. The special needs and circumstances of health maintainance organizations was not at issue. The parties stipulated as to the reasonableness of the costs and methods for construction of the proposed facilities. Both hospitals intend to construct new laboratories. The costs associated with Indian River's proposed construction are less than those proposed by Lawnwood.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a final oider approving the certificate of need applications filed by Indian River Memorial Hospital and Lawnwood Regional Medical Center to establish inpatient cardiac catheterization laboratories. It is further recommended that Lawnwood's application to establish an open heart surgery program be denied. DONE AND ENTERED this 28th day of March, 1990, in Tallahassee, Leon County, Florida. Joyous D. Parrish Hearing Officer Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of March, 1990. Appendix to Case Nos. 89-1293 et seq. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY INDIAN RIVER: Paragraphs 1 through 16 are accepted. With regard to paragraph 17, it is accepted that Indian River physicians have established referral patterns outside of District IX for inpatient and outpatient cath procedures. To the extent that Indian River's application and response to the omissions letter made reference to this phenomenon, it is accepted that such activities were properly placed at issue in these proceedings. As to the calculations expressed in paragraph 17, no formal study was performed by any party to accurately quantify the number of procedures performed outside District IX on residents of Indian River and St. Lucie Counties. It is accepted that Dr. Celano and his partner performed outpatient procedures cn approximately 200 patients. It is further accepted that another 300 procedures were performed on Indian River residents at Holmes or Florida Hospital. Consequently, the utilization rate has been significantly understated. The total volume of which is unknown except as addressed herein, paragraph 17 is rejected as speculation or unsupported by the record in this cause. The first three sentences of paragraph 18 are accepted. The last sentence is rejected as speculation. With regard to paragraph 19, it is accepted that referrals to other hospitals can cause patient anxiety due to waits or transfer difficulties. Otherwise rejected as comment, argument, recitation of testimony or unnecessary. Paragraphs 20 and 21 are accepted. Paragraph 22 is rejected as irrelevant. Paragraph 23 is accepted. Paragraph 24 is rejected as speculation unsupported by the weight of the evidence or irrelevant. Paragraph 25 is accepted. Paragraph 26 is accepted. Paragraph 27 is accepted. Paragraph 28 is accepted. To the extent that the "new rule" requires consideration of inmigration and outmigration, paragraph 29 is accepted. That data became available subsequent to the finding that these applications were complete is irrelevant. Since no data quantifying outmigration/inmigration was available, the rule read as a whole must dictate whether the applicants have established numeric need. The applicants and the Department knew of the outmigration, consequently, reading the rule as a whole establishes that the existing providers are performing an ample number of procedures to guarantee their continued success and that an additional two programs are warranted. See response to paragraph 29 above regarding paragraph 30. Paragraph 31 is rejected as argument--see response to paragraph 29 and findings reached in paragraphs related to "new rule." Paragraph 32 is rejected as argument, comment or unnecessary. Paragraphs 33 through 41 are accepted. With regard to paragraphs 42 through 80, except as noted by findings of fact related to the applicants and the assessment of their proposals, such paragraphs are unnecessary (need for two programs has been established), argument, irrelevant (as to allegations regarding Lawnwood's open heart proposal), or contrary to the weight of competent evidence. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY LAWNWOOD: Paragraphs 1 through 7 are accepted. With regard to paragraph 8, it is accepted that currently Indian River does not have an outpatient cardiac cath program; however, regardless of the outcome of this proceeding, Indian River will establish an outpatient facility. Paragraphs 9 and 10 are accepted. Paragraph 11 is accepted but is unnecessary since it does not provide a fact related to the conclusions reached in this order. Except as accepted in the findings of fact related to the "old rule," paragraphs 12 through 15 are rejected as contrary to the weight of the evidence. In theory, Lawnwood's proposed findings correctly state how the "old rule" should be applied. The actual numbers differ slightly with the findings reached in the recommended order. Except as accepted in the findings of fact related to the "new rule," paragraphs 16 through 20 are rejected as contrary to the weight of the evidence. In theory, Lawnwood's proposed findings correctly state how the "new rule" should be applied. The actual numbers and conclusions differ slightly with the findings reached in the recommended order. Paragraph 21 is accepted. Except as accepted in the findings of fact related to open heart need, paragraphs 22 and 23 are rejected as unsupported by the weight of the evidence, argument, or irrelevant. Paragraph 24 is accepted. Paragraphs 25 through 28 are accepted. Paragraph 29 is rejected as contrary to the weight of competent evidence, irrelevant (an out of district provider would not have standing to oppose the request), or argument. Paragraph 30 is accepted to the extent that it states Martin's inpatient cath program located in Martin County has improved accessibility; however, that program did not exist when these applications were filed and evaluated by the Department otherwise rejected as irrelevant. Paragraph 31 is rejected as contrary to the weight of the evidence or irrelevant. Paragraph 32 is rejected as contrary to the weight of the evidence related to open heart. Open heart facilities are available and accessible for District IX residents. Transfers to open heart facilities under emergency circumstances after cardiac cath procedures would be the exception and not the rule. Paragraphs 33 and 34 are rejected as irrelevant to the issue of open heart. While outmigration is to be considered in determining need for cardiac cath under the "new rule," such outmigration does not establish inaccessibility for open heart services. Paragraphs 35 through 41 are rejected as contrary to the weight of the evidence, contrary to the appropriate rule application, or irrelevant. Paragraphs 42 (deleting open heart) through 44 are accepted. With regard to paragraph 45, the program located at Martin has not been considered in the evaluation of these applicants since approval for that program occurred after this batch closed. Paragraph 46 is accepted. Paragraph 47 is rejected as irrelevant. Paragraph 48 is rejected as irrelevant. Paragraph 49 is rejected as irrelevant. Paragraphs 50 and 51 are rejected as argument or contrary to the weight of the evidence. Paragraph 52 is accepted. Paragraph 53 is accepted. Paragraph 54 is rejected as irrelevant. Paragraph 55 is accepted. Paragraph 56 is rejected as contrary to the weight of the evidence. Paragraphs 57 through 61 are rejected as contrary to the weight of the evidence. Paragraph 62 is accepted. Paragraphs 63 through 80 are accepted. Paragraph 81 is rejected as contrary to the weight of the evidence. Paragraphs 82 through 85 (related only to cardiac oath) are accepted. Related to the allegations foil open heart, such paragraphs are rejected as contrary to the weight of the evidence or irrelevant. Paragraphs 86 through 90 are accepted. Paragraphs 90 through 96 are accepted only as to representations of facility and staffing it is agreed Lawnwood will have. Otherwise, assumption that volume of surgical cases will exist is rejected as contrary to the weight of the evidence. Paragraphs 97 through 105 are accepted. With regard to paragraph 106, it is accepted that the term emergency vehicle includes helicopter; otherwise, rejected as a conclusion of law. Paragraph 107 is rejected as argument. Paragraph 108 is rejected as argument or contrary to the weight of the evidence. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE DEPARTMENT: Paragraphs 1 through 3 are accepted. The conclusion reached in paragraph 4 is rejected as contrary to the weight of the evidence. Paragraph 5 is accepted. The conclusion reached in paragraph 6 is rejected as contrary to the weight of the evidence. Paragraph 7 is accepted. Paragraph 8 is accepted. Paragraph 9 is rejected as to the conclusion reached regarding the cardiac cath program as contrary to the weight of the evidence. With regard to the conclusion reached regarding the open heart program, the paragraph is accepted. Paragraphs 10 through 13 are accepted. Paragraph 14 is rejected as irrelevant. Paragraphs 15 through 16 are accepted. Paragraph 17 is rejected as argument. Paragraph 18 is rejected as argument, contrary to the weight of the evidence, or irrelevant. Paragraph 19 is accepted. Paragraph 20 is rejected as irrelevant. Paragraph 21 is rejected as irrelevant. Paragraph 22 is accepted. Paragraph 23 is rejected as contrary to the weight of the evidence, irrelevant or multiple facts. Paragraphs 24 through 25 are accepted. Paragraph 26 is rejected as comment, argument, or irrelevant. Paragraphs 27 and 28 are accepted. Paragraph 29 is rejected as argument. Paragraph 30 is rejected as repetitive or argument. The second sentence of paragraph 31 is accepted; otherwise, the paragraph is rejected as irrelevant. Paragraph 32 is accepted. Paragraph 33 is accepted. Paragraph 34 is rejected as contrary to the weight of the evidence. Paragraph 35 is accepted. Paragraph 36 is accepted. Paragraph 37 is accepted. Paragraph 38 is rejected as contrary to the weight of the evidence. Paragraph 39 is accepted. With the substitution of the word "maintenance," paragraph 40 is accepted. Paragraph 41 is accepted. Paragraphs 42 through 47, with the exception of the conclusion that only one cath program is needed (that conclusion is contrary to the weight of the evidence), are accepted. Paragraph 48 is rejected as irrelevant. Paragraph 49 is accepted. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY ST. MARY'S: Paragraph 1 is accepted. The first two sentences of paragraph 2 are accepted. The balance of the paragraph is rejected as unsupported by the record. The first two sentences of paragraph 3 are rejected as contrary to the weight of the evidence. The last sentence is accepted. The first sentence of paragraph 4 is accepted. The balance of the paragraph is rejected as argument. It is accepted that Lawnwood does not have a significant history in connection with the outpatient cath facility. Paragraph 5 is rejected as argument. Paragraph 6 is rejected as irrelevant. Paragraphs 7 through 18 are rejected as argument, irrelevant, contrary to the weight of the evidence or recitation of testimony. The first sentence of paragraph 19 is accepted. The balance of the paragraph is rejected as argument, contrary to the weight of the evidence, or irrelevant. Paragraph 20 is rejected as irrelevant. Paragraph 21 is accepted but is irrelevant. Paragraph 22 is rejected as irrelevant. Paragraph 23 is rejected as recitation of testimony. Paragraph 24 is rejected as irrelevant. Paragraph 25 is rejected as irrelevant. The first sentence of paragraph 26 is accepted. The balance is rejected as argument or conclusion of law. Paragraphs 27 and 28 are rejected as argument. Paragraph 29 is accepted. The first sentence of paragraph 30 is accepted. The balance of the paragraph is rejected as argument. Paragraph 31 is rejected as contrary to the weight of the evidence. Paragraph 32 is rejected as argument. Paragraph 33 is rejected as argument. Paragraph 34 is accepted. Paragraph 35 is rejected as argument. Paragraph 36 is rejected as argument. Paragraph 37 is accepted. Paragraphs 38 and 39 are accepted. Paragraph 40 is rejected as irrelevant. COPIES FURNISHED: Kenneth F. Hoffman Oertel, Hoffman, Fernandez & Cole, P.A. 2700 Blair Stone Road Post Office Box 6507 Tallahassee, Florida 32314-6507 John Radey Jeffrey L. Frehn Aurell, Radey, Hinkle & Thomas 101 North Monroe Street Suite 1000, Monroe Park Tower Post Office Box 11307 Tallahassee, Florida 32302 David Watkins Patricia A. Renovitch Oertel, Hoffman, Fernandez & Cole, P.A. 2700 Blair Stone Road Post Office Box 6507 Tallahassee, Florida 32314-6507 Lesley Mendelson Senior Attorney Department of Health and Rehabilitative Services Ft. Knox Executive Center 2727 Mahan Drive, Suite 103 Tallahassee, Florida 32308 Sam Power Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
The Issue Whether Cleveland Clinic Florida Hospital's application for a Certificate of Need to operate an adult inpatient cardiac catheterization program in AHCA District 10 should be granted or denied by the Agency for Health Care Administration?
Findings Of Fact The parties Cleveland Clinic Florida Hospital, ("CCFH,") is a not-for-profit corporation which owns and operates a 153 bed acute-care hospital located within the incorporated limits of Fort Lauderdale on Route A1A in the mid-section of Broward County, AHCA District 10. Among its 153 medical and surgical beds are approximately 11 beds in the intensive care unit and a similar number of intermediate care beds. CCFH is not a Level II trauma center; nor does it provide comprehensive medical rehabilitation services or the tertiary health care services of open heart surgery or organ transplantation. But, fully accredited by the Joint Commission of Health Care Organizations for Special Care Units, provision of tertiary care services in South Florida is a long-term goal of CCFH. Amisub (North Ridge Hospital), Inc., d/b/a North Ridge Medical Center, owns and operates a general acute-care hospital located in Broward County. It provides adult inpatient cardiac catheterization services as well as open heart surgery services. North Broward Hospital District, (the "District,") owns and operates hospitals in Broward County. Among the hospitals are three that provide, individually, adult inpatient cardiac catheterization services. The three hospitals, each a division of the District, are known as Broward General Medical Center, ("BGMC,") Imperial Point Medical Center, ("IPMC,") and North Broward Medical Center, ("NBMC.") In addition to cardiac cath services, BGMC provides open heart surgery services. Holy Cross Hospital is located in the northern part of Broward County within thirty minutes travel time of CCFH by emergency vehicle. It has 587 total licensed beds; 535 are acute care beds, 9 are level II NICU beds and 43 are rehabilitation beds. There is an open heart surgery program at Holy Cross and an adult inpatient cardiac catheterization program with two cardiac cath laboratories. The Agency for Health Care Administration is the single state agency authorized by Section 408.034(1), Florida Statutes, to issue or deny certificates of need, "written statements ... evidencing community need for a new ... health service [such as an adult inpatient cardiac catheterization program.]" Section 408.032(2), Florida Statutes. Other Cleveland Clinic Organizations Cleveland Clinic Florida ("CCF") is a not-for-profit corporation separate and apart from CCFH. Comprised originally of 24 or 25 physicians, most of whom came from the Cleveland Clinic Foundation in Cleveland, Ohio, it began operation in Broward County on February 29, 1988. CCF initially established an outpatient diagnostic and treatment facility on Cypress Creek Road in the eastern middle part of Broward County with the long- term aim of providing tertiary health care services in the South Florida market. It contracted for hospital services with North Beach Hospital, and with the growth of its practice, purchased the hospital in 1990. Converted into a separate not- for-profit corporation, (the applicant in this proceeding,) the hospital was re- named Cleveland Clinic Florida Hospital in 1993. In the six years since the inception of its practice, CCF has expanded into a multi-specialty group practice of approximately 85 physicians, representing more than 30 specialties. Both CCF and CCFH are subsidiaries of the same parent corporation. Although governed by separate entities, a Board of Trustees in the case of CCFH and a Board of Governors in the case of CCF, both entities' boards report to a common Board of Trustees. That board is the Executive Committee of the Board of Trustees of the parent corporation, the Cleveland Clinic Foundation. The Foundation, located in Cleveland, Ohio, is a not-for-profit corporation that serves as the sole corporate member of CCFH. Presently a multi-disciplinary group of approximately 500 salaried physicians, the Foundation is an integrated physician hospital organization, composed of hospital and clinical divisions and a research institute. In contrast to a traditional hospital environment in which a hospital governance may or may not be in accord with its service components' goals, these divisions and the research institute act in concert. The Foundation's organizations and its physicians, therefore, through collaborative effort, carry out the same mission: to provide better care of the sick, to investigate the problems of their illnesses, and to advance those who serve in like capacities. Fundamental values associated with this mission include quality, integrity, compassion, collaboration and commitment. Established in 1921, the Foundation has an extraordinarily distinguished history in cardiac care including coronary cardiac catheterization. Staff members, for example, performed the first valve transplant with bypass surgery. More pertinently, coronary angiography, a diagnostic procedure involving placement of a catheter into the heart, and which accounts for more than 80 percent of diagnostic cardiac catheterization activity, was performed for the first time at the Foundation. Today, the Foundation enjoys wide-spread recognition as a leader in cardiovascular care, research, and education. It is a major tertiary referral center for cardiac patients, treating high risk patients, many of whom have recurring heart disease. The Foundation's hospital in Cleveland has approximately 1,000 beds and is a full service tertiary care center with the exception that it does not provide obstetrics. The Foundation has seven cardiac cath laboratories used primarily for adult cardiac cath or angiography. An eighth laboratory is used to evaluate the arteries in the legs. There are approximately 17 cathing cardiologists on staff at the Foundation's hospital, compared to two on staff at CCFH. On average, 280 adult diagnostic cardiac cath procedures are performed there annually. 12. Despite the close relationship among the Cleveland Clinic organizations, CCFH is a separate entity from the others. The Foundation hospital, as outlined above, is both much larger than CCFH, and a major tertiary referral center when CCFH, at the moment, can only hope to provide tertiary services in the future. Most importantly, while advantages enjoyed by the Foundation may flow directly to CCFH because of their close relationship, the Foundation is not a co-applicant with CCFH in this proceeding. Nor is CCF a co-applicant. The applicant in this case is CCFH only. Pre-hearing Proceedings Including a Projection of Numeric Need Leading to the Agency's Intent to Grant CCFH's Application. 13. On August 6, 1993, the AHCA published in the Florida Administrative Weekly its Summary Need Projections. The Agency's publication projected a need for one additional adult inpatient cardiac catheterization program in District No party challenged the Agency's projection of numeric need. By letter dated August 19, 1993, CCFH notified the Agency of its intent to submit a Certificate of Need application for an adult inpatient cardiac catheterization program in District 10. On the same day that the letter of intent was filed with the agency, August 23, 1993, CCFH filed a copy of the letter with the Broward Regional Health Planning Council. Within fourteen days of the filing of the notice of intent with the Agency, CCFH twice published in the Fort Lauderdale Sun Sentinel a Notice of Filing. The first publication was on August 23, 1993, the second, on September 3, 1993. On September 22, 1993, CCFH filed the application with the Agency and on the same day filed a copy with the Broward Regional Health Planning Council. On October 7, 1993, the Agency acknowledged receipt of the application and informed CCFH that, "[c]ertain elements have been omitted from your proposal which are needed to implement formal review." Cleveland Clinic's Composite Ex. No. 2, Tab 3. Attached to the letter were a list of the omissions under the heading, "Omissions - Certificate of Need No. 7449." The letter informed CCFH that it was required by law to file an omissions response with both the Agency and the appropriate local health council by 5 p.m. on November 8, 1993, or else the application would be incomplete and deemed withdrawn by operation of Agency rule. On November 8, 1993, CCFH timely filed an omissions response with the Agency and a copy with the Broward Regional Health Planning Council. One week later, the Agency acknowledged receipt of the response and deemed the application complete effective November 9, 1993. On January 10, 1994, the Agency by letter to CCFH informed it of its intent to issue: Certificate of Need Number 7449 to Cleveland Clinic Florida Hospital for the establishment of an adult inpatient cardiac catheterization program at Cleveland Clinic Hospital located in Ft. Lauderdale, Broward County, District 10. Cleveland Clinic Composite Ex. No. 2, Tab 6. The letter also informed CCFH that the Agency intended to deny Certificate of Need No. 7551 for the establishment of a like program to be conducted by NME Hospitals, Inc. Outpatient Cath Lab Not Subject to CON Review At the time of hearing, CCFH had no outpatient cardiac catheterization program in operation. But, in October of 1993, CCFH requested a determination from the Agency as to whether it could establish an outpatient cardiac catheterization laboratory without certificate of need review. It received word that an outpatient lab would not require review by letter from the Agency dated October 25, 1993. Whatever one may think of the wisdom of a policy of allowing outpatient cardiac cath labs to escape CON review, (and the apparent conflict with requiring inpatient labs to undergo such review,) the Agency's determination is in keeping with the policy of this state. For its part, CCFH is committed to opening an outpatient cardiac cath lab, regardless of whether it receives the approval it seeks in this proceeding. Commencement of operation for the outpatient laboratory will occur prior to start-up of an inpatient program. At the time of hearing, the outpatient lab was expected to commence operation sometime between November, 1994 and January, 1995. CCFH's aspiration to have an inpatient, as well as an outpatient, cardiac catheterization program at its hospital supports its long-term objective of providing the tertiary services provided in open heart surgery. An inpatient program will be capable of providing immediate endocardiac catheter pacemaking in cases of cardiac arrest, and pressure recording for monitoring and evaluation of valvular disease, or heart failure. The Application Conversion of the Outpatient Lab CON Application No. 7449, (the "Application,") seeks authority to establish an adult inpatient cardiac catheterization program at the Cleveland Clinic Florida Hospital. If granted, the outpatient cardiac catheterization laboratory will be converted to inpatient use. But approval of the application will provide authority to perform diagnostic cardiac catheterization only, not therapeutic cardiac catheterization. To implement the inpatient cath program, CCFH will not incur any construction, design, or equipment costs beyond those incurred with the outpatient cardiac cath facilities. Location, Design and Equipment The proposed location for the cardiac cath laboratory has not changed since the application was submitted in September of 1993. Well situated in relation to the central supply, surgical, telemetry and intensive care areas of the hospital, the laboratory will be on the second floor of the hospital, the site of the pathology lab at the time of the application. It has the added benefit of being near where families can wait while procedures are conducted. And, near the elevator on the second floor and an adjacent post-procedure monitoring area, the location is well-suited to good patient flow. The proposed design has not changed either since the filing of the application. The design calls for special procedure x-rays, film storage, and a dark room for proper processing of films. There will be adequate and appropriate space allocated to each area of the laboratory including the patient holding area. The equipment, manufactured by Picker and Hewlett-Packard, is "state of the art." To be purchased, whether the laboratory remains outpatient or not, is x-ray equipment with the capability of cineangiography or cineangiocardiography, an image intensifier, an automatic injector, a diagnostic x-ray examination table for special procedures, a blood gas analyzer and a multi-channel polygraph. A Closed Lab Currently there are no closed cardiac cath labs in Broward County. But, CCFH intends to operate its cath program, if converted from outpatient to inpatient, as "closed," meaning use of the laboratory by medical staff will be restricted. In the case of CCFH, the restriction will allow only physicians employed by CCF to have access to the lab. Initially, medical staff will be restricted to two members of CCF. When warranted by volume of procedures, CCF will recruit additional physicians to perform cardiac catheterization procedures at the lab. Modeling the Foundation with its Assistance With the assistance of the Foundation, CCFH will model its cardiac cath program after the program in place at the Foundation, allowing for the unique needs of its patient base. The Foundation model entails guidelines and protocols that ensure procedures performed are appropriate, cost-effective, efficient, with acceptable morbidity and mortality, and in a setting that allows education, research and training of medical personnel. It involves salaried staff physicians, in a closed laboratory where the performance of the physicians, themselves, as well as of nurses and technicians are monitored and evaluated. The Foundation has developed standardized protocols for determining whether catheterization procedures are indicated, how they should be performed, and for the evaluation of patients before and after the procedure. It has also developed quality assurance, credentialing, recredentialing, and peer review protocols. Standardized protocols improve efficiency, lower costs, and contribute to better patient care. The Foundation will assist CCFH in developing standardized protocols, based on the protocols used at the Foundation. The Foundation will assist CCFH in training the staff which will perform procedures at the laboratory. The Foundation will make available staff to visit the hospital and will allow CCFH staff to participate in training at the Foundation. The Foundation's assistance should enable CCFH to implement the program expeditiously and efficiently. Other Protocols CCFH has in place a transfer protocol for the transfer of emergency patients to Holy Cross Hospital where open heart surgery and other coronary procedures not available at CCFH can be performed. Holy Cross has agreed to accept emergency transfers. Another Application In addition to the filing of the application in this case, CCFH filed another application for the batched cycle in the Spring of 1994. There are differences in the two applications because the data used by the two are different; the data for the second application being newer. The application in this case used the best data available at the time the application was prepared. Certificate of Need Criteria The criteria upon which the Agency "shall ... review applications for certificate-of-need determinations for health care facilities," Section 408.035(1), F.S., are listed in subsections (a) through (o) of the statute. In addition, Section 408.035(2), Florida Statutes, mandates the Agency to make certain findings of fact, listed in subsections (a) through (e) "[i]n cases of capital expenditure proposals for the provision of new health services to inpatients." Benefits and Absence of Harm Approval of the project is advanced by CCFH as meeting principally three public needs. First, it will further the development of the only fully- integrated health care provider in South Florida. This innovation into the South Florida market will improve quality and control cost. Second, it will improve access to services, albeit limited to cardiac care, for the uninsured population. Access to health care services for the uninsured population is one of the main needs of the health care system in Florida. Third, it will further expanded medical research and education in District 10 by allowing the Cleveland Clinic organization through the presence of CCFH in South Florida to sponsor research and postgraduate medical education in cardiology. Approval of the application will not do any harm. It will not result in any significant expenditure or duplication of equipment since CCFH has already committed to the equipment for its outpatient facility. It will not result in harm to the quality of inpatient cardiac cath services at existing providers. Nor will it cause significant financial injury to existing providers. Need in Relation to the Applicable District Health Plan and State Health Plan The State Health Plan The 1989 State Health Plan, superseded for the most part by the 1992 Interim State Health Plan, contains the latest statement at the state level of policy preferences for approval of new inpatient cardiac cath programs. The 1989 Plan lists four preferences, three of which apply to the application. The second preference applies to counties without any cardiac cath programs and so is not applicable to this proceeding. Of the remaining three preferences, CCFH's application does not conform to the third preference: "Preference shall be given to hospitals with a history of providing a disproportionate share of charity care and Medicaid patient days in the respective acute care subdistrict...". (Cleveland Clinic's Composite Ex. No. 2, Tab 4, p. 18, Testimony of Dr. Luke, Tr. 989.) The application conforms to the first and fourth preferences. The first preference is: "Preference shall be given to an applicant who proposes the establishment of both cardiac catheterization services and open heart surgical services provided that a need for open heart surgery is indicated." Id. The application conforms to this preference because CCFH has applied for authority to implement an open heart surgery program and because the "Florida Need Projections Adult Inpatient Cardiac Catheterization and Open Heart Surgery Programs and Pediatric Cardiac Catheterization and Open Heart Surgery Programs, January 1996 Planning Horizon" indicates a net need for one adult inpatient cardiac catheterization program and a net need for one adult open heart surgery program in District 10. Id. The fourth preference is: "Preference shall be given to an applicant who agrees to provide services to all patients regardless of their ability to pay." Id., p. 19. Consistent with its mission, CCFH has agreed to provide services to patients regardless of ability to pay as evidenced by its commitment to deliver 76 diagnostic caths per year to the uninsured population. The application is consistent with the goals of the 1992 Interim State Health Plan and "Healthy Homes, 1994," the 1994 Health Security Plan. Both of those plans demonstrate the intent of the State to promote improved access, quality, and cost control, based on the model of managed competition. The Cleveland Clinic is cited specifically in those plans as the type of organization that will facilitate managed competition. The District Health Plan The application conforms to both of the recommendations contained in the 1990 District 10 Comprehensive Health Plan. The application conforms to the sole applicable recommendation contained in the 1993 Certificate of Need Allocation Factors Report for Broward County. That recommendation, (also the second recommendation in the 1990 plan,) requires an applicant to document its willingness to make services available to all segments of the service area population, regardless of ability to pay. The recommendation is satisfied by CCFH's commitment in the application to perform seventy-six (76) diagnostic catheterization per year to the uninsured population. Availability, Accessibility, Quality of Care, Efficiency, Appropriateness, Extent of Utilization, and Adequacy of Like and Existing Services in the Service District of the Applicant Geographic Availability and Accessibility There are twelve existing providers of adult inpatient cardiac cath services located in District 10. There are five of these providers within five miles of CCFH: Holy Cross, North Ridge, IPMC, BGMC and Pompano Beach Medical Center. Less than eight miles away are three other providers: Plantation General Medical Center, Florida Medical Center and North Broward Medical Center. A thirteenth program was approved at University Medical Center in 1994. The road system in Broward County is highly developed. There are many facilities within a few minutes drive of any resident in Broward County. In sum, even were CCFH's aspiration of obtaining approval for an inpatient cardiac cath lab never granted, there is no portion of Broward County that is without close, easy and reasonable geographic access to diagnostic inpatient cardiac care. Extent of Utilization Several providers have multiple laboratories, including North Ridge with three separate cardiac catheterization labs. Not counting the new program at University Medical Center, there are 19 cardiac cath laboratories in the District. At a minimum, a single cardiac catheterization laboratory can reasonably accommodate between 1500 and 2000 cardiac catheterizations in a single year. The nineteen labs of the providers existing and in operation at the time of hearing, therefore, had the capacity to perform between 28,500 and 38,000 cardiac catheterizations per year. During 1993, there were 14,701 cardiac caths performed at existing providers in District 10, a number, it may be safely assumed, no more than half of the capacity supported by existing providers. Individually, no existing provider operated at as much as 80 percent capacity and six of the twelve operated at less than 30 percent capacity. Excess capacity led the Agency to conclude in its State Agency Action Report, ("SAAR"): the need for an additional program cannot be supported in total, although based on current and proposed referral patterns, the impact of an additional cardiac cathe- terization program in the district on these underutilized facilities appears minimal. Cleveland Clinic Composite Ex. No. 2, Tab 6, SAAR, p. 13. The primary impact of an inpatient program at CCFH will be on BGMC and Holy Cross, where CCF physicians currently perform diagnostic caths. The adequacy of existing capacity was confirmed by testimony from the Chief of the Certificate of Need and Budget Review sections of the Agency that she is not aware of any individuals within two years of June of 1994 who have been denied access to inpatient diagnostic cardiac cath services because of lack of capacity. Quality of Care Quality assurance, peer review, and credentialing processes are established in order to ensure the highest quality of care. The objective of these processes is to reduce the possibility of unwanted events during the course of treatment. The American College of Cardiology and American Heart Association ("ACC/AHA") have established guidelines regarding the number of diagnostic cardiac catheterization procedures a physician should perform in order to maintain proficiency in the procedure. The guidelines provide, generally, that each physician perform a minimum of 150 procedures annually. And, in general, the guidelines provide that where a physician performs at multiple laboratories, a minimum of 50 procedures should be performed at each laboratory. Some hospitals in Broward County do not require physicians to meet the guidelines. For example, the clinical criteria for performing cardiac cath services at BGMC require that a physician perform as few as 25 diagnostic procedures annually. During 1992 and 1993, only two of the nineteen physicians credentialed to perform diagnostic cardiac catheterization services at NBMC performed more than 40 procedures at the facility. But the guidelines are nothing more than for the purpose of offering guidance to a director of a laboratory in making decisions for what is appropriate in terms of operator experience with regard to credentialing. They are "not written in stone." (Tr. 367.) Exceptions are justifiably made on a case-by-case basis and do not necessarily reflect on quality of care. And there are exceptions in the guidelines, themselves, made for physicians who have extensive experience, that is, more than a thousand independently prepared cases. Nonetheless, one would expect that adherence to the guidelines would enhance quality of care. With the exception of the indirect negative reflection on quality of care that failure to adhere to the guidelines might have, and which could arguably lead to an inference that quality of care was suffering in some existing providers, there was no evidence that quality of care for inpatient cardiac catheterization patients suffers in Broward County. To the contrary, existing providers in District 10 are providing good quality of care. Access for Uninsured Persons Whether on an outpatient or an inpatient basis, CCFH has committed to perform 76 cardiac catheterization on uninsured patients annually, if their application for an inpatient service is granted. On an age-adjusted basis, the use rates for the District 10 uninsured population for diagnostic cardiac catheterization services are significantly below those for the insured population. But whether the use rates signify that the uninsured population of Broward County does not have adequate access to needed cardiac catheterization services is difficult to determine. Dr. Luke, CCFH's expert in health care planning, concluded that uninsured residents of District 10 do not have adequate access. His opinion was met with forceful resistance by other experts in health care planning presented by Cleveland Clinic's opponents. Even the Agency, CCFH's supporter in this proceeding, does not share Dr. Luke's opinion. But Dr. Luke's opinion gains support form the nature of cardiac catheterization. It is a service dependent on referrals. Uninsured persons plainly have more difficulty navigating the referral chain. While there are a number of vulnerabilities in the data Dr. Luke used to reach his opinion, without doubt, there are at least 76 members of the uninsured population per year in Broward County who need cardiac catheterization services annually. Whether they would receive such services, were Cleveland Clinic's application granted, is dependant upon whether they can successfully make their way along the referral chain. CCF, as a multi-specialty practice group, has few primary care physicians, the physicians who would make the initial referral that would lead to a cath procedure at CCFH. But, CCFH and CCF will engage in a program of outreach to identify appropriate uninsured candidates for cardiac catheterization services. CCFH and CCF will inform primary care physicians and clinics of their commitment to provide care to the uninsured population, and will encourage physicians to refer candidates for diagnostic cardiac catheterization services to CCF and CCFH. This outreach program enhances the chances that District 10's uninsured in need of cardiac catheterization services will receive them but there is no guarantee that the outreach program will be successful. Nor has CCFH, in its application or otherwise, offered such a guarantee. Ability and Record of the Applicant to Provide Quality of Care The CCFH cardiac catheterization program will enhance the quality of care offered in Broward County. The CCFH program will model its quality assurance, peer review, patient care, and credentialing/recredentialing protocols upon those used by the Foundation. These protocols meet or exceed the elements necessary to a successful quality assurance program contained in "Guidelines for Continuous Quality Improvement in the Cardiac Catheterization Laboratory" by Members of the Laboratory Performance Standards Committee of the Society for Cardiac Angiography & Interventions, a committee chaired by an employee of the Foundation, Frederick A. Heupler, Jr., M.D. The Foundation's quality assurance and peer review programs provide expressly for sharing quality assurance data with all physicians who perform procedures in the laboratory. The Foundation conducts weekly conferences at which data and specific cases are discussed among all the physicians performing procedures in the laboratory. The CCF physicians who will perform procedures in the CCFH laboratory will participate in the Foundation's conferences via the Foundation's telemedicine capability. The conferences perform an important educational function because in order to bring about quality improvement, the purpose of quality assurance, it is essential to provide feedback to all the physicians, nurses and technicians involved. The closed nature of the inpatient laboratory will enhance quality of care in several ways. Low-volume operators will be excluded thereby enhancing quality control. It will be easier to assure that the physicians with access to the lab meet recommended minimum volume standards necessary to assure quality. Cooperation is enhanced in the standardization of indications for procedures, practice of procedures and protocols. And, the ability to evaluate physicians' performances for purposes of recredentialing is enhanced. CCFH's status as an academically oriented organization enhances quality of care. For example, the presence of post- graduate fellows training in cardiology not only provides support to the laboratory but through their enthusiasm and inquisitiveness provide an animated atmosphere that brings out the best in the practitioners. As well as taking time to educate the fellows, the physicians spend more time educating the nursing staff. The nursing staff, therefore, benefits, in turn, from the stimulating environment afforded by the academic orientation to be provided in the Cleveland Clinic setting. The establishment of a cardiac catheterization program at CCFH will allow the CCF cardiologists to interact clinically with the rest of the CCF staff physicians, who practice predominantly at the hospital. The collegial clinical relationship among the CCF staff physicians enhances quality of care. The CCFH program will perform a minimum of 300 procedures annually by the second year of operation, consistent with the minimum number of procedures called for by the ACC/AHA Guidelines to ensure quality of care. The CCFH program will have a sufficient number and complement of staff to provide high quality services to the patients projected to be served by the program. The number and complement of staff are sufficient to allow for rapid mobilization of an on-call team 24 hours a day, seven days per week. The staff projected for the CCFH program will include a program director, board certified or board eligible in cardiology, radiology, or with subspecialty training in cardiology or cardiovascular radiology; a physician, board- certified or board-eligible in cardiology, radiology, or with specialized training in cardiac catheterization and angiographic techniques who will perform the examination; support staff, specially trained in critical care of cardiac patients, with a knowledge of cardiovascular medication and an understanding of catheterization and angiographic equipment; support staff, highly skilled in conventional radiographic techniques and angiographic principles, knowledgeable in every aspect of catheterization and angiographic instrumentation, with a thorough knowledge of the anatomy and physiology of the circulatory system; support staff for patient observation, handling blood samples and performing blood gas evaluation calculations; support staff for monitoring physiological data and alerting the physician of any changes; support staff to perform systematic tests and routine maintenance on cardiac catheterization equipment and be available immediately in the event of equipment failure during a procedure; and support staff trained in photographic processing and in the operation of automatic processors used for both sheet and cine film. The CCFH plan for care both before and after the procedure will be of high quality. 74. CCFH's cardiac catheterization program will be capable of providing immediate endocardiac catheter pacemaking in case of cardiac arrest and pressure recording for monitoring and to evaluate valvular disease, or heart failure. The following noninvasive cardiac or circulatory diagnostic services will be available at CCFH: Hematology studies or coagulation studies; Electrocardiography; Chest x-ray; Blood gas studies; and Clinical pathology studies and blood chemistry analysis. Availability of Alternatives to the Project While there was expert opinion that an appropriate alternative would be to use the expertise of CCF physicians by operating "a high quality Cleveland Clinic program in one of the existing combined diagnostic and open heart approved facilities," (Tr. 1415,) there are disadvantages to this alternative. First, the transfer of patients from CCFH to a hospital providing inpatient cardiac catheterization services poses risks to patients and anxiety for both the patient and family. Transfer of patients also disrupts continuity of care. Second, the equipment for the laboratory has been purchased. If the project is not implemented, inpatients at CCFH will bypass that equipment and be transferred elsewhere. Third, there are no cost savings associated with the alternative since CCFH will implement an outpatient program if the inpatient program is not approved. Fourth, the South Florida community will not benefit from the research and education capabilities of CCFH and Foundation. Finally, the community will not benefit from whatever free care it might receive if CCFH is able, in fact, to make good on its pledge for the provision of free care. In contrast, the proposed program will benefit the community by enhancing the chances of improving access to the uninsured population, expanding and enhancing medical research and education, and furthering development of the only fully-integrated health care provider in South Florida, which, in turn, will improve quality and control costs. The Need For Research and Educational Facilities North Broward Hospital District has a division of academic affairs related to the training of medical students. It has established medical student affiliations with Nova Southeastern College of Osteopathic Medicine in Broward County and the University of Florida School of Medicine. Broward General Medical Center is seeking approval to establish a residency program and currently instructs third and fourth year medical students on a regular basis. These students often observe cath lab procedures at both BGMC and NBMC. By 1995, BGMC will be listed as an available point of residency in the catalog for the University of Florida School of Medicine. In addition to assisting in the education of medical students, the District is seeking national approval as a continuing medical education (CME) site. CME programs are presently approved by the Florida Medical Association. The week the hearing in this proceeding commenced, for example, the District's division of academic affairs hosted a program on emergency cardiology services sponsored by the University of Florida. Research programs serve an important function as a point of dissemination of new medical techniques. The District is engaged in secondary research. It was recently selected to participate in a multi-center lifestyle heart trial. Six sites were selected nationwide with BGMC being one of the approved sites. The program will do research regarding the reversal of coronary heart disease. The District's hospitals, moreover, have an Institutional Research Board. Any physician can propose a research program to the Board. But, despite BGMC's research activity, there are no recognized research institutions in District 10. Unlike the research in which the District is engaged which is secondary in nature, academic centers such as the Foundation, perform primary or original research. The Foundation, together with CCF and CCFH, is actively engaged in research related to cardiology. Included among CCF and CCFH's research activities are multi- center research studies, most of which are coordinated with the Foundation. The Foundation serves as the principal investigator for those studies but District 10 will benefit from the close relationship with the Foundation enjoyed by CCF and CCFH. There are substantial benefits associated with graduate medical education, including enhancing the quality of medical services provided. When patient care takes place in the milieu of education and research, as it does at the Foundation's facility in Cleveland, it enhances a hospital's opportunity to recruit physicians interested in that type of activity more than in the economics of medicine. Because of the close relationship between the Foundation and CCFH, the benefits provided by the Foundation's research and educational environment spill over to the applicant. For example, the Foundation has one of the largest cardiology residency programs in the United States. Residents from that program, as well as other Foundation residency programs, rotate to CCF/CCFH for part of their training. The number of Foundation residents rotating to CCF/CCFH has grown from 6 to 29 over five years. Most of the residents are in primary care and internal medicine programs. CCFH will provide educational benefits independent of the benefits that flow from the Foundation. There exists a need for additional graduate medical education training sites both in Florida and in District 10. Florida ranks 41st among the 50 states in the number of residents per population. To help meet this need, CCFH provides an independent residency in surgery under the guidance of CCF. It is the only accredited graduate medical education program in District 10. The proposed inpatient cardiac cath lab will further the training of graduate medical students both in Florida and Broward County by increasing their educational opportunities. The program will provide CCFH with the full diagnostic capabilities needed in order to train internists and other primary medicine specialists in evaluating and caring for cardiovascular patients. The ability of primary care physicians to evaluate and care for cardiovascular patients is critical, given the high rate of cardiovascular disease in South Florida. The provision of graduate medicine education requires institutional commitment. The applicant is so committed and its application is backed by the commitment of CCF. The approval of the application will enhance medical research and education in District 10 and the State of Florida. Availability of Resources CCFH's estimate of project costs is found on the second page of Schedule 2 on page 63 of its omissions response. A breakdown of the estimated costs appears at pages 114 and 115 of the omissions response on Table 25, AHCA Form 1455, 1993. The total of the estimate, $117,000, accurately reflects the total costs for the application. CCFH has available the $117,000 necessary to meet the costs and to finance implementation. CCFH will be able to recruit the nursing and technical staff necessary to the implementation of the project. Long-term Financial Feasibility The immediate financial feasibility of the project is not in doubt. CCFH has available funds in cash from operations with which it intends to fund the start-up of the project. The long-term financial feasibility of this project is another matter. Measured by whether the project produces a positive net income following its start up period, long-term financial feasibility should not be an impossible matter to judge within accepted norms. But, determining long-term financial feasibility in this case is difficult because of the troublesome task of sorting out the truth when experts, all duly-qualified, have opinions, either as to the underlying data and assumptions or the ultimate conclusion, that are diametrically opposed. Petitioners and intervenor attacked fervently the assumptions underlying the opinion of CCFH's expert in health care finance that the project is financially feasible in the long-term. These assumptions were, in the main, provided to the finance expert by CCFH's expert in health care planning, Dr. Luke. The attack was launched from various angles. One expert witness noted that the Agency reported in its SAAR that it was unable to determine long- term financial feasibility and that such an observation by the Agency ordinarily would lead to preliminary action by the Agency in the form of a denial. Moreover, inconsistencies between the Application and the subsequent application were viewed by experts other than Dr. Luke as "profound." (See e.g., Tr. 1300.) Conclusions reached in the application were seen as inconsistent by opposing experts when compared with data that was used to support the opinion of CCFH's finance expert, data provided by the Foundation with regard to its hospital in Cleveland, Ohio. Furthermore, internal inconsistencies in the Application were observed by experts called by CCFH's opponents. These included that CCFH overstated volume projections, overstated its service area, used a flawed charge methodology, understated its average length of stays for four DRGs related to cardiac catheterization and failed to account for expenses associated with the outpatient cath lab that would support the inpatient lab, if approved. These inconsistencies led the opponents' expert witnesses either to offer the opinion that the project was not financially feasible in the long-term or to view the data and assumptions used by CCFH's financial expert as so flawed as to prevent the expert from reaching the opinion held by CCFH's financial expert and to constitute a failure in proof by CCFH that its project is financially feasible in the long term. The flaws observed by CCFH's opponents' experts, however, were explained by Dr. Luke so that the opinion of CCFH's expert in health care finance, as best can be determined, remains valid. For example, Petitioners and intervenor pressed hard on the average length of stay assumptions provided for various DRGs. Dr. Luke conceded that the average lengths of stay provided, based on the cardiac cath inpatient treatment by CCF physicians at BGMC and other area hospitals, are "certainly shorter than the [overall] experience of other area providers." (Tr. 1100, 1101.) But, in response to the assertion that the shorter length of stay could be due to treatment at CCFH prior to the transfer to another area hospital where the cardiac cath procedure was to be performed, Dr. Luke offered two explanations. First, there was no evidence to suggest that a much larger percentage of CCF cardiac cath patients were transferred than were patients of other physicians. Second, the total length of stay in the hospital would be less if a patient were treated solely at CCFH and not transferred to another hospital because of efficiencies in scheduling and time lost in the transfer, itself. Dr. Luke's opinion, in this regard, was bolstered by analysis as to length of stay of patients under the care of CCF physicians in DRGs comparable to inpatient cardiac cath DRGS. With regard to DRG 143, (Chest pain), CCFH's average length of stay is tied for the lowest in the district. Others are the lowest. CCFH's 2.7 average length of stay for DRG 140, for example, the lowest in the District, may be contrasted with NBMC's average length of stay for DRG 140, which is 4.3, nearly 160 percent higher than CCFH's. The notion, therefore, that CCFH would have significantly lower average lengths of stay for cardiac cath patients is not inconsistent with available data. Average length of stay is the critical building block in the financial feasibility model used by CCFH in its application. But, on rebuttal, CCFH's expert in health care offered the opinion that the project is financially feasible in the long term based on a methodology under which average length of stay is eliminated as a variable. This methodology uses "Cost per Case" data. CCFH's expert compared CCF physicians' cost per case to the costs per case of both petitioners and their experts in this proceeding as well as data from three clients of the expert who provide inpatient cardiac cath services and employ casemix cost accounting systems: Holmes Regional Medical Center, Sarasota Memorial Hospital and Memorial Medical Center of Jacksonville. The outcome of the analysis was that the cost per case projected by CCFH, $2225, fell in the middle of the range of the other providers, which ran from a low of approximately $1600 to a high of approximately $3000. Based on a cost per case analysis, CCFH's health care finance expert concluded that even were the CCFH cost per case understated and turned out to be as high as the average cost per case of any of the petitioners in this case, the project would still be financially feasible in the long term. To take another of the attacks raised by petitioners, that CCFH failed in its application to take into account for expenses associated with the outpatient cardiac cath lab that would support an inpatient lab, it was not necessary that there be such consideration in the application. CCFH has committed the costs associated with constructing and equipping it outpatient cardiac cath program. This commitment makes these costs "sunk." They will be undertaken regardless of whether CCFH's application is granted or not and so are not part of the costs of the inpatient project. It is difficult to determine whether Dr. Luke or his critics are right. On balance, it seems that the matter swings in Dr. Luke's favor. In any event, the testimony on rebuttal which established financial feasibility based on a cost-per-case methodology was not overcome by the parties opposed to CCFH's application. In sum, the project will be financially feasible in the long term. The project will generate a positive net income and positive cash flow after its start-up period. The projections of utilization relied upon in evaluating the long- term financial feasibility of the program are reasonable and achievable. Those projections are based on the historical experience of CCF physicians who perform cardiac catheterization services at other Broward County hospitals. Those physicians performed in excess of 400 procedures in 1992 and 1993. There was growth of approximately 2000 diagnostic cardiac catheterization procedures performed in District 10 between 1992 and 1993. The CCF physicians will need to obtain modest increases in their market shares in order to meet the projections of utilizations. The payor mix assumptions contained in the application are reasonable and achievable. The application accounts for all operational expenses necessary to the provision of inpatient cardiac catheterization services at CCFH. The Needs of a Multidisciplinary Clinic A multidisciplinary clinic is an organization which employs salaried physicians in a variety of medical specialties to provide diagnostic and therapeutic services to its patients. The physicians practice in a collegial collaborative environment. The multidisciplinary group clinic model promotes ease and economy in the diagnosis and care of patients. The clinic model uses a unified medical record, affording each physician who comes into contact with a patient all data and information pertaining to the patient. CCF is the only multidisciplinary group clinic in South Florida. Approximately eight percent of the discharges by CCF and CCFH in Major Diagnosis Category Five ("MDC-5"), which is the cardiac diagnostic group of the International Classification of Diseases, are attributable to patients who reside outside District 10 and the service districts adjacent to District 10. For purposes of health planning, a service district is a geographic area from which at least two-third's of a health care provider's patients are expected to come. The one-third to 20 percent remainder of the health care provider's patients come from outside the service district. A service district is used in analyzing growth in population or growth in demand for services because such growth will occur most intensively within the service district. The service district for CCFH includes all of Broward County and the southern portion of Palm Beach County. On average, approximately four percent of the MDC-5 discharges for other District 10 facilities reside outside District 10 and the adjacent service districts. The difference between the percentage of CCF and CCFH MDC-5 discharges from outside District 10 and service districts adjacent to District 10 and the average percentage of other District 10 hospitals' MDC-5 discharges from outside District 10 and adjacent service districts is statistically significant. Impact on Costs and Effects of Competition The CCFH program will sharpen competition for cardiac cath services in Broward County. CCFH, in conjunction with CCF and the Cleveland Clinic Florida Health Plan ("CCFHP"), constitute a fully-integrated health care delivery system. A fully integrated system enables a person in need of any type of medical care to receive services through the system. The relationship that exists between CCFH, CCF and CCFHP are unique in the Broward County market. Fully integrated health care delivery systems have been shown generally to produce efficiencies of operations and to improve the quality of care. The Cleveland Clinic system has had a positive impact on both the quality and cost efficiency of care offered in Broward County. CCH's average length of stay for patients and average charges for treatment of common cardiac problems are, on average, the lowest in Broward County. Both in Broward County and generally, health care is moving toward an environment of managed care and managed competition. Managed care and managed competition will result in a more competitive system, which will involve providers of health services bearing risk, in terms of prospective payment or prepaid medical plans. Managed care is intended to achieve high quality and cost efficiency in the delivery of medical services. The integrated health care delivery system model in place at CCFH is well suited for an environment of managed care and managed competition. Similar models in California, for example, have proven effective in offering high quality services at a lower cost in the California managed competition environment. In order for an integrated health care delivery system to achieve the goals of lower consumer costs and high quality, it must be able to control all elements of service delivery, including the costs of delivering services. The better the system can control its costs, the more competitive it can be. If the application is approved, CCFH will be able to control all its elements of the delivery of cardiac catheterization services. The approval of the application will enable CCFH to compete more effectively in the managed care environment because of the desire on the part of purchasers in the marketplace to receive the maximum number of services available. The more comprehensive CCFHP is the more its competitive stature is enhanced in the local market for health care services. To the extent that managed care entities compete on the basis of price, lower prices for health care services will occur. CCFHP has formed an accountable health partnership, ("AHP"). AHPs are organizations comprised of a service delivery system and a financing vehicle. The CCFHP AHP recently submitted a bid to a community health purchasing alliance ("CHPA"), which entities are organized under Florida law to serve as a clearinghouse of information to purchasers of health care, including the assembling and dissemination of information on constituent AHPs to interested parties. The CCFHP bid was the second lowest of the proposals offered to both the Broward County and Palm Beach County CHPAs. While the approval of the application is likely to lower the number of procedures done at all other programs in District 10, it will not have a material adverse impact on the quality of services offered at any existing inpatient cardiac cath program in the District. For those most likely to be affected by the program, approval does not at all threaten that they will drop below 300 procedures since the number of procedures conducted in their programs is in the thousands. For other programs operating at or about 300 procedures annually, approval should not impede their ability to perform in excess of 300 procedures annually. The approval of the application will not have a material impact on University Hospital, which recently received a certificate of need authorizing the development of an inpatient cardiac cath program. The approval of the application will result in the redirection to CCFH of cases primarily from BGMC and Holy Cross. Even with the redirection of cases, both BGMC and Holy Cross will retain in excess of 1000 procedures annually, which is more than adequate to ensure a program's quality. Nor will approval have a material adverse financial impact on any of the petitioners or intervenor. Both Holy Cross and North Ridge have enjoyed substantial operating margins and are otherwise extremely solvent. In the cases of IPMC, BGMC and NBMC, it is appropriate to evaluate the impact on the District system as a whole. The District has substantial financial resources. In the contexts of these organizations' financial strength, the impact of the CCFH inpatient cardiac cath program will be inconsequential. Past and Proposed Provision of Services to Medicaid and Indigent Patients It is the policy of CCFH to accept all patients, regardless of ability to pay. In addition to its commitment to provide free services to 76 uninsured patients as a condition of approval of the application, CCFH will also seek out Medicaid patients. This conditional commitment has the potential to be a substantial contribution to alleviating problems of the uninsured in obtaining needed inpatient cardiac catheterization services. But, as stated above, there simply is no guarantee that the commitment will be fulfilled. The Decision in the Dr. John T. MacDonald Foundation Case On April 1, 1994, slightly more than two months before final hearing in this case commenced, Hearing Officer Michael M. Parrish rendered a Final Order in Dr. John T. MacDonald Foundation, et al., v. Department of Health and Rehabilitative Services, DOAH Case Nos. 91-6390R (consolidated). The issue in the case was whether Rule 10-5.032, Florida Administrative Code, is an invalid exercise of delegated legislative authority. By the Final Order, the hearing office declared only a relatively small part of the rule invalid, leaving almost the entire text of the rule intact. Rule 10-5.032 "implements the provision of section 381.706(1)(c), F.S., which provides that certificate of need shall not be required for an expenditure to provide an outpatient service." Pertinently to this case, the rule goes on to define[] the requirements for the establish- ment of inpatient cardiac catheterization services, including minimum requirements for staffing, equipment, and a need methodology for cardiac catheterization programs. A certificate of need for the establishment of inpatient cardiac catheterization services shall not normally be approved unless the applicant meets all relevant statutory criteria, including the standards and need criteria set forth in this rule. Dr. John T. MacDonald Foundation, at 8. Sub-section (8) of the rule is entitled, "Need Determination." Paragraph (c) of subsection (8), also entitled, "Need Determination," sets out the "need formula" as follows: A new adult cardiac catheterization program may be approved if the difference between the projected program volume and the number of adult cardiac catheterizations performed in the service planning area during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool, minus the number of approved adult programs times 300, is at or exceeds a program volume of 300 for the applicable service planning area. This need formula is expressed as follows: NN = PCCPV - ACCPV - APP Where: NN is the 12-month net adult program volume need in the service planning area projected 2 years into the future for the respective planning horizon. Net need projections are published by the department as a fixed need pool twice a year. The planning horizon for applications submitted between January 1 and June 30 shall be July of the year 2 years subsequent to the year the application is submitted. The planning horizon for applications submitted between July 1 and December 31 shall be January of the year 2 years subsequent to the year which follows the year the application is submitted. PCCPV is the projected adult cardiac catheterization program volume which equals the actual adult cardiac catheterization program volume (ACCPV) rate per thousand adult population 15 years and over for the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool, multiplied by the projected adult population 15 years of age and over 2 years into the future for the respective planning horizon. The population projections shall be based on the most recent population projections available from the Executive Office of the Governor which are available to the department 3 weeks prior to the fixed need pool publication. ACCPV equals the actual adult cardiac catheterization program volume for the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool. APP is the projected program volume for approved adult programs. The projected program volume for each approved program shall be 300 admissions. Id., at 14 and 15. The rule goes on in (8)(d): Irrespective of the net need calculated under paragraph (c), no additional cardiac catheterization program shall normally be granted unless ACCPV divided by the number of operational programs for the service planning area is at or exceeds a program volume of 300 patient admissions. Id., at 15. The Hearing Officer summarized the rule as follows: it, projects a number of anticipated admissions to cardiac catheterization programs in the horizon year by multiplying the current use rate (number of admissions per thousand adult population) times the projected population. If the difference between the current volume and the projected volume is greater than 300, a new program may be awarded, so long as all of the existing programs, plus the proposed program, are projected to perform an average of 300 admissions each. An approved program is assigned a value of 300 for purposes of determining the average. Id., at 15 and 16. After summarizing the rule in the Final Order, the hearing officer took it to task on the basis of a number of deficiencies, not the least of which is that the rule fails to take into account the number of cath laboratories as opposed to the number of cath programs within a district. This point is found in Finding of Fact No. 29 in the Final Order. Even the most cavalier reading of Finding of Fact No. 29 shows the point could not have been made more plainly: The rule does not take into consideration the number of individual catheterization laboratories, rather it considers the number of cardiac catheterization programs. The difference is that an individual hospital will have only one program, but it may have more than one laboratory in each program. Id., at 19. In addition to deficiencies, the rule, in the view of the hearing officer, contains a fatal flaw. It does not address the capacity of existing cardiac catheterization programs or the capacity of existing laboratories. Furthermore, its use of 300 as the threshold number of procedures was an unexplained deviation from an earlier standard of 600 procedures as the threshold. This deviation was also an "unexplained departure from the National Guidelines for Health Planning, and an unexplained departure from other published guidelines recognized as authoritative." Id., at 25. The hearing officer went on in the Final Order to find that "[a]n essential ingredient of any functional need determination methodology is a method for identifying unmet need." Id., at 26. To do so, the methodology must identify "not only ... a reasonable estimate of future need," but also "a reasonable estimate of the future capacity of existing providers to meet that need." Id. The rule's shortcomings are summarized in Finding of Fact 43 of the order: The failure of the subject rule to consider the future capacity of existing providers in calculating future need has an adverse effect upon the ability to accurately predict future unmet need and also has a potential for adverse effect upon the quality of care offered by the existing providers. The rule authorizes the approval of a new inpatient cardiac catheteri- zation program even though many of the existing programs may be operating substantially below their capacity. The addition of new programs under such circumstances has the adverse effect of tending to reduce utilization of existing facilities that are already functioning well below capacity. Id., 26, 27. Ultimately, parts of the rule were determined by the Hearing Officer to be beyond the bounds of "reasonableness" and therefore arbitrary and capricious, and hence, an invalid exercise of delegated legislative authority, see Section 120.52(8), F.S., as follows: The term "operational programs," was determined arbitrary and capricious because the term failed to take into account the number of laboratories within each program. The hearing officer wrote, "[I]llogical results [produced by the use of the term] can be avoided only by use of a methodology that takes into account the number of existing and approved laboratories." Id., at 32; The use of the phrase "a program volume of 300 patient admissions" was determined un- reasonable because it is inconsistent with the National Guidelines For Health Planning and other authoritative guidelines and because it bears no rational relationship to the actual capacity of cardiac catheterization laboratories, Id., at 33; and, Paragraph (9) of the rule was determined to be arbitrary and capricious because "it has the effect of ignoring the existence of any new laboratories added to existing facilities." Id., at 34. The effect of the hearing officer's ruling and the explanation underpinning the ruling was to turn much of the rule, and certainly the numeric need formula, into mincemeat. It clearly called for the initiation of rulemaking if AHCA wanted a rule establishing "need methodology" for calculating numeric inpatient cardiac catheterization program need. But AHCA chose to look at the Final Order in a different way, a way that one would think would occur only in a hearing officer's wildest nightmare. Instead of reading the Final Order in its entirety, and taking it as a whole in able for the order to make sense, AHCA, followed only the strict, literal, reading of paragraphs 4., and 5., on pages 35 and 36 of the order, where it is declared: That the following portions of Rule 10-5.032, Florida Administrative Code, are an invalid exercise of delegated legislatively authority for the reasons stated above: the use of the term "operational programs" at paragraph (8)(d), the use of the phrase "a program volume of 300 patient admissions" at paragraph (8)(d), and the last sentence of paragraph (9). That, with the exception of the portions of the rule described in the immediately preceding paragraph, Rule 10-5.032, Florida Administrative Code, has not been shown to be an invalid exercise of delegated legislative authority, and the chal- lenges to other portions of the rule are hereby dismissed. Id., at 35, 36. By reading the declaration of partial invalidity "literally," in the strictest sense of the word, AHCA chose to leave in effect the numeric need formula: "NN = PCCPV - ACCPV - APP." This decision was made despite the fact that nearly the entire Final Order is devoted to an explanation of why the formula is dysfunctional in ways which strike at the very heart of the Certificate of Need program. Moreover, the strictly literal reading of the Final Order by AHCA leaves a rule on the books with portions which make no sense. AHCA conceded as much, through its Chief of the Certificate of Need and Budget Review sections of the Agency, elicited during the hearing in direct examination by AHCA's own counsel: Q: ... Now, specifically, as to paragraph 59C-1.0328, I think it is (d), with the language that has been stricken by the hearing officer in the John T. MacDonald case, does that paragraph make any sense to you? A: Not without that language in there, no. It doesn't read as something that could actually function. (e.s., Testimony of Elizabeth Dudek, Tr. 1468-1469.) The remainder of the Final Order was characterized in this manner by the Agency, Well, in looking through the final order, and then discussing it with other members of my staff and the legal staff, and in determining how we actually utilize the rule and what the difference in what is stated within the final order and the rule ... there did not appear to be any language that indicated ... that we needed to review capacity, nor the number of laboratories that were there. There were some comments related to both, but the findings were only such in the final order that the provisions of (8)(d) and then of (9) were deleted. (Tr. 1470-1). Suffice it to say, as will be articulated in the Conclusions of Law, below, this hearing officer does not read the Final Order in the Dr. John T. MacDonald Foundation case in the same way as does the Agency.
The Issue The issue presented by the instant case is whether Petitioner's application for a certificate of need to provide inpatient cardiac catheterization services at Pembroke Pines General Hospital should be granted.
Findings Of Fact Based on the evidence received at hearing and matters officially recognized, the Hearing Officer makes the following Findings of Fact: Petitioner and its Parent Corporation Petitioner is a for-profit Florida corporation formed on February 1, 1985, by Encino, California-based Nu-Med Hospitals, Inc. (NM), of which it is a wholly-owned subsidiary. NM provides various administrative services to Petitioner. In return for these services, Petitioner pays NM an annual fee. The fee in 1987 was approximately $1.8 million. In 1988, it was about $952,000. NM has also advanced loans to Petitioner. One such loan was in the amount of approximately $31.4 million at an interest rate of 15.6%, the same interest rate that NM had to pay to obtain the money which was the subject of the loan. Although interest rates have declined, the loan has not been refinanced. The failure to refinance has added substantially to Petitioner's costs. Furthermore, there is a significantly greater cash flow from Petitioner to NM than would be the case had the loan been refinanced. The total pre-tax cash flow from Petitioner to NM, including the amount attributable to the "excess interest" of the aforementioned loan, was $7,900,000 (or roughly 40% of NM's equity investment in Petitioner) in fiscal year 1987 and $4,387,000 (or roughly 23% of NM's equity investment in Petitioner) in fiscal year 1988. In addition to providing administrative services and making loans to Petitioner, NM has also invested more than $17 million over the past four years in Petitioner. Petitioner had an after-tax profit of $852,300 in fiscal year 1987. In fiscal year 1988, it had an after-tax loss of $346,600. Preliminary figures reveal that Petitioner suffered an after-tax loss of slightly more than $1 3l0 in fiscal year 1989. Pembroke Pines General Hospital. Petitioner owns and operates Pembroke Pines General Hospital (PPGH). PPGH is an acute- care hospital with a licensed capacity of 301 beds. It is fully accredited by the Joint Commission on Accreditation of Health Care Organizations. The hospital's bed complement includes 24 intensive care beds (12 coronary beds and 12 surgical beds) 2/ and 32 telemetry beds. Its telemetry unit will be expanded to 48 beds in the near future. In July, 1988, PPGH instituted an eleven bed obstetrical unit. Prior to the acquisition of the hospital in 1985, NM conducted a due diligence study to seek information about the hospital and became aware of the extent of the services provided by the hospital. According to 1987 actual data collected by the Hospital Cost Containment Board (HCCB), PPGH earned a 7.1% return on tangible equity and ranked 7th in this category of the 18 hospitals in Broward County reporting such information; PPGH had a cash flow to total debt ratio of .112% and ranked 9th in this category of the 20 hospitals in Broward County reporting such information; and its total margin percent was 2.6% and it ranked 8th in this category of the 20 hospitals in Broward County reporting such information. According to 1988 actual data collected by the HCCB, in terms of gross revenue per adjusted admission, PPGH ranked 8th of the 30 hospitals in HCCB Group 5 and 3rd of the 20 hospitals in Broward County reporting such information; and in terms of net revenue per adjusted revenue, PPGH ranked 7th of the 30 hospitals in HCCB Group 5 and 5th of the 20 hospitals in Broward County reporting such information. PPGH is located in Respondent's District x, the boundaries of which mirror those of Broward County. It is situated in the southwest quadrant of the county on the corner of Sheridan Street and University Drive. In the area surrounding the hospital is a large concentration of physicians' offices, including one housing a five-member group which limits its practice exclusively to cardiology and is the largest such group in Broward County. The group provides total cardiovascular care to its patients, including echocardiography and nuclear, invasive and clinical cardiology services. It has an active patient case load of 5,000 to 6,000. Of the members of the group, only Dr. Joseph Horgan and Dr. Barry Schiff practice invasive cardiology. Their practice is not confined to invasive cardiology, however. They are also clinical cardiologists. Both are board-certified in internal medicine, as well as cardiology. The Horgan-Schiff group accounts for 15 to 35 patients a day at PPGH, which has an active cardiology service, notwithstanding that it does not offer open heart surgery. The group provides on-site coverage at PPGH from 8:00 A.M. to 7:00 or 8:00 P.M. during the weekday. At other hours members of the group are on call and are able to quickly respond to emergencies at the hospital. Approximately 25 to 30 physicians in the area surrounding the hospital refer their patients who need cardiac catheterizations exclusively to the group. PPGH's primary service area, as defined by Petitioner, is bounded on the north by State load 84, on the south by the Broward County/Dade County line, on the east by the Florida Turnpike, and on the west by the eastern boundary of the conservation area. Included in this area are the cities of Pembroke Pines, Miramar, Davie and Cooper City. Most of Dr. Horgan's and Dr. Schiff's patients reside in PPGH's primary service area. While PPGH is not the only acute-care hospital that serves the residents of this area, it is the only hospital that is located within the area's geographic boundaries. Intervenor PPGH's primary service area is within the jurisdictional boundaries of the South Broward Hospital District (SBHD). SBHD is an independent taxing district which encompasses roughly the southern third of Broward County. It was created in 1947 by a special act of the Legislature to provide quality health care services to the residents of the district regardless of their ability to pay. Hollywood Memorial Hospital SBHD operates several facilities in the district, including a 24-hour walk-in medical center in Pembroke Pines, a freestanding ambulatory surgical center, an oncology center and a radiation therapy center. Its flagship, however, is Hollywood Memorial Hospital (Memorial), a public acute-care hospital that has grown from a 100-bed facility to a 737-bed facility offering a wide variety of health care services. Memorial is located six or seven miles east of PPGH outside of PPGH's primary service area. It is the closest hospital to PPGH. Many of the physicians who have privileges at PPGH also have privileges at Memorial. For instance, 13 of the 16 clinical cardiologists on the medical staff of PPGH, including Dr. Horgan and Dr. Schiff, are also on the medical staff of Memorial. The Horgan-Schiff group is responsible for 10 to 30 patients at Memorial on any given day. Charity Care, Medicaid and Medicare Memorial is the major provider of charity care to residents of the SBHD. In fiscal years 1987, 1988, and 1989, it provided $16,928,000, $22,728,000, and $22,258,000, respectively, in gross indigent charity care 3/ and $6,153 000, $13,739,000, and $7,587,000, respectively, in net unfunded (by tax revenues) indigent charity care. For fiscal year 199(), Memorial projects that it will provide $24,442,000 in gross indigent charity care, of which $14,211,000 will be funded by tax reVenues. A sizeable portion of the hospital's indigent charity care is funded by its operating revenues. During fiscal year 1989, the hospital earned slightly less than $3 million from its operations. Total revenues over expenses that year, however, exceeded $12 million, more than $8 million of which was attributable to returns on its investments. For fiscal year 1988, the hospital's total revenues over expenses was almost $14 million. In calendar year 1986, PPGH furnished 1.1% of the indigent charity care provided in Broward County. It ranked in the top 50% of hospitals in the county in this regard. Memorial ranked 2nd in the county, providing 22.8% of the county's indigent charity care during the calendar year. In calendar year 1987, PPGH provided $596,295 in indigent charity care. This constituted 1.29% of its gross patient revenues. In comparison, during this same period, Memorial provided $18,248,517, or 9.79% of its gross patient revenues, in indigent charity care. In terms of indigent charity care provided during calendar year 1987 as a percentage of gross patient revenue, PPGH ranked 5th of the 12 hospitals reporting in the county and 118th of the 209 hospitals reporting in the state. Memorial, on the other hand, ranked 3rd in the count, behind two other public hospitals, and 19th in the state In calendar year 1988, PPGH ranked 16th of the 30 hospitals in HCCB Group 5 in this category. Of the 20 hospitals reporting in the county, PPGH ranked 10th and Memorial ranked 2nd. Both Memorial and PPGH participate in the Medicaid program. As participants in the program, they are reimbursed for the services they provide to Medicaid patients, but generally not in the amount private pay patients are charged for the same services. The difference between what they receive from Medicaid and what they would have received from a private pay patient is referred to as a "Medicaid deduction." In calendar year 1988, PPGH's "Medicaid deductions" represented .76% of its gross patient revenues. In this category, it ranked 26th of the 30 hospitals in its HCCB group and 8th of the 20 hospitals in Broward County. Memorial, whose Medicaid deductions were 5.29% of its gross patient revenues, ranked 2nd in the county. Based on PPGH's operating budget for calendar year 1989, it ranks 192nd of the approximately 230 acute-care hospitals in the state in the amount of "Medicaid deductions" as a percentage of gross patient revenues. A further comparative review of calendar year 1989 operating budgets reveals that of the 22 hospitals in its HCCB group in calendar year 1989, PPGH ranks last in Medicaid days as a percentage of total patient days. During the third quarter of calendar year 1988, 1.3% of PPGH's gross patient revenues and 5.4% of Memorial's gross patient revenues were attributable to Medicaid patients. PPGH's 1.3% was the 8th highest and Memorial's 5.4% was the third highest of Broward County's 20 hospitals. Pursuant to a contractual arrangement with Respondent, PPGH provides medical services to patients at South Florida State Hospital, a mental health facility operated by the state. In return for the provision of these services;, PPGH is reimbursed at rates comparable to those that apply to Medicaid patients. South Florida State Hospital patients constitute approximately 2 to 5% of PPGH's Average Daily Census. Unlike Memorial, PPGH does not receive any tax revenues to help defray its expenses. PPGH has offered to serve indigent patients who live in the SBHD if the SBHD will reimburse it the same rate the SBHD reimburses Memorial for such services. The SBHD, however, has refused the offer. In terms of Medicare utilization, 1988 HCCB actual data reflects that PPGH ranked 13th of the 30 hospitals in its group and 11th of the 20 hospitals reporting in Broward County. District X Population and Demographics The Executive Office of the Governor, in a report prepared June 22, 1988, estimated that on January 1, 1988, the adult population (15 years of age and over) of Broward County was 1,001,822, and projected that it would increase to 1,047,900 on January 1, 1991. PPGH's primary service area in southwest Broward County has experienced rapid and sustained population growth in recent years. It is the site of several significant retirement communities, including a Century Village development which is expected to have 17,000 residents at build-out. Nonetheless, the population of this area is younger than that of Broward County as a whole. Approximately, 23% of the total population in southwest Broward County is over 55 years of age. While this is two percentage points higher than the national average, it is considerably lower than the countywide figure. Individuals aged 45 to 74 constitute 33.5% of the County's total population, but only 29.7% of the total population of southwest Broward County. The leading cause of death in Broward County is heart disease, a disease to which individuals become more susceptible as they age. Average Daily Census, Occupancy Rates, and Market Scare Notwithstanding the substantial population growth in Broward County, there is now, and has been since at least 1983, a large number of excess hospital beds in District X. The occupancy rates of Broward County hospitals, excluding PPGH, were as follows for calendar years 1983 through 1988: 1983- 65.4%; 1984- 61.3%; 1985- 57.1%; 1986- 55.5%; 1987- 56.2%; and 1988- 52.6%. PPGH, which had a capacity of 301 licensed beds throughout the period, had even lower occupancy rates. During the period, its Average Daily Census (ADC) and, consequently, its occupancy rate declined each year as follows: 4/ Calendar ADC Occupancy Rate 42.5% 37.9% 37.2% 34.1% 32.9% 30.9% Year 1983 127.9 1984 114 1985 111.8 1986 102.6 1987 98.9 1988 93 Based upon statistics for the first six months of calendar year 1989, however, it appears that the hospital's ADC for the entire calendar year will not further decline, but rather will increase to 100.6. 5/ Calendar Year ADC 1983 570.7 1984 533.7 1985 513.6 1986 538.7 1987 552.6 1988 560.5 During calendar years 1983 through 1988, Memorial's occupancy rates far exceeded those of PPGF, as reflected below: Occupancy Rate 78.6% 72.5% 69.7% 73.1% 75.0% 76.1% Based upon statistics for the first six months of calendar year 1989, it appears that for the entire calendar year Memorial's ADC will be 526.5 and its occupancy rate will be 71.3%. Memorial's occupancy rates have been higher than PPGH's due, at least in part, to the fact that Memorial has been able to offer heavily used specialized services not available at PPGH, including neonatal, rehabilitative, and short-term psychiatric care. Furthermore, while PPGH and Memorial both have pharmacy, 6/ physical therapy, nuclear medicine, and cardiac rehabilitation programs, the regular hours of operation of these programs are longer at Memorial. Based upon their ADCs, PPGH's and Memorial's share of the total Broward County market for calendar years 1983 through 1988 was as follows: 7/ Year PPGH 1983 3.6% 1984 3.1% 1985 3.3% 1986 3.1% 1987 3.0% 1988 2.8% Calendar Memorial 16.2% 14.7% 15.1% 16.2% 16.9% 17.2% January, 1988, through June, 1988, discharge data reveals that during that period PPGH and Memorial were responsible for 19.2% and 61.8%, respectively, of the total number of patients from PPGH's primary service area who were discharged from PPGH and District X hospitals with existing or approved inpatient cardiac catheterization programs. Although the ADC for PPGH's total bed complement declined from 1983 to 1988, the number of emergency room visits and emergency room admissions at PPGH increased 18.2% and 31.6%, respectively, during that period. The percentage increases are even greater if only the latter four years of this five-year period are considered. In terms of the average number of critical care beds occupied on a daily basis PPGH has experienced an increase of 28.9% from 1983 to 1988 and an increase of 35.4% from 1984 to 1988. Data reflecting PPGH's performance during the first five and six months of calendar year 1989 indicate that the increase in the number of emergency room visits, emergency room admissions and critical care beds occupied on a daily basis at PPGH has continued. Cardiac Catheterization As accurately described by Respondent in its rules a cardiac catheterization is a medical procedure requiring the passage of a catheter into one or more cardiac chambers of the left and right heart, with or without coronary arteriograms, for the purpose of diagnosing congenital or acquired cardiovascular diseases, or for determining measurement of blood pressure flow. Cardiac catheterization also includes the selective catheterization of the coronary ostia with injection of contrast medium into the coronary arteries. The flow of contrast medium through the coronary arteries may be recorded on x-ray film. The x-ray picture, or angiogram, that is produced can provide information quite helpful to the patient's physician. If it reveals a clot or other blockage restricting the flow of blood to the heart, a balloon-tipped catheter may be used to dilate or open the affected artery. Such a procedure is referred to as a coronary angioplasty. In contrast to cardiac catheterization, which is a diagnostic tool, coronary angioplasty is a therapeutic procedure. A high percentage of patients who receive a coronary angioplasty require open heart surgery immediately following the procedure. Cardiac catheterizations are generally, but not always, elective procedures which need not be performed immediately. There are occasions, however, where a patient is in the throes of a heart attack and requires an emergency coronary angioplasty to restore the flow of blood to the heart to minimize damage to the heart muscle. Under these circumstances, an emergency diagnostic cardiac catheterization, which can be completed in as little as five to six minutes, must also be performed so that the cardiologist will know precisely where in the arterial tree the blockage is located. Respondent permits health care providers to perform such emergency inpatient procedures regardless of whether they possess a certificate of need. Cardiac catheterizations are performed in equipped laboratories and, in the absence of complications, are usually completed within 60 minutes. They may be done on an inpatient or outpatient basis, depending on the condition of the patient. The equipment used is the same, however, whether the procedure is performed on an inpatient or on an outpatient. Recent technological advancements have made it possible to perform more procedures on an outpatient basis than previously. Smaller-sized catheters can now be used. As a result, the entry wound typically heals faster and there are fewer vascular complications. Dr. Horgan and Dr. Schiff were among the first invasive cardiologists in South Florida to employ these smaller- sized catheters. Physicians performing cardiac catheterizations are assisted by technicians and nurses who have specialized skills and training. These technicians and nurses are, at times, in short supply. Competition amongst hospitals to recruit and retain these support staff members is therefore sometimes keen. The majority of cardiac catheterizations are performed on individuals 45 to 74 years of age. 39 There has been no showing that there are any alternative diagnostic procedures which are preferable to cardiac catheterization. District X Inpatient Cardiac Catheterization Programs Broward County is not divided into cardiac catheterization subdistricts. The following seven facilities in Broward County, each of which is within two hours travel time of 90% of the county's population, provide inpatient cardiac: catheterization services pursuant to certificates of need granted by Respondent: Broward General Hospital; Florida Medical Center; Holy Cross Hospital; Memorial; North Broward Regional Medical Center: North Ridge Hospital; and Plantation General Hospital. Broward General, North Broward, and Plantation General each have one cardiac catheterization laboratory. Memorial also has one laboratory, but has plans to construct another pursuant to a "major renovation certificate of need" granted several years ago. It is unclear, however, as to when construction will begin. North Ridge has two laboratories. Florida Medical and Holy Cross each have two laboratories as well, plus one backup laboratory. The average hospital charge and the average length of stay per inpatient admission to these inpatient cardiac catheterization programs during calendar years 1986 and 1987 and the first nine months of calendar year 1988 were as follows: Calendar Average Average Stay 3.71 days 3.27 days 3.43 days 2.98 days 3.70 days 3.00 days Year Charge 1986 (All $4,365.14 Patients) 4936 (Excluding $3,932.44 Medicaid and Medicare) 1987 (All $4,359.92 Patients) 1987 (Excluding $4,041.80 Medicare and Medicaid) 1988 (All $5,054.17 Patients) 1988 (Excluding $4,393.60 Medicare and Medicaid) Cardiac catheterizations are also performed on an outpatient basis at these seven existing facilities. The number of cardiac catheterizations performed in Broward County increased almost 60% from 1985 to 1987, an increase that can be attributed to the aging of the county's population and the advances in cardiac catheterization technology. During the period from April, 1987, through March, 1988, there was a total of 9,289 cardiac catheterization admissions, both inpatient and outpatient, at these facilities, an amount substantially less than their combined capacity. During the period from July, 1987, through June 1988, they also collectively operated well below their combined capacity, handling a total of 9,236 inpatient and outpatient cardiac catheterization admissions Each of the existing laboratories in Broward County can handle at least 1,000 to 1,200 cardiac catheterizations a year during their normal hours of operation with their regular staff. 8/ These laboratories appear to be operating efficiently and to be available to all segments of the county's adult population requiring routine/diagnostic cardiac catheterization services. Furthermore, there is no indication that the quality of care offered at these laboratories is in any way lacking. In addition to these seven existing programs, Respondent has also granted certificates of need authorizing routine/diagnostic inpatient cardiac catheterizations to be performed at two other health care facilities: Imperial Point Hospital and Humana Bennett Hospital. Humana Bennett's primary service area overlaps PPGH's service area. It takes approximately 15 to 20 minutes by car to get to Humana Bennett from PPGH under normal driving conditions. The programs at Imperial Point and Humana Bennett are not yet operational. If their laboratories have hours of operation and staffing levels comparable to those of the laboratories in the county that are currently in operation, these laboratories will also each have the capacity to handle at least 1,000 to 1,200 cardiac catheterizations annually. The same can be said for Memorial's proposed second laboratory. Memorial's Inpatient Cardiac Catheterization Program Since 1981, Memorial's inpatient cardiac catheterization program has been open only to those cardiologists who devote their entire practice to performing cardiac catheterizations. It is closed to cardiologists, like Dr. Horgan and Dr. Schiff, who are not full-time invasive cardiologists. While it has its disadvantages, closing the program in this manner is a policy decision that, on balance, tends to enhance, rather than compromise, the program's efficiency as well the quality of care received by the program's patients. Other cardiac catheterization laboratories in Broward County are "closed" like Memorial's laboratory. The majority of the county's cardiac catheterization laboratories, however, including those at Broward General, Florida Medical, North Broward Regional and Plantation General, have laboratories that are open to any qualified invasive cardiologist. In addition, the laboratories at Humana Bennett and Imperial Point will be "open" when they become operational. In 1984, Dr. Horgan applied for privileges at Memorial's cardiac catheterization laboratory. Following a hearing before the SBHD's Board of Commissioners, final action was taken by the board to deny Dr. Horgan's application. Dr. Horgan appealed the board's decision to the Fourth District Court of Appeal. The board's decision was affirmed by the appellate court. Thereafter, in early 1987, at the request of the administrator of Memorial, Dr. Horgan, as well as his partner Dr. Schiff, discussed with Memorial representatives the possibility of their performing cardiac catheterizations at Memorial. Although approval of such an arrangement was initially given by the hospital, it was later withdrawn after members of the hospital's cardiology department complained about the arrangement. At present, three full-time invasive cardiologists, Dr. Mario Sperber and his partners Dr. Barry Alter and Dr. Michael Mareke have privileges to perform cardiac catheterizations at Memorial. They charge $1-500 for a routine/diagnostic left and right heart catheterization. Included in this charge is a fee of $191 that is passed on to the radiologist who assists in the interpretation of the angiogram. Because it has an open heart surgery program, Memorial is also authorized to perform routine/non-emergency angioplasties. These angioplasties are performed in Memorial's cardiac catheterization laboratory. The total number of procedures done in this laboratory during fiscal year 1988 was 1,635, seven of which were performed on Medicaid patients and 176 of which were performed on an outpatient basis. The total number of procedures, including angioplasties, done in Memorial's cardiac catheterization laboratory during fiscal year 1989 increased slightly to 1,650. The number of those procedures performed on an outpatient basis, however, almost doubled. The ratio of routine/diagnostic inpatient cardiac catheterizations to routine/diagnostic outpatient cardiac cathetrizations performed at Memorial has decreased from about 6 to 1 to approximately 4 to A further decrease is likely in view of the technological improvements that have been made. During calendar year 1988, 1,238 routine/diagnostic cardiac catheterizations, 234 angioplasties, and 512 open heart surgeries were performed at Memorial. During the first six months of calendar year 1989, there ware 680 routine/diagnostic cardiac catheterizations, 168 angioplasties, and 241 open heart surgeries done at Memorial. Approximately 23% of the total number of inpatient procedures performed in Memorial's cardiac catheterization laboratory during the first six months of calendar year 1988 were done on patients who resided in PPGH's primary service area. From fiscal year 1988 to fiscal year 1989, the revenues over direct expenses of Memorial's cardiac catheterization laboratory increased slightly. PPGH's Cardiac Catheterization Laboratory In addition to the previously mentioned cardiac catheterization laboratories in Broward County, there is also a 695-square foot cardiac catheterization laboratory located inside the operating room suite at PPGH. Cardiac catheterizations are performed at this laboratory, however, exclusively on an outpatient basis. It is the only such outpatient laboratory in Broward County and it was the first of its kind in South Florida. The laboratory at PPGH is leased to a Florida limited partnership, University Heart Institute, Ltd (Partnership) which operates the outpatient cardiac catheterization program at the hospital. 10/ The leasing of a department of a hospital is not an uncommon practice in Broward County. Petitioner provides the space needed to operate the outpatient cardiac catheterization program at PPGH, as well as other support services, pursuant to a management agreement with the Partnership. In return for the space and services it provides, Petitioner receives a nominal sum of $1.00 a month from the Partnership. The management agreement has a termination provision which permits Petitioner to terminate the agreement if, at any time after the first twelve months, "the Partnership has a negative cash flow over a period of six or more calendar months." Petitioner is a 50% general partner of the Partnership. Accordingly, pursuant to generally accepted accounting principles, Petitioner must reflect: the financial activities of the Partnership on its balance sheet as though they were its own. The other general partner in the venture is University Hospital, Inc., (UHI), a corporation controlled by Dr. Horgan and Dr. Schiff and their partner, Dr. Dweck. Petitioner and UHI have equal control over the Partnership. There are also about 20 limited partners, all of whom are physicians. The profits and losses of the Partnership are divided as follows: 50% to Petitioner; 25% to UHI; and 25% to the limited partners. During the first year of operation of the cardiac catheterization laboratory, the Partnership earned a profit of approximately $100,000. PPGH's cardiac catheterization laboratory began operation on April 29, 1988, after the area of the hospital in which it is located received less than $50,000 worth of renovation work. Two-hundred and forty-eight outpatients received cardiac catheterizations at the laboratory in the first twelve months of its operation. During the thirteenth month of its operation, cardiac catheterizations were done on an additional 22 outpatients. Of the 270 outpatients who received cardiac catheterizations during the first thirteen months of the laboratory's operation, only one was a Medicaid patient. The overwhelming majority of outpatients who have received cardiac catheterizations at PPGH's laboratory have been from southwest Broward County and have been referred to the laboratory by Dr. Horgan and Dr. Schiff. Dr. Joseph S. Horgan, M.D., P.A., and Dr. Barry H. Schiff, M.D., P.A., are the exclusive providers of cardiac catheterization services at PPGH's laboratory pursuant to a professional services agreement they entered into with the Partnership. Under the agreement, only "physicians that are associated with, employed or otherwise engaged under contract with" these two Florida corporations run by Dr. Horgan and Dr. Schiff, respectively, may use the laboratory. Dr. Horgan and Dr. Schiff therefore have the sole authority to determine who may perform cardiac catheterizations at PPGH's laboratory. They also serve as co-medical directors of the laboratory and, in these capacities, are responsible for the development and implementation of all policies pertinent to the operation of the laboratory. To date, only Dr. Horgan and Dr. Schiff have performed cardiac catheterizations at the laboratory. A third invasive cardiologist, however, will soon join Dr. Horgan and Dr. Schiff in providing such services at the hospital. The hospital's laboratory will be closed to all other invasive cardiologists. Dr. Horgan and Dr. Schiff charge $950 for a routine/diagnostic right or left heart catheterization and $1,175 for a routine/diagnostic right and left heart catheterization. These charges are consistent with the provision of the professional services agreement with the Partnership which requires that their fees "be competitive with the usual and customary fees charged in the community for similar services." Under the agreement, Dr. Horgan and Dr. Schiff are entitled to keep the fees they receive for the professional services they render. Most of Drs. Horgan's and Schiff's patients receive a right and left heart catheterization. As a result, they average 1.8 procedures per patient and their average charge per patient is $1,100. Unlike the invasive cardiologists who practice at Memorial's laboratory, Dr. Horgan and Dr. Schiff do not utilize radiologists to assist them in interpreting the angiograms they produce. Dr. Horgan and Dr. Schiff have proven to be highly competent and skilled invasive cardiologists and they offer high quality care to the outpatients they catheterize at PPGH's laboratory. There have been no moralities at the laboratory and only a few outpatients have experienced complications after being catheterized. Furthermore, approximately 91% of the catheterizations performed at the laboratory reveal some abnormality. This high rate of abnormal catheterizations suggests that Dr. Horgan and Dr. Schiff are exercising sound judgment in referring outpatients to the laboratory, as opposed to making these referrals without justification. In the professional services agreement with the Partnership, Dr. Horgan and Dr. Schiff have agreed "not to provide outpatient cardiac catheterization and peripheral vascular procedure services within Broward or Dade Counties, Florida for a two (2) year period after the commencement of the term of this Agreement [at any facility other than PPGH] except that [they) shall continue to provide such services at Plantation General Hospital, Florida Medical Center, University of Miami, Jackson Memorial Hospital and Cedars Medical Center of Miami." Most of the cardiac catheterizations that Dr. Horgan and Dr. Schiff perform are done on an outpatient basis. They do cardiac catheterizations on an inpatient basis only if the patient's medical condition warrants. They perform these inpatient cardiac catheterizations at Florida Medical and Plantation General. Between May 1, 1988, and April 30, 1989, they performed inpatient cardiac catheterizations on about 125 to 150 patients in these two facilities. Florida Medical and Plantation General are each within a half hour driving time of PPGH. Florida Medical offers open heart surgery and routine/non-emergency angioplasty. Plantation General has received preliminary approval from Respondent to provide open heart surgery services. Dr. Horgan's and Dr. Schiff's patients receive good care at Florida Medical and Plantation General. In addition to performing these inpatient cardiac catheterizations at Florida Medical and Plantation-General, during the one year period ending April 30, 1989, they also referred approximately 160 patients to Memorial for cardiac catheterization services. If Petitioner had the certificate of need that it is seeking in the instant case, none of these referrals would have been made. When they are performing cardiac: catheterizations at PPGH, Dr. Horgan and Dr. Schiff are assisted by a highly qualified and well-trained support staff consisting of a catheterization technician and three Registered Nurse's, one of whom is the staff director. All four staff members are employees of Petitioner, not the Partnership. Their combined annual salaries total about $119,000. Collectively, they receive approximately another $36,000 from Petitioner in fringe benefits. The Partnership reimburses Petitioner for monies expended “0 compensate these staff members for the work they perform in PPGH's cardiac catheterization laboratory. These staff members, however, do not work full-time in the laboratory. They are also assigned to other-areas of the hospital, most notably the intensive care unit. The majority of cardiac catheterization laboratories in Broward and Dade Counties have support staffs similar in size to the support staff assigned to PPGH's laboratory. The equipment in PPGH's cardiac catheterization laboratory was purchased by the Partnership from Dr. Horgan at Dr. Horgan's cost. Dr. Horgan paid approximately $250,000 for the equipment when he purchased it from EWA Industries, Inc., shortly before the opening of the laboratory. A portion of the money Dr. Horgan used to pay for the equipment came from a loan he received from Petitioner. At the time of its original purchase, the equipment was, for the most part, newly reconditioned. The equipment is not "state-of-the-art." It lacks certain features that are available on other equipment, such as digital/computer analysis capability. These features, however, are of relatively insignificant value. Despite lacking these features, the equipment in PPGH's outpatient cardiac catheterization laboratory is more than adequate, as evidenced by the high quality of Dr. Horgan's and Dr. Schiff's angiograms. Furthermore, although the equipment is made of parts manufactured by different manufacturers, obtaining parts for repair is not a major problem. They are readily available from EWA, which is based in Miami. In addition, there are two distributors and service centers located in Broward County from whom replacement parts may be obtained. Although PPGH has the medical and support staff and the equipment, as well as the ancillary services, necessary to provide routine/diagnostic cardiac catheterization services to inpatients at the hospital, it has not been authorized to do so by Respondent. PPGH's inability to offer these inpatient services places it at a competitive disadvantage relative to those facilities in the county that are authorized to provide these services. For instance, it makes it more difficult for PPGH to compete for contracts with health maintenance organizations and other third party payers. More significantly, PPGH's competitors offering inpatient cardiac catheterization services are able to capture patient revenues that would otherwise be received by PPGH if it were able to provide such services. PPGH's situation, however, is not unique. The majority of hospitals in Broward County are not authorized to offer inpatient cardiac catheterization services. Moreover, even though its competitive position would be enhanced if it were able to offer such services, its inability to do so does net threaten its survival as a health care facility in the Broward County market. If an inpatient at PPGH needs a routine/diagnostic cardiac catheterization that, because of the patient's unstable medical condition, cannot be performed on an outpatient basis, the patient must be transferred to another facility that is authorized to provide inpatient cardiac catheterization services. During fiscal year 1988, PPGH transferred 106 such patients to other facilities to receive inpatient cardiac catheterizations. Even if PPGH had been able to provide inpatient cardiac catheterization services to these patients, some of them would have had to have been ultimately transferred to another facility in any event to receive routine/non- emergency angioplasty or open heart surgery. Patients transferred from PPGH to another facility to receive cardiac catheterizations on an inpatient basis are generally transported by ambulance. A round-trip ambulance ride from PPGH typically costs between $500 and $700. In addition to increasing these patients' costs, such transfers may also cause them to experience additional stress. Clearly, in hindsight, it can be said that these transferred patients would have been better off if they had been initially admitted to a facility with inpatient cardiac catheterization capability instead of PPGH. Unfortunately, however, it is often difficult to determine at the time of admission whether a patient will need cardiac catheterization services. Furthermore, there are occasions where a patient arrives at PPGH's emergency room in such a medically unstable condition that he must wait at the hospital until his condition improves before he can be transported to another facility. It is not uncommon for Dr. Horgan's and Dr. Schiff's patients who need to be transferred from PPGH to receive an inpatient cardiac catheterization to have to wait two or three days before there is an opening in the cardiac catheterization laboratory schedule at Florida Medical or Plantation General that is convenient to them and their physician. During this time, these patients remain at PPGH, thus increasing the length of their stay there and they undergo expensive diagnostic testing designed to provide information that may be useful in managing these patients until they are able to be transferred and catheterized. While such scheduling problems have been experienced in the past, the situation should improve when the laboratories at Imperial Point and Humana Bennett become operational. Furthermore, there has been no Chowing that the patients who had to wait two or three or more days to be transferred from PPGH to Florida Medical or Plantation General could not have received such services at another existing provided, such as Memorial, had they so desired. Patients of Dr. Horgan and Dr. Schiff have died at PPGH while waiting to be transferred to another facility to receive an inpatient cardiac catheterization. A significant number of these patients could have survived had they received an emergency cardiac catheterization and angioplasty. Although the necessary equipment and staff were available at PPGH to perform these procedures, these procedures were nonetheless not performed. Because these were emergency situations where the 34 patients' lives were threatened, PPGH's lack of a certificate of need did not preclude Dr. Horgan and Dr. Schiff from performing these procedures at PPGH. Petitioner's Application for a Certificate of Need Approximately five months after the first outpatient cardiac catheterization procedure was performed at PPGH, Petitioner submitted an application for a certificate of need to provide inpatient cardiac catheterization services at the facility. Petitioner proposes to use, in providing these services, the same laboratory, equipment and staff it now uses for its outpatient program. The application estimates that the total cost of the project will be only $10,000, which represents "the legal and consulting fees associated with the Certificate of Need Application." There will be no financing, refinancing, professional services, construction or equipment costs, according to the application. In estimating the total cost of the project, Petitioner does not include the costs that were incurred to commence operation of PPGH's outpatient cardiac catheterization program, notwithstanding that these costs were incurred in contemplation of the filing of the instant application. 11/ The application also contains an estimate of revenues and expenses for the first two years of operation of the proposed project. The estimate includes projected revenues and expenses attributable to both the inpatient and outpatient operations of the laboratory. Petitioner projects in its application that 532 patients (320 inpatients and 212 outpatients) will visit PPGH's cardiac catheterization laboratory the first year it is able to offer inpatient services 12/ and that 592 patients (355 inpatients and 237 outpatients) will visit the laboratory the following year. Given Dr. Horgan's and Dr. Schiff's track record 13/ and reputation and the financial interest they have in the successful operation of the laboratory, 14/ it is not unreasonable to believe that they will attract these projected numbers of patients to the laboratory. Moreover, they, along with the third invasive cardiologist who will soon join them, should easily b able to handle such patient case loads at the laboratory during reasonable hours of operation with the laboratory's existing support staff and equipment. In projecting the gross revenues that will be generated by the inpatients who visit the laboratory, Petitioner assumes that these inpatients will be charged an average of $4,935 per patient the first year and $5,176 per patient the second year. These charges are consistent with the average charges of existing providers in the county. With respect to outpatients, Petitioner assumes that they will be charged on the average $2,300 per patient the first year and $2,415 per patient the second year. These charges are consistent with the laboratory's current average charge per outpatient. In view of the foregoing, Petitioner's projections in its application regarding gross revenues are reasonable. Of the patients that will visit the laboratory during the first two years of the inpatient program, Petitioner projects in its application that 2% will be Medicaid recipients and 3% will receive charity or free care. In view of PPGH's past performance in these areas, it appears unlikely that these percentages will be realized.15/ Accordingly, Petitioner's projections in its application regarding the deductions from gross revenues for Medicaid contractual allowances and charity care are unreasonably high. The projections made by Petitioner regarding direct and indirect expenses, in the aggregate, are not unreasonably low, notwithstanding that the application's statement of projected revenues does not make specific reference to certain expense items relating to inpatient care, such as nursing care and food supply costs. If anything, Petitioner has overestimated total expenses.16/ Providing only outpatient services, which generate less net income per patient than do inpatient services, the laboratory at PPGH returned a profit of approximately $100,000 in its first year of operation. The profitability of the laboratory will likely increase, as Petitioner projects, if it is able to offer inpatient, in addition to outpatient, services. In both the short-term and the long-term, Petitioner' proposal to provide such services is financially feasible. As evidenced by the attachments to Petitioner's application, as supplemented in response to Respondent's October 13, 1988, omissions letter, PPGH has transfer agreements with St. Francis Hospital and Florida Medical, both of which are within thirty minutes driving time of PPGH and have open heart surgery capability. Potential Impact of Granting the Application While Petitioner will benefit if its application is granted, the same cannot be said for existing providers of 16 For example, Petitioner allocates the entire salary of each of the four support staff members to the cardiac catheterization laboratory, even though these employees also work in other parts of the hospital. 38 inpatient cardiac catheterization services in Broward County. They will have to contend with another effective competitor seeking a share of the already highly competitive Broward County inpatient cardiac catheterization market. Collectively, the existing facilities will lose inpatient cardiac catheterization patients and net revenues they otherwise would have had if the laboratory at PPGH did not offer inpatient services.17/ Memorial will be among those `facilities suffering the greatest such losses. While it is difficult to predict the precise extent of these losses, they no doubt will be significant and therefore adversely impact Memorial's ability to provide charity care. At the very least, Memorial will lose to PPGH the inpatient cardiac catheterization patients that Dr. Horgan and Dr. Schiff now refer to Memorial's laboratory and the net revenues these patients generate. As previously mentioned, Dr. Horgan and Dr. Schiff referred 160 patients to Memorial's laboratory during the year ending April 30, 1989.96. Routine/non-emergency angioplasties and open heart surgery will not be performed at PPGH if Petitioner's application is granted. Accordingly, Memorial will not lose to PPGH any patients requiring these services as a result of the granting of the application. Although patients at PPGH who require routine/diagnostic inpatient cardiac catheterization services will not have to be transferred to another facility to receive inpatient cardiac catheterizations if the application is granted, it will still be necessary to transfer patients needing routine/non-emergency angioplasty and open heart surgery. With the advent of an inpatient cardiac catheterization program at PPGH, the hospital will attract, in far greater numbers than it does presently, individuals who require, not only inpatient cardiac catheterization services, but also routine/non emergency angioplasty or open heart surgery and who therefore must be transferred to another facility. Therefore, there likely will be more, rather than fewer, total transfers of patients than there would be if PPGH did not offer inpatient cardiac catheterization services.18/ Although cardiac catheterization support staff are generally difficult to recruit and retain, the granting of the instant application will not make it any more difficult for existing providers in Broward County to attract and keep such staff members inasmuch as Petitioner already has a support staff assigned to its cardiac catheterization laboratory at PPGH and it does not intend to expand its staff if it is given authorization to provide services at the laboratory on an inpatient basis. Regardless of whether Petitioner's application is granted, the adult population of Broward County requiring inpatient cardiac catheterization services will be able to receive such services from existing and approved providers in the county, which have the collective capacity to meet the population's demand for these services. It is more efficient to make greater use of the current collective capacity of these providers than to add to the county's overall capacity to serve cardiac catheterization inpatients. Furthermore, there is no reason to believe that PPGH will provide quality of care appreciably different from that offered by any existing or approved inpatient cardiac catheterization provider. Even if Petitioner's application is denied, patients of Dr. Horgan and Dr. Schiff who live in the area surrounding PPGH will still be able to receive routine/diagnostic cardiac catheterizations from these two invasive cardiologists, albeit at a facility that is slightly further from their homes and Dr. Horgan's and Dr. Schiff's offices than is PPGH. If an inpatient cardiac catheterization program is established at PPGH, the program's charges will be comparable to those of its competitors. They will neither be excessive, nor unusually low, in relation to those of other programs. Accordingly, approval of the program will have no significant impact on costs and patient charges. Florida Administrative Code Rule 10-5.O11(1) Respondent has adopted procedures governing its review of applications, such as Petitioner's, for certificates of need authorizing the establishment of an inpatient cardiac catheterization program. These procedures are found in Florida Administrative Code Rule 10- 5.011(1)(e).41 Respondent published notice in the April 22, 1988, edition of Florida Administrative Weekly of the amendments it proposed to make to the rule as it existed at that time. (The version of the rule that Respondent sought to amend Bill be referred to hereinafter as the "old rule.") These proposed rule amendments were the subject of rule challenge petitions filed with the Division of Administrative Hearings. The petitions were voluntarily dismissed after the challengers and Respondent negotiated a settlement, pursuant to which Respondent made certain modifications to the proposed amendments to Rule 10- 5011(1)(e). Among the modifications was the addition of the following language relating to the intent of the rule: It is the intent of the department to allocate the projected growth in the number of cardiac catheterization admissions to new providers regardless of the ability of existing providers to absorb the projected need. In addition, the prefatory language of the provision relating to need determination was modified to read as follows: In order to assure patient safety and staff efficiency, to foster competition among providers, and to achieve maximum economic use of existing resources, the following criteria shall be considered in the approval of Certificate of Need applications for new adult cardiac catheterization programs. The minimum annual projected net program volume need for the establishment of a new adult cardiac catheterization program shall be at or exceed 300 admissions for the service planning area. Applicants shall demonstrate that they will be able to reach an annual program volume of 300 admissions within 2 years after the program becomes operational. Notice of these changes and the other modifications that were made to the April 22, 1988, proposed rule amendments was published in the July 29, 1988, edition of Florida Administrative Weekly. Eleven days earlier, these proposed rule amendments, as modified, (hereinafter referred to as the "new rule") had been filed with the Secretary of State. In August 1988, the new rule was challenged on the ground that Respondent had not complied with the procedural requirements of Section 120.54, Florida Statutes, in making changes to the proposed rule amendments originally published on April 22, 1988.19/ The hearing officer assigned to these cases treated the rule challenge petitions as having been filed pursuant to Section 120.54, Florida Statutes, rather than Section 120.56, Florida Statutes, notwithstanding that the new rule had been filed with the Secretary of State more than 20 days prior to the filing of any of these petitions. Following a hearing on the matter, the hearing officer, on June 29, 1989, entered a final order holding that "the amendments to paragraph 2 (h), paragraph 3(c) III, and paragraph 6(a) and the amendment regarding the definition of `inpatient visit' are an invalid exercise of delegated legislative authority, because they were adopted without adhering to the proper procedures for adoption delineated in Section 120.54, Florida Statutes." On or about July 27, 1989, Respondent appealed the hearing officer's final order to the First District Court of Appeal. The appeal is still pending. Since August, 1988, Respondent has been applying the new rule in evaluating inpatient cardiac catheterization certificate of need applications. It applied the new rule in making its preliminary determination to deny Petitioner's application, which was in the first batching cycle after the effective date of the new rule.20/ Although the packet of application materials Respondent sent to Petitioner did not contain any express indication that the new rule would be applied in evaluating its application, Petitioner conceded in its completed application that it had "been informed [through other means) by [Respondent) that the [new rule would] likely be used in evaluating this CON application." In view of this advisement, Petitioner addressed in its application the various provisions of the new rule as they related to its application. The State Health Plan Issues relating to cardiac catheterization are discussed in the 1985-1987 State Health Plan. Among such issues is that of minimum case loads. Regarding this issue, the plan contains the following discussion: Up until 1977 the literature showed a consensus on the need for minimum case loads. Since 1977, expert opinion has become more divided on the issue with many provider representatives advocating that the standards now reflected in federal and many state laws are no longer necessary and justifiable. However, a general opinion among the medical profession is that a certain minimum number case load is essential to assure quality results. A number of complications can occur in catheterization programs if all personnel are not experienced and active. Studies may have to be repeated because inadequate data were received. This could result in unnecessary exposure of patients to radiation and hazards caused by the injection of of engaged contrast materials and the manipulation catheters. The established federal and state minimum standards of 300 procedures annually for adult and 150 for pediatric cardiac catheterization laboratories are believed to be adequate to maintain the expertise of the professional team in this highly specialized service. The plan also addresses the "concern surrounding. . . the physical proximity and the relationship between the [cardiac catheterization] diagnostic facility and a cardiovascular surgical program." It notes that the "Inter-society Commission on Heart Disease Resources (ISCHDR) stresses the need for a very close relationship between the two services;" "national health planning guidelines support this emphasis through a recommendation that no new cardiac catheterization unit be opened in any facility not providing open heart surgery;" and the "Florida rule requires that cardiac catheterization laboratories where coronary angioplasty (e.g., plastic surgery upon blood vessels) is performed must be located in health care facilities which also provide open heart surgery." One of the goals of the State Health Plan is to ensure the appropriate availability of cardiac: catheterization services at a reasonable cost. An objective of the plan is to "maintain an average of 600 cardiac catheterization procedures per laboratory in each district through 1990." The project proposed by Petitioner in the instant case conforms with this goal and objective to the extent that the services offered at PPGH will be competitively priced and that it is likely that the laboratory at PPGH will average at least 600 procedures annually. Local Health Plan The 1988 District X Comprehensive Health Plan contains the following analysis and recommendation with respect to the provision of cardiac catheterization services in Broward County: AVAILABILITY AND ACCESSIBILITY The hospitals offering cardiac catheterization services are well located throughout the County for geographic accessibility. Financial barriers continue to raise questions about accessibility of these services to the poor. QUALITY All of the facilities offering cardiac catheterizations in Broward County are providing in excess of the minimum number of procedures recommended.21/ RECOMMENDATION 1 Applicants for Certificate of Need approval should document either their intention and/or experience in meeting or exceeding the standards promulgated by the appropriate national accreditation body and by HRS. RECOMMENDATION 2 Applicants proposing to initiate or expand cardiac catheterization must make those services available to all segments of the population regardless of the ability to pay. RECOMMENDATION 3 Outpatient cardiac catheterization services should continue to be regulated under the Certificate of Need program. Petitioner has demonstrated that the inpatient cardiac catheterization program it proposes to establish at PPGH will meet or exceed the accreditation standards referred to in Recommendation 1 of the plan. Petitioner's stated policy is to make the services of PPGH available to all segments of the population regardless of their ability to pay. Petitioner's past performance in the area of indigent care suggests, however, that Petitioner may not be firmly committed to implementing this policy. The suggestion is also made in the plan that "[a)11 else being equal applications to establish new cardiac catheterization laboratories in Broward County in facilities with existing open heart surgical capability will receive priority - when being considered for certificates of need."
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Respondent enter a final order denying Petitioner's application for a certificate of need to establish an inpatient cardiac catheterization program at Pembroke Pines General Hospital. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 12th day of January, 1990. Administrative Hearings Parkway 32399-1550 of the Administrative Hearings January, 1990. STUART M. LERNER Hearing Officer Division of The DeSoto Building 1230 Apalachee Tallahassee, Florida (904) 488-9675 Filed with the Clerk Division of this 12th day of
Findings Of Fact At all times pertinent to the issues involved herein, Respondent was licensed as a registered nurse in the State of Florida under license number 01271-2. Respondent has been licensed as a registered nurse in Florida since 1951. Since that time she has taken various continuing education courses in the nursing profession and is up-to-date on her continuing education requirements. She began work as a registered nurse with Methodist Hospital in 1967 and remained there until she was terminated 15 years later in December, 1982. According to Mrs. Scott the patient in question here, Mrs. Thornton, was first assigned to her care on the morning of November 26, 1982. This was the first day she met her. Respondent came into Mrs. Thornton's room that morning to get the patient up and ready for the day. At this point, Mrs. Thornton said she did not feel well and was very weak. Instead of a bath, she asked merely for a light sponge bath. The patient was wearing a high-neck "granny flannel" gown which she would not allow the Respondent to remove even to give her the sponge bath. At that time, Mrs. Scott says, Mrs. Thornton had one IV tube connected to an Abbott pump. This IV was connected to the patient's right forearm. Mrs. Scott did not see nor did she know that Mrs. Thornton had a subclavian catheter installed. Mrs. Scott contends that when she did rounds with Dr. Eye in the afternoon of November 26, he advised her to discontinue the IV in Mrs. Thornton's arm because of puffiness of the arm where the IV was connected. When she went to do that, she states she noticed one suture on the inside of the patient's right arm just above the elbow which was not connected to the IV. She showed this to Dr. Eye, who told her to take it out. As a result, she removed the suture and took out the intravenous tube from the right arm. At this point, she asked Dr. Eye if he wanted to send it to the lab and he said no. As a result, she put the IV set and all other throwaways in the wastebasket. At this point, Dr. Eye gave her an oral order to apply warm compresses to the arm. This order was subsequently reduced to writing. Mrs. Scott categorically denied having removed a left subclavian catheter from Mrs. Thornton. In fact, because of the gown Mrs. Thornton was wearing, Mrs. Scott denies even knowing that such a catheter had been installed. In any case, she would not have removed it by herself, she says, because she had been taught never to remove a subclavian catheter without someone else being present. She contends the catheter she removed was not a CVP (central venous pressure) catheter, as she subsequently charted by mistake. In that regard, she wrote in her nurse's notes, she says, merely what Dr. Eye had written in his order as to the description of the catheter to be removed. Dr. Eye had indicated in his orders to "D/C central line", which meant to disconnect the central line catheter (here, the subclavian) and because of the tremendous confusion at the nurses' station at the time she wrote her notes, she put in the wrong procedure. The subclavian catheter in question here was installed by Dr. Nunn, Mrs. Thornton's surgeon, on November 19, 1982.. During the procedure he inserted a 20-gauge catheter into the patient through the left subclavian area. He did not install any other catheter of a similar size. Somewhat later, he received a call from Mrs. Thornton's physician, Dr. Garcia, regarding the fact that a portion of the catheter was still in the patient and as a result, he performed surgery to remove it. He found a part of the catheter outside the wall of the subclavian vein and the remainder still in the vein. The entire portion of the catheter that was left in the patient was removed and the patient recovered satisfactorily from the surgery. In this regard, the danger inherent in leaving a piece of a catheter like this one inside a patient is that the broken remains could cause blockage of either a coronary artery, or if in the vein, a venal blockage. A third possibility is that of infection though this is somewhat more remote. According to Dr. Nunn, there are various causes for a catheter to break. The catheter may be subjected to rough treatment. The catheter itself may be weak. The catheter could be cut by the person removing it when the suture holding it in place is cut, and, although quite unlikely, the catheter might be broken when it is passed through the needle used to insert it. In Dr. Nunn's experience going back to 1955, however, he has never seen an instance where part of a subclavian catheter was left in a patient by accident. Mrs. Grace E. Davis, Mrs. Thornton's daughter, recalls that on the day Mrs. Thornton was released from the hospital, Mrs. Davis had to wait for her in the waiting room while an additional procedure was accomplished prior to the discharge. As Mrs. Davis recalls, when they got home from the hospital, she asked her mother why they had had to wait and Mrs. Thornton said that it was for the purpose of removing the catheter in her heart through which she was getting nitroglycerin. According to Dr. Earl T. Cullins, who reviewed Mrs. Thornton's medical records, she was in the hospital from November 17 through December 6, 1982. The medical records for that period indicated that the only catheters, IV's, or CVP's in the patient on November 26 may have been an Abbott Intravenous in the right arm and a subclavian catheter on the left side. The records further reveal that Dr. Eye gave verbal orders to disconnect the centerline (catheter) on November 26 and the nurse's notes written by Mrs. Scott indicate that on November 26, a CVP (central venous pressure--centerline catheter) was discontinued by her. CVP insertions are generally made in the subclavian plane or through the jugular vein, with the subclavian insertion being preferred. The records are, according to Dr. Cullins, somewhat confusing. For example, he cannot tell from the records whether the subclavian catheter was -being used for medication or whether it was covered with a pressure dressing on November 26. In any event, the records do not indicate that the left subclavian catheter was removed. Instead, they show that a CVP line (centerline catheter) was removed. While he feels that they are one and the same, he cannot tell for certain whether or not they are. At no place do the records or nurse's notes refer to the two together or as one and the same. Dr. Cullins had much to say about the performance of many of the other professionals involved in this case. For example, he described Dr. Eye as a "spastic" personality and questions the order that Mrs. Scott received to "remove the line." Dr. Cullin feels that if there were two lines in place, it cannot be certainly determined from the notes as to which one she removed. He also contends that Dr. Nunn made a mistake when he inserted the subclavian catheter on November 19 by not taking an X-ray after insertion. Another difficulty with the records, according to Dr. Cullin, is in that they reflect the intravenous needle was inserted in the patient's right hand on November 18 and was thereafter moved from hand to hand until November 26 when all drugs, which required two IV's, were stopped. To Dr. Cullin this indicates that even though the records do not specifically show the second line (other than the fact that the intravenous needle is in the right hand) there had to be one from a medical standpoint. Dr. Cullin is convinced that since the incident took place late in the day, it would not be at all unusual for Mrs. Scott to have mischarted the removal of the intravenous needle from the hand as the CVP needle which is in the only entry relating to removal of any intravenous lines. Dr. Cullin also states that the medical records, which on November 25 reflect "IV site good", and the fact that on- November 25, the nurse's notes refer to a transfer of the patient from the intensive care unit with the CVP line intact, without any other intravenous lines being mentioned, does not mean that there were no other lines. In short, Dr. Cullin is stating that the records are so confused it is impossible to tell whether there was one, two, or more intravenous lines in Mrs. Thornton on November 26, and which one was removed by Mrs. Scott. Ms. Ann Halley, Director of Nursing at Methodist Hospital, became aware of the situation involving Mrs. Thornton when she received a phone call from Dr. Nunn, who had installed the catheter and who told her that when he saw Mrs. Thornton that morning for a follow-up check, about a week after her discharge from the hospital, an X-ray showed that a portion of the subclavian catheter he had installed was still in her chest. Mrs. Thornton was returned to the hospital that afternoon for removal of the remaining piece of catheter, at which time Ms. Halley called for the medical records. when she checked them over, she saw that Respondent was the one who allegedly had removed the catheter. She contacted Ms. Jan G. Headrick, the head nurse on the floor with Mrs. Scott on November 26. Ms. Halley and Ms. Headrick had a discussion with Respondent about the situation during which Respondent admitted she had removed the catheter. In fact, she stated that when she cut the suture, the catheter simply fell out. According to Ms. Halley, Respondent did not actually use the term "subclavian" in regard to the catheter in question. However, in her opinion, there was little indication that Respondent was confused as to which catheter was in issue. Mrs. Thornton's patient records, as they relate to the catheter issue, were reviewed by Dr. Eileen Austin, a consultant with many years experience in the field of nursing. Dr. Austin concluded that a subclavian catheter had been removed from Mrs. Thornton in part by a nurse and that the remaining portion left in at the time of initial removal was surgically removed. Her review of the records revealed that three catheters were inserted during the first period of Mrs. Thornton's hospitalization. These were: An intravenous line inserted in the Patient's right hand on November 18, 1982 initially, but which was restarted several times and moved from hand to hand until it was finally capped on November 22, 1982. A catheter of this nature is always less than one inch in length and is never anywhere near seven and a half inches in length. A sub-clavian catheter inserted on November 19, 1982 which is also inserted in a vein. The purpose of this one appeared, here, too for administering drugs. It is approximately twelve inches in length and was removed, according to the records, by Respon- dent on November 26, 1982. An arterial line installed on November 19, 1982 following inser- tion of the sub-clavian catheter described above. The purpose of this line was for the withdrawal of blood for blood gas determination. It is called an arterial catheter and the longest one Dr. Austin has ever seen is two and a half inches. On the basis of the above, it appears obvious that the only one of the three catheters inserted, according to the records, long enough to have been left in the patient, was the subclavian catheter. A subclavian catheter is inserted into the clavian vessel so that the tip of the catheter is near the heart. It is inserted just below the collarbone. The records here reflected no reference in the nurse's notes after Mrs. Scott indicated removal of the subclavian catheter except for two references to dry dressings over the entry area. According to Dr. Austin, the proper procedure for the removal of a catheter is for the nurse to clip the suture holding the catheter to the skin without cutting the catheter. Thereafter, the nurse withdraws the catheter very carefully and, upon complete withdrawal, compares the length of the portion withdrawn with that of the catheter inserted as described in the patient's records. If a piece is broken off inside the patient, the visual examination in this way will reveal that that taken out is shorter than that put in, thereby indicating that some was left in the patient. Here, according to Dr. Austin, the Respondent failed to exercise proper procedure in two areas: one, she failed to note the length of the catheter inserted so that a comparison with removal could be done and, two, she failed to inspect the tip of the catheter on removal. It should be smooth and round. Anything else indicates that the catheter was broken or cut and part was left therein. This must be immediately reported to the physician. In Dr. Austin's opinion, a nurse who would remove a catheter and fail to insure the entire item was removed, and thereafter fails to report that it was not all removed, is unprofessional and puts the patient in a life- threatening situation. Further, assuming that the Respondent's sole improper activity was in mischarting the actual catheter removed, as Respondent contends, this could constitute substandard performance itself. However, the right arterial catheter in Mrs. Thornton was removed on November 20, 1982 at approximately 2:45 a.m. by Randy G. Martin, the hospital supervisor for the 11 - 7 shift that evening. He removed this catheter because the nurse on duty at the time saw that it was bent and there was some concern that it might break or otherwise do harm. At the time of this operation, Mr. Martin noticed that Mrs. Thornton had a subclavian catheter in place. When the arterial catheter was removed, it was measured and examined to see that the edges were good and then saved for the physician to examine the next day. If this arterial catheter was removed on November 20, it could not have been there on November 26, as Respondent says. Dr. Eye gave certain orders to discontinue all intravenous medication on November 22, 1982. The doctor's orders are as follows: D/C central line Per. with other meds this way Warm heat to rt arm Penicillin 500 mg-p/o Q.I.D. Serum theophyllin 6 hours after dose (scratched out) Room air arterial blood gas Sunday am. D/C all IV medication Dr. Eye's orders O.K.'d w Dr. Garcia Respondent as was stated before, contends she did not remove the subclavian catheter but instead removed the arterial catheter in the right arm, thereafter inaccurately charting its removal as the CVP catheter. She said she did this because she merely quoted the doctor's order. Thorough consideration of the above evidence admitted both for and against the Respondent, considered in light of the inherent probabilities and improbabilities of the evidence, results in the inescapable conclusion that Respondent did in fact withdraw the subclavian catheter from Mrs. Thornton and, in doing so, failed to insure that the entire catheter was removed. As a result, a 5 to 6 centimeter long piece of the catheter was left in Mrs. Thornton's chest which was surgically removed several days later. It is neither alleged nor found that Mrs. Scott was responsible for the catheter breaking. However, the evidence is clear that when she removed the catheter she failed to take those steps necessary and dictated by proper nursing procedures to insure that the entire catheter was removed. An independent examination of Mrs. Thornton's medical records by Dr. Austin, who had no part whatever in the scenario as it was acted at the time in question, revealed that three catheters were inserted in Mrs. Thorton during the period of her initial hospitalization: the subclavian catheter in the left portion of her chest; the arterial catheter in the right arm; and the peripheral catheter in one or both hands from time to time. The arterial catheter was removed by Nurse Martin on November 20, 1982. The peripheral catheter was capped on November 22, 1982. As a result, the only catheter remaining in Mrs. Thornton on November 26, 1982 was the subclavian catheter. when that fact is considered, along with the fact that Mrs. Scott's initial notes, regardless of her current explanation for them, revealed that she removed the CVP catheter (here it should be noted that CVP catheter is, in this case, the same as subclavian catheter), the conclusion is inescapable that she is the individual who removed the subclavian catheter leaving a portion in the patient. There simply is no evidence aliunde Mrs. Scott's own statement that any other catheter remained in the patient on November 26, 1982. This is so notwithstanding the testimony of Mrs. Davis concerning what her deceased aged mother advised happened the day of her discharge. It is difficult to believe that hospital officials would remove a subclavian catheter from Mrs. Thornton on the morning she is released from the hospital and Mrs. Davis' testimony as to that issue is rejected.
Findings Of Fact THE PARTIES Petitioner, Englewood Community Hospital, Inc., d/b/a Englewood Community Hospital (Englewood), is a 100 bed general acute care hospital located in Englewood, Florida. Englewood is owned and operated by Columbia/HCA Health Care (Columbia), a for-profit corporation. Englewood operates an outpatient cardiac catheterization laboratory in a mobile unit located in the hospital parking lot. Patients and some physicians have been reluctant to use the mobile unit. Venice Hospital, Inc. (Venice) is a not-for-profit, community owned hospital with 342 beds. Venice operates an inpatient cardiac catheterization laboratory for invasive cardiac diagnostic procedures. Venice has unsuccessfully applied twice for a certificate of need (CON) to provide open heart surgery. The Sarasota County Public Hospital Board (Sarasota Hospital Board) is a publicly elected, nine member organization, which is responsible for the operation and oversight of Sarasota Memorial Hospital (Memorial). Memorial is a 952 bed hospital with services including inpatient cardiac catheterization and open heart surgery. Memorial is located in Sarasota, Florida. Englewood, Venice, and Memorial are all located in Sarasota County which is in the Agency for Health Care Administration Planning District 8. There are nine other inpatient cardiac catheterization programs in District 8. The existing inpatient cardiac catheterization programs are distributed as follows: Sarasota County (3); Charlotte County (3); Lee County (4); Collier County (1). Respondent, Agency for Health Care Administration (Agency), is the state agency which administers CON laws in Florida. The Agency published on February 4, 1994, a fixed need pool projection for inpatient cardiac catheterization procedures, showing a need for three additional programs in District 8 for the batch in which Englewood's application was reviewed. This calculation counted an earlier application of Englewood as approved. THE PROJECT Englewood proposes to establish an adult inpatient cardiac catheterization laboratory, placing inside the hospital facility the equipment which is currently located in its mobile cardiac catheterization laboratory. Englewood timely filed the letter of intent, CON application, and response to omissions for CON Number 7663. The Agency originally denied the application because a previous application by Englewood for inpatient cardiac catheterization services had been granted. The previous application proposed to keep the equipment in the mobile unit and build a walkway from the mobile unit to the hospital facility. Englewood withdrew its application for the previous application. The Agency has filed an official notice of changing its position to support Englewood's CON Application Number 7663. NEED FOR THE PROJECT IN RELATION TO THE LOCAL AND STATE HEALTH PLANS The 1993 Florida State Health Plan provides four allocation preferences relevant to the review of the certificate of need applications to establish adult inpatient cardiac catheterization programs. Preference shall be given to an applicant who proposes the establishment of both cardiac catheterization services and open heart surgical services provided that a need for open heart surgery is indicated. Preference shall be given to an applicant proposing to establish a new cardiac catheterization program if the applicant can demonstrate that patients are currently seeking cardiac catheterization services outside the respective county or HRS district. Preference shall be given to hospitals with a history of providing a disproportionate share of charity care and Medicaid patient days in the respective acute care subdistrict. Qualifying hospitals shall meet Medicaid disproportionate share criteria. Preference shall be given to an applicant who agrees to provide services to all patients regardless of their ability to pay. Englewood has projected that charity and indigent care for cardiac catheterizations at less than 1.0 percent of total revenue. Given Englewood's past history, 1.0 percent of total revenue is a gross overstatement. At the final hearing, Englewood stated that it would not agree to condition the CON on Englewood providing charity and indigent care equal to 1.0 percent of the total revenue. The Agency's 1992 Hospital Financial Data showed that Englewood's reported charity and uncompensated care was approximately .09 percent and .06 percent of total revenues for fiscal years 1992 and 1993, respectively. Englewood has agreed to provide adult cardiac catheterization services to anyone in need without ability to pay; thus, Englewood is entitled to a partial preference for providing services to patients regardless of their ability to pay. Englewood has not demonstrated that it should receive a preference for the other three factors. The 1993 District 8 Allocation Factors Report addresses the following preferences relevant to the review of certificate of need applications to establish adult inpatient cardiac catheterization services. Preference shall be given to applicat- ions for new or expanded cardiac catheterization services that clearly indicate the impact of the proposed services on other health providers offering similar services in the same area. Preference shall be given to applicants which agree to provide services to all patients, regardless of their ability to pay. Englewood has agreed to provide services to all patients without ability to pay and is entitled to a partial preference for the second factor in the district plan. AVAILABILITY, QUALITY OF CARE, EFFICIENCY, APPROPRIATENESS, ACCESSIBILITY, EXTENT OF UTILIZATION, AND ADEQUACY OF LIKE EXISTING HEALTH CARE SERVICES IN THE SERVICE DISTRICT. Englewood's proposed inpatient cardiac catheterization program would not adversely affect the quality of care provided by the cardiac catheterization programs at Sarasota Memorial Hospital and Venice Hospital. Memorial has a comprehensive cardiac catheterization program. It operates three dedicated cardiac catheterization laboratories. The Memorial laboratories provide diagnostic catheterizations as well as all available therapeutic catheterization techniques. Prior to performing a diagnostic catheterization, cardiologists are able to determine with a high degree of confidence and reliability whether a patient with cardiovascular disease will require, during a particular hospitalization, therapeutic intervention, e.g. angioplasty or open heart surgery. Cardiologists rely on an array of sophisticated non-invasive diagnostic tests in making such determinations. When a cardiologist determines that a patient is not sufficiently ill to require therapeutic intervention, the patient will customarily receive a diagnostic catheterization on an outpatient basis. During the last several years, there has been a shift in Sarasota County from inpatient catheterization to outpatient catheterization. In fact, the Medicare program requires that Medicare patients receive outpatient catheterization, unless a patient's medical condition requires inpatient care. Normally only patients with unstable medical conditions receive inpatient cardiac catheterization. That group of patients is likely to require therapeutic intervention during the same hospital admission to resolve their medical problems. Between 80 to 90 percent of patients who receive inpatient cardiac catheterization receive therapeutic intervention during the same hospital admission. If an unstable patient presents at a facility which lacks the capability to perform therapeutic intervention, it is in the best medical practice to stabilize the patient and then transfer the patient to a facility which can perform both the diagnostic catheterization and the therapeutic intervention. If the unstable patient requires intervention in the form of angioplasty, it is in the patient's best interest to receive both the diagnostic and therapeutic procedures during a single visit to the cardiac catheterization laboratory. The provision of both procedures in one visit enhances comfort, safety, and efficiency. It is Memorial's practice to provide both types of services in one visit to the catheterization laboratory when possible. Adult inpatient cardiac catheterization programs are available within a maximum automobile travel time of one hour, under average travel conditions, for at least 90 percent of District 8's population. The Sarasota Hospital Board's policy is to provide cardiac catheterization services at Memorial to all residents without regard to their ability to pay. In its most recently completed fiscal year at the time of the final hearing, the Sarasota Hospital Board provided $268,000 of charity care and $720,000 of Medicaid care, related to cardiac catheterization patients. In its application, Englewood stated: "There is no evidence to indicate that the efficiency, appropriateness and adequacy of adult inpatient cardiac catheterizations services in District VIII are less than adequate." Each of the seven hospitals in Sarasota and Charlotte Counties, with the exception of Englewood, operate an adult inpatient cardiac catheterization laboratory. There is excess capacity at the existing cardiac laboratories in Sarasota and Charlotte Counties. A single cardiac catheterization laboratory can safely perform approximately 1500 cases annually. Three of the existing cardiac catheterization laboratories in Sarasota and Charlotte Counties operate a volume between 300-400 cases annually: Fawcett, St. Joseph's, and Doctors'. Fawcett is owned and operated by Columbia. Venice operates the existing laboratory closest to Englewood. Venice's catheterization laboratory has the capacity to perform 1,500 procedures annually. Over the last five years, the number of cases has grown from 500 to approximately 800, where it has leveled off, leaving almost half the laboratory's capacity unused. Venice's catheterization laboratory is available and accessible to Englewood residents. The catheterization laboratory at Venice has been serving Englewood patients and will continue to do so. Venice currently serves a significant share of the market in three of the six zip codes identified by Englewood as its service area. There is adequate capacity at the existing laboratories in Charlotte and Sarasota Counties to treat the existing volume of cardiac catheterization patients, as well as the volume that Englewood proposes to serve. Patients in the Englewood area will not experience serious problems in obtaining inpatient cardiac catheterization services in the absence of Englewood's proposed program. Under these circumstances it is more appropriate and less expensive to the health care system as a whole to fully utilize existing catheterization laboratories. ABILITY OF APPLICANT TO PROVIDE QUALITY CARE AND APPLICANT'S RECORD OF PROVIDING QUALITY OF CARE Englewood has a record of providing appropriate quality of care to its patients. Englewood is fully accredited by the Joint Commission on Accreditation of Health Care Organizations. Englewood submitted a written protocol for transfer of emergency patients to a hospital providing open heart surgery within 30 minutes travel time by emergency vehicle under average travel conditions as part of its application. Englewood's cardiac catheterization program policies and procedures manual is appropriate. The equipment which Englewood proposes for its inpatient cardiac catheterization laboratory was purchased from Southwest Florida Regional Medical Center in Fort Myers, Florida, where it had been used successfully for approximately one year. The equipment is currently being used in Englewood's outpatient cardiac catheterization laboratory. The equipment uses analog imaging, and includes video playback to allow instant review. Digital imaging is newer technology than analog imaging and allows the image of the cardiac areas to be magnified, processed and measured while the physician is performing the catheterization. Regardless whether analog or digital imaging is used the physician will rely on a 35mm film which is made during the catheterization procedure to make the diagnosis. The digital imaging equipment is more expensive than the analog imaging equipment. Although, digital imaging is nice to have, it is not necessary to provide quality cardiac catheterization services. Englewood has plans to move the outpatient cardiac catheterization laboratory from the mobile unit to inside the hospital facilities. As of the date of the final hearing, Englewood had not begun construction of this project to relocate the outpatient laboratory. The cost of renovating space for the cardiac catheterization laboratory and moving the equipment inside is estimated to be $400,000. Two or three people are required to assist the physician perform an inpatient cardiac catheterization. One person circulates, moving outside the sterile area surrounding the procedure table to get medications, log information and generally oversee and monitor the patient's condition. The staff should include cardiovascular technicians, who may be but do not have to be nurses. Englewood proposes the following staffing and salary: FTE'S YEAR 1 HOURLY RATE SALARIES FTE'S YEAR 2 HOURLY RATE SALARIES RNS 3.0 19.92 118,061 5.0 19.68 204,672 Nurse Manager 1.0 0 1.0 0 Cath Lab Tech 2.0 14.43 60,029 2.0 15.01 62,442 Subtotal 6.0 178,090 8.0 267,114 Lab Director 1.0 0 1.0 0 Subtotal 1.0 0 1.0 0 Unit Secretary 0.5 7.96 8,278 1.0 8.28 17,222 Subtotal 0.5 8,278 1.0 TOTAL 7.5 186,368 10.0 284,336 The radiology technician's job is to assist with quality assurance, help maintain and oversee the equipment, and monitor safety. The radiology technician does not have to be present in the laboratory during procedures. Englewood already employs a radiology technician in its radiology department. This technician has had training for cardiac catheterization laboratory duties. Dr. DeGuia currently performs the duties of a medical director and will continue to do so if the inpatient laboratory is established. The nurse manager who is currently employed as the nursing manager for the intensive care, progressive care and outpatient will be utilized in the inpatient laboratory as well. The staff will be cross trained in each position's functions. Englewood will have the assistance of Fawcett Memorial Hospital and Southwest Heart Institute in staffing and training when needed. Englewood's proposed staffing will provide an adequate number of properly trained personnel. The salaries Englewood proposes to pay its staff are reasonable and competitive. UTILIZATION In its application, Englewood projects that the first year of operation of the inpatient laboratory, there will be a total of 236 cardiac catheterizations performed consisting of 132.9 inpatients and 103.1 outpatients. In the second year of operation, Englewood projects the total cardiac catheterizations to be 345 with 194.3 being inpatient and 150.7 being outpatient. Englewood has included six specific zip code in its service area. Based on Englewood's experience with MDC 05 diagnoses1, Englewood's expert witness Scott Hopes opined that Englewood's market share for diagnostic cardiac catheterization services would be as follows: ZIPCODE MARKET SHARE 33947 53.1 percent 33981 43.8 percent 34223 50 percent 34224 65.2 percent 34287 6.4 percent 34293 2.0 percent In order to project inpatient utilization of the Englewood laboratory, it is appropriate to rely upon the historical pool of patients in the Englewood service area who have received inpatient catheterization during a hospital admission, without receiving angioplasty or open heart surgery during that admission. Englewood proposes to serve primarily "low risk" inpatients who are not expected to require intervention during that hospital admission. For the period July 1991 through June 1992, there were 490 inpatient cardiac catheterizations performed on patients residing in Englewood's service area. For the period July 1992 through June 1993, there were 479 inpatient cardiac catheterizations performed on patients in the same service area. In its application, Englewood applied an aggregate market share to the total number of inpatient cardiac catheterizations performed on the residents of the proposed service area. This method distorts the projected number of inpatient procedures which could be performed by Englewood because of the variability of the market shares in each zip code. Based on the method employed in Englewood's application, Englewood would have performed 145 and 160 inpatient cardiac catheterizations in the 1991-1992 and 1992-1993 periods, respectively. When one applies the actual market share by zip code to the actual number of procedures performed on patients from each zip code, a more accurate projection based on historical data can be made as shown in the chart below. ZIP CODE MARKET SHARE 1991-1992 CATHS ENGLEWOOD SHARE 1992-1993 CATHS ENGLEWOOD SHARE 33947 53.1 percent 21 11 18 10 33981 43.8 percent 35 15 29 12 34223 50.0 percent 68 34 72 36 34224 65.2 percent 42 27 34 22 34287 6.4 percent 145 9 146 9 34293 2.0 percent 179 4 180 4 100 93 Englewood performed 50 outpatient cardiac catheterizations in 1994. This low utilization is based on the physical location of the outpatient facility in the hospital parking lot and the lack of marketing. Fifty procedures is not a representative number of the outpatient procedures which Englewood could expect if the laboratory was located inside the hospital and the program was marketed effectively. The application states that in 1992 the percentage of inpatient cardiac catheterization procedures of the total cardiac catheterizations performed in hospitals with an inpatient program in District 8 was 56.33 percent.2 Thus based on Englewood's market share by zip code, the total amount of cardiac catheterizations which Englewood could have expected in 1991-1992 and 1992-1993 would have been 177 and 165, respectively. In its application, Englewood uses three different methodologies to project the number of cardiac catheterizations Englewood could expect during its first and second year of operation. Method 1 (pgs. 28 and 32 of the Response to Omissions) subtracts the amount of catheterizations Englewood would have expected in 1991-1992 from the amount it would have expected in 1992-1993 and increases the projection each year by this amount to project the number of catheterizations for the first two years of operation. Using Method 1 would result in a decrease in the number of cardiac catheterizations each year because the number of cardiac catheterizations declined by 12 procedures from 1991-1992 to 1992-1993. Method 2 (pgs. 30 & 32 of the Response to Omissions) employs an annual increase of 8 percent. This increase is the lowest annual percentage increase of cardiac catheterizations in District 8 from October 1987 to September 1993. Using this method would result in a projection of 208 procedures for 1996 and 224 procedures for 1997. Method 3 (pgs. 31 & 32 of the Response to Omissions) uses a 12.78 percent annual increase based on the average annual percentage increase of cardiac catheterizations in District 8 from October 1987 to September 1993. Using this method would result in a projection of 237 procedures for 1996 and 267 procedures for 1997. Using any of the three methods to project the number of procedures to be performed in the second year, Englewood will not perform a minimum of 300 catheterization procedures by the end of the second year of operation of the inpatient laboratory. The Intermedic Health Center is a large multi-specialty group with a five cardiologist heart group based in Port Charlotte. Intermedic has offices in Englewood. The heart group was to begin regular office schedules in Englewood in February, 1994. The group plans to recruit one or two additional physicians to staff the office. At the time of final hearing the physicians of Intermedic's heart group performed cardiac catheterizations at hospitals other than Petitioner's because some of the cases were inpatient and some of their outpatients were uncomfortable with a portable laboratory. For 1995, Intermedic projected 90 to 100 cases; thereby resulting in some increase in business with Englewood relating to cardiac catheterizations. The population in the Englewood service area consists of a large number of residents who are 65 or older. This segment of the population is more likely to have a high demand for cardiac catheterization than a younger segment of the population. The 65 or older category is a fast growing part of the population in the Englewood service area. IMMEDIATE AND LONG-TERM FINANCIAL FEASIBILITY OF THE PROGRAM Englewood has the financial ability to fund the construction of the project. The pro forma statement contained in the CON application is flawed. Englewood has double counted a profit layer that it is already enjoying from inpatients that it transfers to an inpatient catheterization provider. Englewood does not account for the contribution margin attaching to Englewood's inpatient portion of their care before transfer. In projecting its revenues from outpatient utilization, Englewood has included in its figures outpatient catheterizations it would perform whether or not its application is approved rather than basing their pro forma on the incremental difference attributable to approval of an inpatient program. The projected revenues contained in the pro forma are suspect. First, the proposed procedure charges shown on the outpatient service revenues page of Englewood's application are high. It is unusual to find outpatient procedure charges that are higher than the inpatient procedure charges. In Table 7 in the application, Englewood asserts that patient days for Medicaid and private pay will net the highest revenues per patient day. Typically those two payor sources are at the bottom of the list of revenue producers than the top. Englewood's pro forma understates revenue deductions by assuming Medicaid and private pay reimbursement that is unrealistic and by failing to take into account anticipated growth in managed care. Englewood's financial expert agreed that managed care will see significant growth over the next five years. Because the pro forma overstates net revenue, it understates revenue deductions. Englewood has understated expenses. The marginal cost per case is understated, relocation expenses are understated, and the nurse manager's time is not allocated to the expense side of the pro forma. The State Agency Action Report also calls into question the adequacy of the expenses in Englewood's pro forma.3 Based on the flawed pro forma, Englewood has not demonstrated that the project is financially feasible. OTHER STATUTORY CRITERIA The costs and methods of the proposed construction, including consideration of the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction are reasonable. The proposed design of Englewood's inpatient cardiac catheterization laboratory is reasonable and appropriate. Englewood submitted the list of capital projects required by Section 408.037(2)(a) and (b), Florida Statutes (1993); the audited financial statements required by Section 408.037(3), Florida Statutes (1993); and the resolution required by Section 408.037(4), Florida Statutes (1993). I. STANDING OF VENICE AND MEMORIAL If Englewood were to establish an inpatient cardiac catheterization laboratory, both Venice and Memorial would have patients diverted from their programs to Englewood's. Based on the projections contained in Englewood's application, Venice would lose 82 catheterization procedures in the second year of operation of Englewood's proposed program, resulting in a net profit lose of $234,000. Although Englewood's application projections are inaccurate, the application does contemplate that Venice would lose procedures as a result of the implementation of Englewood's proposed program. In order for Englewood to reach its projected volume of procedures, approximately 40 to 50 procedures would have to be redirected annually from Memorial to Englewood. There is also a strong potential that Memorial would lose angioplasty and open heart surgery cases as well. Southwest Florida Regional Medical Center (SWFRMC), in Fort Myers, is owned by Columbia. It is a tertiary cardiovascular referral center for other Columbia hospitals in Southwest Florida. The development of an inpatient cardiac catheterization laboratory at Englewood would assist in the development of referral patterns from the Englewood area to SWFRMC for angioplasty and open heart surgery. It would be in Columbia's interest to encourage utilization of SWFRMC's cardiovascular services by patients residing in the Southwest Florida area.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying the application of Englewood Community Hospital, Inc., d/b/a Englewood Community Hospital's for Certificate of Need 7663 to establish an adult inpatient cardiac catheterization program. DONE AND ENTERED this 18th day of December, 1995, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND, 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 18th day of December, 1995.
Findings Of Fact Petitioners Flagler and St. Augustine have each applied for a CON to establish an inpatient cardiac catheter-ization program within HRS Service District IV. Each had the opportunity of responding to HRS' "omissions letter" for the cure of certain initial flaws. However, in its preliminary review of the applications, HRS denied both applicants and this proceeding followed. HRS initially denied Flagler's application, stating it had only partially complied with Sections 381.705(1)(a), (b), (i), (l), (n), and (2)(b) and (d) F.S. (1989) and Rule 10-5.011(1)(e)4.a, 4.c., and 8.b. F.A.C. HRS initially denied St. Augustine's application, stating it had only partially complied with Sections 381.705(1)(a), (b), (h), (i), (l), (n), and 2(b) and (d) F.S. and Rule 10-5.011(1)(e)4.a., 4.c., and 8.b. F.A.C. and that the applicant failed to demonstrate any compliance with Sections 381.705(1)(m) and (2)(a) F.S. Prior to formal hearing, the parties stipulated that there is a numerical need under Rule 10-5.011(1)(e)8. F.A.C. for one additional inpatient cardiac catheterization laboratory in HRS District IV for the applicable planning horizon for these applications. That planning horizon is January 1992. The parties further stipulated that both applicants have provided quality care; that, except for existing inpatient catheterization laboratories, there are no alternatives to the proposed facilities; that health manpower and management personnel are available for operation of the proposed programs; that the salaries listed on each application are reasonable; that the costs and methods of construction proposed are reasonable; that either applicant, if approved, would meet the scope of services, hours of operation, and health personnel requirements of Rule 10-5.011(1)(e) F.A.C.; and that St. Luke's Hospital in Jacksonville provides open heart surgery and is within one-half hour ambulance travel time from either applicant. It was also stipulated at formal hearing that the equipment costs proposed by both applicants are reasonable and that the costs of construction, as proposed in the applications, are reasonable. Facilities operated by Flagler Hospital, Inc. and St. Augustine General Hospital, L.P. are located in the city of St. Augustine, St. Johns County, Florida. The two facilities are less than 500 yards apart and, for all practical purposes, are directly across U.S. 1 from one another. Both facilities are 115-bed general acute care hospitals providing the same services except that Flagler provides obstetrics and St. Augustine does not. The service areas of the two hospitals consist of the five zip codes immediately surrounding the two facilities as the primary service area and St. Johns County, except the Ponte Vedra area, as the secondary service area. Flagler operates as a not-for- profit hospital. St. Augustine operates for profit. The applicant for CON 6011 is "Flagler Hospital, Inc." This corporation is based out of its only and local facility described supra and is locally operated. Regardless of any other terminology applied during HRS' review leading up to the formal Petition in DOAH Case No. 90-2035, and regardless of any inadvertent changes of the style of that cause thereafter, the "applicant" for CON 6012 is, in fact, "St. Augustine General Hospital, L.P.," a limited partnership. The applicant's August 23, 1989 Letter of Intent in CON 6012 is in the name of "St. Augustine General Hospital, L.P. d/b/a St. Augustine General Hospital." The Identification of Principal Parties form submitted by the applicant states that the legal name of the applicant/parent corporation is "St. Augustine General Hospital, L.P." and that the facility/project name is "St. Augustine General Hospital." As of the date of formal hearing, "St. Augustine Hospital, Inc." (no "General" in this name) was a wholly-owned subsidiary of "Healthtrust, Inc." and the only general partner in the applicant, and "Healthtrust, Inc." was the sole limited partner in the applicant. "Healthtrust, Inc." purchased the shares of all the other former limited partners in July 1990, only after this cause had reached the formal hearing stage. The Board of Directors of the general partner, "St. Augustine Hospital, Inc.," is located in Nashville, Tennessee, as is the Board of Directors of "Healthtrust, Inc." Health Corporation of America (HCA) owns a significant number of shares (approximately 30-34%) of "Healthtrust, Inc." "Healthtrust, Inc." is a nationwide hospital chain with approximately 90 hospitals, which "spun off" from HCA in 1987. Thus, "Healthtrust, Inc." is both the sole owner of the general partner and the sole limited partner in the applicant, a limited partnership. The past lineage of the several St. Augustine legal entities is somewhat convoluted, but it is a significant and material consideration for purposes of this CON proceeding that "Healthtrust, Inc." collects management fees from St. Augustine General Hospital, which is the applicant's d/b/a namesake, and that "Healthtrust, Inc." seems to have been underwriting St. Augustine General Hospital in one context or another for an uncertain period of time. St. Augustine General Hospital has been losing money annually. Its net loss for fiscal year 1990 was $2 million. By a September 25, 1989 letter from Stephen C. Brandt, "Healthtrust, Inc.," otherwise known as "The Hospital Company," has committed to loan "St. Augustine General Hospital, Inc." sufficient funding to implement and provide cardiac catheterization services at "St. Augustine General Hospital." The proposed recipient of "Healthtrust Inc.'s" commitment, which is "St. Augustine General Hospital, Inc.," is not the same entity or legal "person" as the applicant, "St. Augustine General Hospital, L.P.," and the parties further agree that there is no such legal entity as "St. Augustine General Hospital, Inc." (TR-132-133) Also, it is not clear from this record what other enterprises or ventures are attributable to "St. Augustine Hospital, Inc.," the general partner in the applicant. Therefore, even if the true intent of Mr. Brandt's letter was to show that the general partner, "St. Augustine Hospital, Inc." and not the nonexistent "St. Augustine General Hospital, Inc.," would receive funding from "Healthtrust, Inc.," there is no guarantee that "Healthtrust Inc.'s" funding commitment to the general partner would be used as a simple conduit to St. Augustine General Hospital, L.P., the applicant. With regard to quality of care, either applicant is capable of providing high quality cardiac catheterization services. However, St. Augustine's proposed physical plant is less ideal than that proposed by Flagler. St. Augustine proposes a lab with a procedure room that contains only 314.5 square feet of floor space. The industry standard is 480 square feet. The State of Florida has not adopted by rule a standard for the minimum size of a cardiac catheterization procedure room. However, the Inter-Society Commission for Heart Disease Resources has issued a report, relied upon by architects in designing cardiac care facilities, which recommends a minimum size for a procedure room of 50.4 square yards, which equals 453.6 square feet. The State Health Plan has adopted the Inter-Society Commission Report. Undersizing the lab has the potential to downgrade the quality of care in St. Augustine's proposed lab in several respects. It limits the storage space necessary and required to conduct routine procedures and crash procedures in cardiac arrest situations and interferes with maintaining the "sterile field," essential to routine catheterization procedures, but more importantly, in the event of a cardiac arrest or other emergency situation, there may not be adequate room for as many as five additional persons to enter the room, together with emergency equipment, to resuscitate and stabilize the patient. Concerns about undersizing of space are not applicable to Flagler's proposed catheterization lab. St. Augustine submitted that it could convert space adjacent to its proposed lab for its cardiac catheterization program at a cost of approximately $33,000, but expert testimony was persuasive that such a conversion could be considerably more expensive. To the extent that St. Augustine's planning would need to be revised, additional drawings would have to be prepared to show the reconfiguration of the room with the cost increase. Even assuming, arguendo, that St. Augustine's $33,000 figure is correct and that $33,000 is a proportionately low cost of such a change of plans in relation to St. Augustine's entire proposed project costs, it is found that such a construction conversion as proposed would constitute a change in the St. Augustine application so substantial that it would require amendment of St. Augustine's pending application and therefore such a conversion cannot be considered anew and without prior HRS review at this stage of the CON proceedings. The State Health Plan contains certain preferences relevant to this comparative CON review. Both applications benefit from the State Plan's favoring of an applicant proposing to provide cardiac catheterization services in a county that does not presently have a catheterization lab if it can be demonstrated that patients are leaving the county for such services. Upon the credible evidence as a whole, including but not limited to the testimony of Messrs. Jernigan and Nelson, Ms. Dudek, and Drs. Matthews, Prakash, and Mehrotra, it is found that a minimum of 225 patients had to travel outside St. Johns County, primarily to Jacksonville, Duval County, for such services in 1988, and there is competent, substantial evidence upon which a reasonable person may infer that that number is increasing (See Finding of Fact 20). HRS' viewpoint that freestanding labs which do not require a CON in order to operate in the proposed service area now accommodate these patients or will soon take up this slack is not supported by credible, competent substantial evidence. (See Finding of Fact 19) The State Health Plan also favors disproportionate Medicaid providers. Flagler is a federally designated disproportionate share hospital and qualifies for this preference. (See, also, Findings of Fact 15 and 20). Both applicants have committed to provide services to all patients regardless of their ability to pay and therefore both applicants meet this State Health Plan preference. The Local Health Plan also contains criteria relevant to these applications, among which is that plan's preference for an applicant who proposes to provide catheterization services in an area of concentrated population which is currently without an existing program. The city of St. Augustine constitutes such a designated area, and since both applicants' facilities are located there, they are each entitled to such preference. Both facilities are located in the District IV subdistrict with the highest use rate, and both are entitled to the Local Health Plan's preference for an applicant in the area of highest catheterization use. St. Augustine would be the logical place to put a catheterization lab if need were shown, and HRS' own rule reveals the need for one lab. (See also Finding of Facts 4, 14, 20) The Local Health Plan also prefers the applicant who will provide the proposed services in the most cost effective manner. Hospital Cost Containment Board (HCCB) figures suggest that Flagler is superior in this regard but are not persuasive in and of themselves. Historically, the applicants have been comparably cost-effective, dependent upon the procedure or service assessed. However, for the reasons set forth infra in respect to long-term financial feasibility in general, Flagler has the edge in this preference area. The Local Health Plan contains a preference for an applicant addressing a current access problem. HRS determines need for inpatient cardiac catheterization labs on a district-wide basis rather than a county-by-county basis. No cardiac catheterization subdistricts have been designed and promulgated by HRS rule. The Local Health Plan uses a subdistrict basis; subdistrict 3 contains St. Johns County without any inpatient cardiac catheterization programs and southeastern Duval County where three hospitals provide such services. Either applicant's facility meets the access standard of Rule 10-5.011(e)4.a. F.A.C., that is, access within one hour of automobile travel time under ordinary conditions for 90% of the district population. However, the access problem bears some further specific commentary. St. Johns County residents now regularly travel, primarily to Jacksonville, Duval County, and to a lesser extent, to Gainesville, Alachua County, to receive these services. Increased costs and duplicate procedures often accrue unnecessarily to patients who seek treatment outside the service area/county. Moreover, the need to travel probably depresses the number of catheterization procedures done on St. Johns County residents, either because of the genuine logistics of lack of continuity of care, travel costs to the patient and family, and stress on the patient and family caused by out-of-county procedures or because of the patients' perceptions that these problems exist. Health care of patients who forego catheterization for these reasons would be qualitatively improved if they could submit to the procedure in their own locale; likewise, health care and costs to all catheterization patients would be improved it they could access the procedure close by with lesser travel, stress, and peripheral costs. That an access problem exists has been thoroughly and conscientiously demonstrated by both applicants. It has also been established that the city of St. Augustine location of either applicant would enhance accessibility for the elderly, handicapped, and medically indigent who are the least likely patients to submit to travel for inpatient catheterization services. For those reasons and since the two facilities to be utilized by the applicants are in such close proximity, it can only be concluded that the award of a CON to either applicant would equally improve access to inpatient cardiac catheterization services on a geographic basis alone. Both applicants will be able to meet the personnel requirements of Rule 10-5.011(e)5.b. F.A.C. The premise that a de minimis higher FTE projection by St. Augustine automatically translates into better patient care was not proven and is suspect due to the size limitations of St. Augustine's proposed lab. (See Finding of Fact 10) Flagler's argument that because Flagler assigned a higher pay rate to different members of its catheterization team and because Flagler is willing to pay higher salaries overall does not translate into an advantage upon the state of this record as a whole. Either applicant will provide services to all persons in need, regardless of ability to pay, and each applicant further proposes serving Medicare, Medicaid, indigent, private pay, and HMO/PPO. Both applicants must, by law, comply with any conditions HRS may place on their CONs. In these respects, it is concluded that each applicant equally meets those respective Local Health Plan preferences, even though Flagler has clearly shown that its past "track record" in the area of Medicare, Medicaid, and indigent care exceeds that of St. Augustine in both quantity and quality. (See Findings of Fact 11 and 20) All capital projects or expenditures proposed by St. Augustine have to be approved by Healthtrust, Inc., although the hospital management can approve "substitutions" of capital items of less than $5,000 per invoice. This restriction on local management, St. Augustine's potentially imprudent freezing of its per procedure cost for two years, and its perennially low occupancy rate overall (42 out of 115 beds last year) impact unfavorably on both the short-term and long-term feasibility of its project. St. Augustine raised the valid point that since, due to litigation, neither applicant can meet its projected opening date, some adjustment of each applicant's pro forma, based on inflation, is in order, however what this adjustment should be was never persuasively quantified by the witnesses. St. Augustine challenged Flagler's pro forma statement on basically three grounds: that the nine-month earlier projected starting date (now past) for Flagler's lab projects an artificially lower patient charge due to inflation; that Flagler's supply expense of $200 is too low; and that Flagler did not amortize remodeling costs of $147,000. Both applicants' projections in the category of patient charge per procedure are found to be reasonable, but St. Augustine also suggested that Flagler's patient charge per procedure should be increased by 3.75%, which assumes a nine-month adjustment, at a 5% annual interest rate to increase Flagler's procedure charge from $1,385 to $1,437 for year one and from $1,475 to $1,530 for year two. Such a result would not render Flagler's proposal unreasonable and would have the effect of increasing Flagler's profitability. However, no evidence showed Flagler intended to increase its charge. Flagler's projected supply expense per procedure is reasonable. Assuming Flagler depreciates renovation costs over a 20 year period, the resulting minimal increase in depreciation is not a significant concern proportionate to Flagler's "bottom line" profitability. HRS opposes both applications in part upon its assertion that neither applicant can attain its proposed number of procedures so as to insure long term financial feasibility. One of HRS' premises for this assertion is its contention that there are few cardiologists residing or practicing in St. Johns County. This is a truism so far as it goes, but not a controlling factor in light of significant other forces at work. Rather than cardiologists' clientele "feeding" a cardiac catheterization lab, as HRS originally supposed, the undersigned finds, upon the greater weight and credibility of all witnesses, including HRS' Ms. Dudek, that the absence of an inpatient cardiac catheterization lab in the city of St. Augustine, St. Johns County, has, in fact, depressed the availability of cardiologists in the county. Upon the testimony of Mr. Conzemius and Dr. Lambert, it is found that because there is no inpatient cardiac catheterization lab available, cardiologists currently cannot be recruited by either applicant. Establishment of such a lab by either applicant would result in more cardiologists locating in St. Augustine and St. Johns County with a concomitant improvement in patient accessibility to cardiology services. HRS' assertion that neither applicant can attain its break-even use rate is not based upon any definitive or even cursory study by HRS of existing county use rates, CONs are not required for outpatient catheterization services which may be offered in freestanding facilities. The record does not establish with specificity the extent of utilization or service volume of outpatient cardiac catheterization labs, if any, in St. Johns County. There is expert cardiologist testimony that freestanding catheterization labs are not a medically acceptable alternative to inpatient programs in a hospital. HRS contended that neither applicant has projected reasonable patient utilization figures guaranteeing long-term financial feasibility of their respective projects, but conceded that either proposal would be financially feasible if it attracted the projected patient numbers. The greater weight of the credible evidence supports a finding that sufficient numbers of inpatient cardiac catheterization patients can be captured by either applicant. Typically, 20% of cardiac catheterizations are done on an outpatient basis, so the 225-patient figure demonstrated for 1988 understates the potential cardiac catheterization patients in St. Johns County by 20%. Thus, approximately 55 more patients obtained catheterization out of county in 1988 than are shown by the inpatient figures, so mathematically one could project 270 such procedures on St. Johns County residents actually occurred in 1988. Application of the statewide use rate of 8.9 such procedures per 1,000 people applied to the appropriate January 1, 1992 planning horizon with the predicted population increase would yield an even higher potential patient figure of 674. Subdistrict 3 has historically experienced a yet higher use rate of 10.1 cardiac catheterization admissions. Either Flagler's 250 (first year) and 300 (second year) or St. Augustine's 275 (first year) and 325 (second year) is a reasonable projection which meets the HRS recommended minimum volume of 300 procedures per year in the second year. See, Rule 10-5.011(e)8.a. and e. F.A.C. Having a cardiac catheterization program would complement the obstetrical care which is exclusive to Flagler. Both applicants indicated their willingness to make their services available to a broad payor mix. St. Augustine projects utilization by class of pay for both year one and year two of operation as 2.2% Medicaid, 56.9% Medicare, 38.9% insurance, and 2.2% indigent. Flagler projects utilization by class of pay for both years as 7% Medicaid, 60% Medicare, 31% insurance, and 2% indigent. St. Augustine's projection of 2.2% of its cardiac catheterization services for Medicaid patients is reasonable but its projection of that same percentage for charity is inconsistent with St. Augustine's prior service and is unreasonable. Considering Flagler's historical Medicaid and indigent service history, its several contracts to provide care to these classes of pay, and the comparable cardiac catheterization utilization experience of similar providers, Flagler's projections in this respect are reasonable. If Flagler has erred in this portion of its assessment, increased percentages of patients covered by insurance reimbursements would only improve Flagler's "bottom line" for long- term financial feasibility. Both applicants' pro forma statements are based on operation of the proposed cardiac catheterization lab only, not including ancillary services and other charges related to the entire patient episode of care. Both applicants will receive an incremental layer of profit from establishing a cardiac catheterization lab, but that amount was not quantified on this record. The greater weight of the credible expert evidence shows that St. Augustine's understatement of a number of expenses will result in its lab experiencing a net loss which it will be tempted to "pass on" through other hospital charges. St. Augustine's commitment to following Healthtrust, Inc.'s policies with regard to depreciation, amortization, and assigning useful life to equipment is not persuasive that these corporate principles are preferable to the generally accepted accounting principles used by Flagler. If St. Augustine's commitment to freezing its charge per procedure does not result in its raising fees elsewhere, this commitment may still aggravate instead of alleviate St. Augustine's financial predicament, for the entire facility currently operates at a net loss. Rule 10-5.011(1)(e)6. F.A.C. as amended, August 1988, requires that CON cardiac catheterization applicants who do not provide open heart surgery services include a written protocol for the transfer of emergency patients to a hospital providing open heart surgery which is within 30 minutes' travel time by emergency vehicle under average travel conditions. No statute, rule, or credible testimony herein defined "protocol" contrary to the interpretation given that term in Florida Medical Center et al. v. HRS, 11 FALR 3904 (1989). HRS' Ms. Dudek determined that each submittal met HRS' intent in the current rule. Her rule interpretation, based on agency expertise, is entitled to great weight. Flagler filed a protocol which is specific to cardiac catheterization patients in need of open heart surgery but did not specify which open heart surgery facility would be utilized. St. Augustine submitted a current transfer agreement between St. Augustine General Hospital, L.P. and St. Luke's Hospital, Jacksonville, the closest open heart surgery provider. This agreement is not specific to cardiac catheterization patients. St. Augustine also has an agreement with doctors at St. Luke's for open heart services backup. St. Luke's is within one-half hour's emergency travel time from either applicant's facility. There was no valid reason advanced in this record to suppose that Flagler could not also obtain travel and backup services with St. Luke's if it were granted the CON applied-for. Therefore, it is found that both applicants have complied with the current rule. Inherent in all challenges to the applicants' respective financial projections is the completeness of each application, and evidence as to the completeness of both applications has been received. Upon the testimony of HRS' health planning expert and agency representative, Elizabeth Dudek, it is found that at the time both applications were filed and at all times material to these applications, there was no consensus at HRS as to what constituted a "capital project" pursuant to Section 381.707(2)(a) F.S.; HRS had no definitional rule in place; HRS regularly looked to an applicant's audited financial statements with respect to the impact statement required under that section; and HRS did not require that there be a separate page labelled "assessment" for compliance with that section. Ms. Dudek reviewed both applications in the context of Section 381.707(2)(a) for HRS against other information already internal to HRS (exemptions, determinations for exemptions, or non-reviewables) and determined for purposes of initial review that both applicants had "captured" what HRS needed to know under Section 381.707(2)(a). This remained her opinion at formal hearing. (TR-586-589, 591- 593) St. Augustine expressly stated in its omissions response that it "has no capital projects applied for, pending, approved or underway in any state" (emphasis in original). In fact, the HCCB reported that for the eight-month period ending August 31, 1989, St. Augustine had $59,000 in construction in progress. Moreover, St. Augustine failed to list a lobby and patient wings renovation project costing approximately $540,000. St. Augustine's application contained no mention of these projects and no assessment, discussion, or analysis of their impact. St. Augustine's own Comptroller, David Chapman, would have defined these as capital projects (TR-93-94), and a common understanding of the English language would suggest that his is a reasonable interpretation of the clear statutory language. Flagler provided a page titled "FLAGLER HOSPITAL, INC. CURRENT CAPITAL PROJECTS" (Flagler-10), which listed the following "capital projects," as their expert witnesses defined that term under the statute. Maintenance and Yard Service Facility $61,000 (Review exemption pending) Storage Room Improvements $75,000 (Review exemption pending) Flagler Hospital Replacement Facility CON #2883; $21,728,558 Cost overrun application is being developed Rick Knapp, a certified public accountant and Flagler's expert in health care finance, accounting, and financial feasibility, also testified that Flagler's inclusion of the replacement hospital in the application as a "capital project" when the replacement hospital was essentially paid out before Flagler's CON application was even filed was probably not necessary under the statute but was intended for full disclosure. In fact, the evidence at formal hearing shows that Flagler's $21 million-plus replacement facility was completed, occupied, and paid for prior to Flagler's submission of the CON application to HRS in September 1989. The audited financial statements submitted with Flagler's application also indicated that, as of September 30, 1988, there had been construction in progress of $17 million, and an estimated $7.5 million for expected completion of construction in fiscal year 1989. Evidence admitted at formal hearing showed that the construction had been completed and the facility occupied in February 1989. Flagler began to depreciate its replacement facility upon occupancy. An overrun of approximately four million dollars was accrued and paid as of February 1989, but determining its exact amount was delayed by litigation with the architect and retainage by the general contractor. It cannot be determined from the application and omissions response that the cost overrun had been financed in full, but the two smaller capital projects were considered in the preparation and submission of Flagler's omissions response and specifically, depreciation expenses are included in the omissions response for all three of the above-identified projects. The hospital-wide pro forma contained in Flagler's omissions response shows a "healthy bottom line" for Flagler, even after consideration of the then-pending capital projects. Mr. Knapp represented that pages R-1, 2 of Flagler's omissions response (Flagler-11) meet the requirements of Section 381.707(2)(a) F.S., requiring a complete listing of all capital projects and an assessment of the capital projects' impact on the applicant's ability to provide the proposed cardiac catheterization lab. However, a close reading of pages R-1, 2 reveals that pages R-1, 2 do not repeat the list of capital projects just described or "showcase" Flagler's capital projects' impact on Flagler's ability to provide the services of the proposed catheterization lab, but rather, they make the detailed evaluation of the impact of the proposed cardiac catheterization lab on the cost of other services provided by Flagler, which detailed evaluation is required by Section 381.707(2)(c) F.S. Indeed, R-1 is entitled "IMPACT OF PROPOSED PROJECT ON COSTS OF OTHER SERVICES PROVIDED BY THE APPLICANT." Flagler's own witnesses concede that pages R1, 2 must be read in conjunction with Flagler's audited financial statements in order to arrive at the analysis of how other "health facility development projects and health facility acquisitions applied for, pending, approved or underway" will affect Flagler's ability to finance its catheterization lab. However, when compared to the pro forma on Table 3.3 of the application, it is clear that there is no impact of the listed capital projects on the proposed program. According to Mr. Conzemius, Flagler applied to HRS in March 1989 (six months prior to the filing of Flagler's CON application) and was turned down for an exemption on its overrun, and in the future Flagler will be applying for a CON regarding it. Flagler has disguised none of its activities from HRS and resolved and paid out the cost overrun prior to formal hearing so that the overrun, if it ever could have impacted on Flagler's proposed project, cannot do so now. Flagler's proposed cardiac catheterization lab will be paid for by cash funds in hand; the application contained a typographical error indicating that the funds were assured, when in fact, they are in hand. There will be no debt incurred by Flagler for the construction of the project.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that HRS enter a final order granting CON 6011 to Flagler Hospital, Inc. and denying CON 6012 to St. Augustine General Hospital, L.P. RECOMMENDED this 29th day of January, 1991, at Tallahassee, Florida. ELLA JANE P. DAVIS, 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 29th day of January, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 90-2034 and 90-2035 The following constitute specific rulings pursuant to Section 120.59(2) F.S. upon the parties' respective proposed findings of fact (PFOF): Petitioner Flagler's PFOF (1-77): Accepted: 7, 10, 15, 16, 22, 23, 30, 34, 58 Rejected as irrelevant, unnecessary and nondeterminative: 4, 5 Rejected as subordinate or unnecessary: 66, 67, 68, 69, 70 Accepted except where subordinate, unnecessary, or cumulative to the facts as found; not necessarily adopted: 1-3, 11, 12, 13, 14, 17, 18, 19, 20, 21, 24, 25, 26, 27, 31, 33, 38, 39, 40, 41, 42, 53, 54, 55, 56, 59, 61, 62, 65 Rejected as mere legal argument: 6 Subjects covered but proposals rejected in form proposed because they are mere legal argument or recital of unweighted, unreconciled testimony and/or exhibits: 71, 72, 73 Covered as modified to reflect actual stipulations and credible record evidence as a whole, eliminating subordinate matters and mere legal argument: 8, 9, 28, 29, 32, 35, 36, 37, 43-52, 57, 60, 63, 74-77 The weight and credibility of all the evidence has been weighed within the RO and applies to all rulings. Petitioner St. Augustine's PFOF 6-(69)-73: [NOTE: St. Augustine numbered its preliminary matters 1-5 and its PFOF begin with #6; it also proposed two #69's] Accepted, except where subordinate, unnecessary, or cumulative to the facts as found: 6-15, 17-24, 26, 27, 28, 33, 35, 37, 38, 40, 41, 47 Accepted as modified to more closely conform to the material facts of record or to eliminate subordinate or unnecessary proposed facts or facts which were not proven: 31, 34, 48, 49, 52, 53, 54, 55, 58, 66, 67, 68, 69#2, 72 Accepted, except where subordinate, unnecessary or mere legal argument: 39, 43 Rejected as subordinate, immaterial or mere legal argument: 16, 25, 29, 32, 36 Subjects covered but proposals rejected in the form proposed because they are mere legal argument or recital of unweighted, unreconciled testimony and/or exhibits: 30, 42, 44, 45, 46, 50, 51, 60, 70 Rejected as not proven for the reasons set out in the RO: 56 Accepted in part, the remainder is rejected in part as mere legal argument, recital of unweighted, unreconciled testimony and exhibits, and/or not proven: 57 PFOF 59: First paragraph cumulative. All paragraphs beginning with a dash on the same page under 59: Subordinate and unnecessary to the facts as found or mere recital of unweighted or unreconciled testimony and/or exhibits and legal argument. Dash 1 on next page: Rejected as contrary to the credible record evidence as a whole. Remaining dashes beginning on that page: subordinate and not determinative and/or mere recitation of unweighted or unreconciled testimony and exhibits. Credibility determination made. Accepted but cumulative that historically Flagler has served more Medicaid patients than St. Augustine and is a disproportionate Medicaid provider. The remainder is rejected as mere legal argument or recital of unweighted or unreconciled testimony and/or exhibits: 61 Rejected that the same payor mix may be expected. The evidence supports Flagler's projected 7% Medicaid rate. The remainder is mere legal argument, subordinate and cumulative to the facts as found, and/or contrary to the weight of the credible record as a whole: 62-65 Accepted as modified to eliminate mere legal argument and to more closely conform to the material facts of record: 69#1 In all its parts, is rejected as mere legal argument and not determinative of any material fact: 71 PFOF 73: The subject matter is covered within the RO. Recital of deposition testimony in a belated attempt to impeach a witness who has testified has been rejected as not a proposed finding of material fact. The remainder is mere recitation of unweighted or unreconciled testimony/exhibits. The weight and credibility of all the evidence has been weighed within the RO and applies to all rulings. Respondent's PFOF (1-13): Accepted, except as subordinate or unnecessary: 1, 2, 3, 4, 7, 11, 13 Rejected in part as mere legal argument or unweighted or unreconciled testimony or exhibits (not proven upon the credible record evidence as a whole); otherwise accepted: 5, 6, 8, 9, 10, 12 The weight and credibility of all the evidence has been weighed within the RO and applies to all rulings. COPIES FURNISHED: Kenneth F. Hoffman Patricia A. Renovitch Attorneys at Law Oertel, Hoffman, Fernandez & Cole, P.A. Post Office Box 6507 Tallahassee, Florida 32314-6507 Jay Adams, Esquire Attorney at Law 1519 Big Sky Way Tallahassee, Florida 32301 Richard Patterson Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Drive Fort Knox Executive Center Tallahassee, Florida 32308 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
Findings Of Fact The initial application for a CON to operate an adult cardiac catheterization laboratory by Metropolitan General Hospital was denied by DHRS in the State Agency Action Report dated June 28, 1983 (Exhibit 2). This denial was based upon a projected use of 2,704 cardiac catheterization procedures in 1985 and four cardiac catheterization facilities in operation in District V, the service area which comprises Pinellas and Pasco Counties. The need methodology rule provides that an additional cardiac catheterization laboratory will not be approved if it reduces the average volume of procedures per lab performed in the district below 600 adult procedures based on the projected need in the service area. With a projected need of 2,704, an additional cardiac catheterization lab would reduce the average below the 600 figure. The four hospitals which have approved cardiac catheterization facilities in this district are: All Children's, Medical Center, Morton F. Plant, and St. Anthony's. All Children's is a pediatric hospital adjacent to Bayfront Medical Center Hospital. All Children's is authorized a pediatric cath lab in which adult patients are treated. Most of these patients come from Bayfront and the cardiac cath procedures are done on an out-patient basis. The number of cardiac cath procedures being performed at All Children's Hospital has increased every year since 1980 and the increase has been due primarily to the increase in the number of adult cardiac cath procedures performed. Adult procedures at this lab outnumber children's cardiac cath procedures by approximately three to one. In 1983, 536 adult cardiac cath procedures were performed at All Children' s Hospital. St. Anthony's Hospital has a cardiac cath lab in which 301, 327, and 300 adult cardiac caths were performed in the years 1981, 1982, and 1983, respectively. In Medical Center Hospital's cardiac cath unit more than 900 cardiac caths were performed in 1984 and the number has increased annually since the lab was installed. In disapproving Metropolitan General's application DHRS counted All Children's cardiac cath lab as an adult cardiac cath lab. When it was pointed out that All Children's cardiac cath lab is approved as a pediatric cardiac cath lab and that is the only cardiac cath lab at All Children's Hospital, DHRS recounted the number of existing cardiac cath labs in the district, did not include the cardiac cath lab at All Children's, found that a need for a total of four units exists in this district, and approved the CON for Metropolitan General. Medical Center protested and this hearing followed. Prior to the granting of this CON to Metropolitan General for a cardiac cath lab, correspondence between DHRS and Morton F. Plant Hospital culminated in DHRS advising Morton F. Plant that it could establish a second cardiac cath lab without going through the CON process if the total cost of the project did not exceed $695,285 (Exhibit 20). Pursuant to this "authorization" Morton F. Plant is proceeding to equip and operate a second cardiac cath lab. In awarding the CON to Metropolitan General, this "second" cardiac cath lab at Morton F. Plant was not counted by DHRS. Counting two labs at Morton F. Plant and not counting All Children's lab' leaves four adult cardiac cath labs in the district. DHRS' witnesses testified that an inspection of the facility at All Children's Hospital revealed only one cardiac cath lab. Because this hospital is a pediatric hospital, because the cardiac cath lab was "grandfathered in" without having to go through the CON process, and because the hospital administrators stated that priority would be given to children over adults in the cardiac cath lab, DHRS concluded not to count All Children's as having an adult cardiac cath lab. Metropolitan General Hospital is an osteopathic hospital. David Dietrick, D.O., is a cardiologist on the staff of Metropolitan General and of Medical Center. He presently performs 125-150 cardiac cath procedures per year and all are now performed at Medical Center Hospital. If a CON to operate a cardiac cath lab is granted to Metropolitan General, Dietrick will move all of the cardiac cath procedures he now does at Medical Center to Metropolitan General. The procedures performed by Dr. Dietrick at Medical Center represent about four percent of the hospital's 350 million gross revenues per year. Medical Center recently completed renovation of its cardiac cath lab and the installation of the latest state of the art equipment. This lab is located in the vicinity of the radiology department in which equipment is provided to do angiographic procedures. These procedures are similar to cardiac cath procedures but are done in the arms, legs, abdomen, etc., rather than in the heart. Because of the similarity of equipment and procedures and the heavy demand for cardiac cath procedures at Medical Center Hospital, the early appointments in the radiology lab are reserved for cardiac cath procedures and on average one such procedure per day is performed in the radiology lab. A total of 926 cardiac cath procedures were performed at Medical Center in 1984. If the current rate for 1985 of 90 per month continues throughout the year, a total of almost 1,100 cardiac cath procedures will be performed at Medical Center Hospital in calendar 1985.
Findings Of Fact At all times material hereto, Respondent has been licensed to practice medicine in the State of Florida, having been issued license number ME-0027913, and was employed by the Norton Seminole Medical Group in Pinellas County, Florida. Respondent has been licensed in Florida since 1976. At approximately 3:50 p.m. on November 1, 1983, a 31 year old white male, with the initials R. L., arrived at the emergency room of Lake Seminole Hospital, Seminole, Florida, and was examined by the emergency room physician on duty. R. L. complained of substernal mid-chest pain radiating to his back, which had begun the night before. He was agitated and exhibited a great deal of emotional stress. The emergency room physician on duty treated R. L. for suspected cardiac pathology, placed him on a cardiac monitor, inserted a heparin lock into a vein, and ordered lab work which included a chest x-ray, electrocardiogram, electrolytes, cardiac enzymes, CBC (complete blood count), blood sugar, creatinine and BUN (blood urea nitrogen). These were appropriate tests under the circumstances. When the Respondent came on duty in the emergency room at 7:00 p.m., all lab work had been completed, except for the cardiac enzymes. The emergency room physician who had been on duty when R. L. appeared at the emergency room briefed Respondent about R. L.'s medical history, condition while in the emergency room, and the test results which had been received. After the cardiac enzyme values were received, Respondent reviewed R. L.'s medical history and lab test results, which he determined to be normal, and discharged R. L. at approximately 7:35 p.m. on November 1, 1983, with instructions that he see his family physician the next morning. Respondent's discharge diagnosis for R. L. was atypical chest pain secondary to anxiety. At approximately 11:21 p.m. on November 1, 1983, R. L. expired from cardiopulmonary arrest at the emergency room of Metropolitan Hospital, Pinellas Park, Florida. The autopsy report notes extensive coronary artery disease, but makes no mention of acute myocardial infarction. It was not established by clear and convincing evidence that R. L. suffered an acute myocardial infarction. There is conflicting expert testimony from Steven R Newman, M.D., and Stephen J. Dresnick, M.D., concerning whether Respondent should have admitted R. L. to Lake Seminole Hospital instead of discharging him from the emergency room, and also whether his E.K.G. taken at the emergency room was normal. Drs. Newman and Dresnick are experts in the care and treatment of patients in an emergency room, but their testimony was received by deposition instead of through live testimony at hearing. Thus, based upon this conflict in testimony, and the fact that the demeanor of these witnesses cannot be assessed, it is found that it was not established by clear and convincing evidence that Respondent failed to practice medicine with that level of care and skill which is recognized by a reasonably prudent similar physician as being acceptable under similar conditions and circumstances when he discharged R. L., and evaluated the tests which were administered to the patient while in the emergency room as within normal limits. A patient who appears at a hospital emergency room with unstable angina, such as R. L., does not necessarily require admission to the hospital. While serial electrocardiograms and serial cardiac enzymes are called for with patients whose symptoms of cardiac discomfort warrant hospitalization, these procedures are not usually and customarily performed in an emergency room. Therefore, since it was not established that Respondent should have admitted R. L. to the hospital as an in-patient, it was also not established that he failed to exercise the required level of skill and care by failing to order such serial tests while R. L. was in the emergency room. Although the emergency room physician on duty when R. L. arrived at the emergency room at approximately 3:50 p.m. on November 1, 1983, was initially responsible for obtaining a patient history and ordering the tests which were performed, when Respondent came on duty at 7:00 p.m. and took over this case, he was also responsible for insuring that his medical records concerning his evaluation and treatment of R. L., as well as his decision to discharge the patient, were full and complete. Respondent failed to document his review and findings based upon the lab tests and chest x-ray which had been completed, as well as the patient's medical history, and the specific reason or basis for his decision to discharge R. L. Respondent relied almost completely on the medical records compiled by the emergency room physician who was initially on duty when R. L. arrived at the emergency room, and made no significant additions to those records while the patient was under his care, or which would justify his course of treatment, including discharge, of this patient.
Recommendation Based upon the foregoing, it is recommended that the Board of Medicine enter a Final Order reprimanding Respondent for his violation of Section 458.331(1)(m), Florida Statutes, and placing him on probation for a period of six months from the entry of the Final Order in this case, conditioned upon his complying with such reasonable terms and conditions as the Board may impose, including review and verification of the completeness of medical records prepared by the Respondent while on probation. DONE AND ENTERED this 5th day of July, 1990 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 5th day of July, 1990. APPENDIX (DOAH CASE NO. 89-6874) Rulings on the Department's Proposed Findings of Fact: 1-2. Adopted in Finding of Fact 1. 3-4. Adopted in Finding of Fact 2. 5-6. Adopted in Finding of Fact 3. 7. Adopted in Finding of Fact 4. 8-9. Rejected in Finding of Fact 5. 10. Rejected in Finding of Fact 4. 11-12 Rejected in Finding of Fact 6. 13. Adopted in part in Finding of Fact Rejected in Findings 5 and 6. 7, but otherwise Rulings on the Respondent's Proposed Findings of Fact: Adopted in Finding of Fact 1. Adopted in Finding of Fact 2. Adopted in Findings of Fact 2 and 3. 4-5. Adopted in Finding of Fact 2. 6. Adopted in Finding of Fact 3. 7-9. Adopted in Finding of Fact 4. Rejected in Finding of Fact 5. Rejected in Finding of Fact 7. 12-13. Adopted in Finding of Fact 6. Adopted in part in Finding of Fact 2, but otherwise Rejected in Finding of Fact 5. Adopted in Finding of Fact 5. Rejected in Finding of Fact 7. COPIES FURNISHED: Andrea Bateman, Esquire Kevin F. Dugan, Esquire 1940 North Monroe Street Wittner Centre West Suite 60 Suite 103 Tallahassee, FL 32399-0792 5999 Central Avenue St. Petersburg, FL 33710 Kenneth E. Easley, Esquire General Counsel 1940 North Monroe Street Suite 60 Tallahassee, FL 32399-0792 Dorothy Faircloth Executive Director Board of Medicine Northwood Centre 1940 North Monroe Street Tallahassee, FL 32399-0792
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the parties' stipulations of fact, the following relevant facts are found: The petitioner RHPC, Inc., d/b/a Riverside Hospital (Riverside) is licensed to operate a 102-bed general, acute care hospital located in New Port Richey, Pasco County. Formerly a public hospital known as West Pasco Hospital, Riverside was acquired by American Healthcare Management, Inc. (AHM) of Dallas, Texas, in December of 1983. By the prior issuance of Certificate of Need (CON) Number 2859, Riverside was authorized to construct and equip a new hospital building for patients and ancillary services at a cost of $14.8 million, including a special procedures room. The new building was approved for occupancy and use as a hospital in September of 1986. Riverside was able to complete construction and equipping of its new facility for an amount approximately $2.5 million less than the approved capital expenditure budget for CON No. 2859. Riverside now seeks to upgrade the existing equipment in its special procedures room so as to be capable of performing cardiac catheterization procedures. The room would not be a dedicated cardiac catheterization laboratory, but would serve the dual function of both cardiac catheterization and non-cardiac angiography. While the cost of creating a brand new cardiac catheterization laboratory would normally amount to approximately $1.4 million, petitioner proposes an expenditure of only $512,474. This lower figure results from the fact that Riverside's existing special procedures room was equipped during the renovation and reconstruction authorized pursuant to Certificate of Need Number 2859, and now needs only to be upgraded to achieve cardiac catheterization capacity. In 1982, prior to its acquisition by AHM, Riverside lost its accreditation through the Joint Commission on Accreditation of Hospitals (JCAH). The removal of accreditation was occasioned by code and physical plant deficiencies and documentation deficiencies related to quality assurance, infection control, medical record-keeping and staff credentialling. Riverside has attempted to eliminate all such deficiencies which led to the prior loss of accreditation. In September of 1986, Riverside submitted its application for a JCAH accreditation survey of its facility. As of the dates of the administrative hearing, the survey dates had not yet been scheduled. It generally takes JCAH approximately so days after a survey to render its accreditation decision. Riverside does not intend to offer cardiac catheterization services until JCAH accreditation is received by the hospital, and is willing to condition its proposed Certificate of Need upon receipt of such accreditation. Riverside has been certified by HRS for Medicaid/Medicare participation. While those conditions of participation are similar to JCAH accreditation standards, they are not identical. Riverside's active medical staff includes six board- certified or board-eligible cardiologists, none of whom currently perform cardiac catheterizations. There are no cardiovascular surgeons on staff, and Riverside does not immediately intend to offer open heart surgery at its facility. Approximately nine local cardiologists in Pasco County, including those on the medical staff of Riverside, have formed a corporation to promote and implement a quality assurance program for the catheterization laboratory at Riverside and to recruit and hire a board-certified cardiologist to perform the catheterizations. No specific physician has yet been recruited as catheteer. Riverside currently has on its staff certified critical care registered nurses and registered nurses with advanced cardiac life support (ACLS) training. It also has radiological support staff, staff trained-in photographic processing and staff available to handle blood samples and observe and monitor patients. It is expected that there will be cross-training at other AHM facilities having cardiac catheterization laboratories, such as St. Luke's Hospital in San Antonio, Texas. In addition to the cardiologists, Riverside intends to staff the proposed laboratory with one registered nurse, one radiology technician, a scrub technician and a technician responsible for the operation of the physiological monitoring during a procedure. The former two positions will be hired exclusively for the cardiac catheterization laboratory, and the latter two are already on the staff and will be assigned for catheterization procedures. Riverside currently offers the following noninvasive cardiac/circulatory diagnostic services: hematology studies, coagulation studies, electrocardiography (EKG), chest x-rays, blood gas studies, clinical pathology studies, blood chemistry analysis, nuclear studies pertaining to cardiology, echocardiography, pulmonary function testing and microbiology studies. Riverside proposes to upgrade its existing General Electric angiographic system with a new General Electric multi- purpose diagnostic system, and will also purchase a physiological monitor. A maintenance agreement will be purchased under which General Electric, which maintains an office in Tampa, will be responsible for maintaining the equipment. It is anticipated that a GE service technician will be on call, if not on site, during all cardiac catheterization procedures. GE also provides in-service training in the use of its equipment, and it is anticipated that GE training personnel will remain on site during the first several times the equipment is operated. Funds for the proposed cardiac catheterization laboratory are available through the prior financing arranged by AHM for the hospital reconstruction and renovation authorized by Certificate of Need No. 2859. Assuming that the proposed lab will perform 219 catheterization procedures at an average charge of $1,794 during the first year of operation, and 417 procedures at an average charge of $1,884 during the second year, Riverside projects a net income of $20,593 for year one and $117,288 for year two. The proposed charges are comparable to those of existing providers. The pro formas assume a payor mix of approximately 15 percent Medicare patients. Inasmuch as a large majority of patients requiring cardiac catheterization are elderly, the Medicare patient mix projections are probably low. Since Medicare does not generally fully reimburse a hospital for its actual charges, the net income projections are likely overstated. The pro formas do not include any expenses associated with a helicopter ambulance service. The expenses projected for employee benefits, seventeen percent of salary, appear to be a little low for the Pasco County area. Riverside anticipates that the net income generated from the proposed catheterization lab will also help offset and reduce the overall losses experienced by it in the past several years. HRS District V includes Pasco and Pinellas Counties. Although the HRS methodology for determining the numeric need for cardiac catheterization laboratories indicates, no additional need in District V, the parties have stipulated and the evidence demonstrates that there is a need for such a lab in Pasco County. The five existing catheterization laboratories in District V are all located in Pinellas County. There are currently no existing or approved labs in Pasco County, and approximately 1,200 Pasco County residents per year are being sent out of Pasco County for cardiac catheterization, mostly to Tampa General Hospital in District VI. The physicians who testified at the hearing would prefer to perform cardiac catheterization procedures and send their catheterization patients to a facility which also has open heart surgery capacity. When open heart surgery is necessary and a patient is referred or transferred to another hospital for such surgery, that facility often performs its own cardiac catheterization procedures. This results-in duplicate costs, services and potential risk to the patient who is cashed in one facility and referred to another facility for surgery. It has been the experience of local cardiologists in Pasco County that between 50% and 70% of patients upon whom a catheterization procedure is performed ultimately also have open heart surgery. Nevertheless, each of the cardiologists who testified indicated his desire and willingness to utilize Riverside's proposed laboratory for low-risk diagnostic cardiac catheterization procedures. Until Riverside is able to offer open heart surgery services at its facility (which is within Riverside's long-range plan)' it proposes to screen patients for risk, and perform only elective, diagnostic catheterization procedures. Neither pediatric, emergency nor therapeutic catheterization, such as balloon angioplasty, will be performed in Riverside's proposed cardiac cath lab. Three hospitals offering open heart surgery have entered into formal transfer agreements with Riverside. These include Morton F. Plant Hospital in Clearwater, Bayfront Medical Center in St. Petersburg, and Tampa General Hospital in Tampa. None of the three are within thirty minutes driving time from Riverside by emergency vehicle. Morton F. Plant' the closest of the three, is 27 miles from Riverside. During a "red run" or "hot run" with sirens and lights flashing, and following normal emergency driving procedures, it would take between 45 and 50 minutes for an ambulance to travel between Riverside and Morton F. Plant Hospital. There are large traffic volumes which utilize the road systems between Riverside and Morton F. Plant Hospitals, and a great number of lighted intersections. While petitioner presented testimony that an emergency vehicle traveling 10 miles per hour over the speed limit could reach Morton F. Plant from Riverside in 30 minutes, 18 seconds, such testimony is not deemed credible. The witness had not actually traveled that distance in an emergency vehicle. An actual emergency run was made from Tarpon Springs General Hospital to Morton F. Plant Hospital a distance of about 15 miles. That run, travelling a portion of the same route proposed by Riverside's witness, took about 22 minutes. Given the fact that Riverside is some 10 to 12 miles further away from Morton F. Plant Hospital than is Tarpon Springs General Hospital, it is concluded that an ambulance could not travel the 27 miles from Riverside to Morton F. Plant Hospital in 30 minutes in average travel conditions. Riverside does have a helipad at its facility, but does not own a helicopter and does not have a contract for air ambulance services. Although one of Riverside's witnesses believed that a helicopter would be at Riverside on all days upon which cardiac catheterizations are performed, no expenses for a helicopter or a contract with a helicopter ambulance service are included within Riverside's pro forma. Riverside intends to offer cardiac catheterization services 24 hours a day, seven days a week. While patients are generally directly charged for the actual costs associated with emergency transport, it is not reasonable to assume that the costs of either purchasing or maintaining an on-site helicopter could legitimately be directly charged to patients. The actual flight time from ground takeoff at Riverside to ground landing at Tampa General Hospital in average travel conditions is 15 minutes. There is a licensed air ambulance service, known as Suncoast, which operates out of Tampa International Airport and maintains two helicopters. Unless a hospital has a contract for air ambulance services, Suncoast does not dedicate a helicopter to be on standby and ready to respond to a call for an emergency flight. Even if a helicopter were available, it would take between 30 to 45 minutes to place a helicopter on the ground at Riverside after the need has been communicated to Suncoast. Given the fact that Riverside does not own or maintain a helicopter on site, it is reasonable to consider the time which could be expected to lapse between the summons for an emergency transport vehicle and its arrival, as well as the time of transport between two hospital facilities. Emergency runs, whether by ground ambulance or air transport, are tremendously stressful on a patient. This factor becomes particularly important when the patient is one who has recently undergone a cardiac catheterization procedure and is being transported for emergency open heart surgery. Even when patients are screened for risk, complications can arise during a diagnostic cardiac catheterization procedure necessitating an immediate transfer of the patient to open heart surgery or, in some events, a therapeutic catheterization procedure. Such complications include a possible artery dissection during insertion of the catheter or the occurrence of an eschemic episode as a result of the displacement of oxygenated blood with the dye injected into the coronary arteries. While these events are rare, occurring in possibly only 1% of all diagnostic procedures, they do necessitate immediate, more advanced treatment. The 1985-87 Florida State Health Plan favors co-located cardiac catheterization laboratories and open heart surgery programs in the same facility. Quoting from the Inter-Society Commission on Heart Disease Resources, the State Health Plan notes: ". . . there can be little justification for the development of these highly specialized facilities (cash labs) unless expertise in cardiology, cardiovascular radiology, and cardiovascular surgery are immediately available. Optimally therefore, catheterization laboratories should be located only in institutions with well organized and closely related programs of cardiovascular surgery. ". . . such an arrangement not only facilitates close interdisciplinary cooperation and minimizes unnecessary, repetitive, inadequate, or unsafe diagnostic studies, but it also allows prompt intervention should life threatening complications develop during catheterization studies . . . It should be emphasized . . . that separation of the diagnostic laboratory from the surgical facility is less than optimal and may present serious problems." (Riverside Exhibit 5, Volume II, pages 95-96). The State Plan recognizes that some within the medical community feel that independent, "satellite" labs can perform studies as adequately as labs associated with open heart surgery programs. However, it also recognizes the literature demonstrating that such independent labs usually have lower utilization rates. The District v Health Plan does not stress co-location, but suggests that cath labs be developed in areas which have the potential of justifying open heart surgery capability within three years. Other than considerations of timely access, there was no evidence that an additional open heart surgery facility is needed in District V or specifically, in Pasco County. The District Health Plan does stress the provision of services to the indigent. Riverside is committed to serving all patients regardless of ability to pay. Bayonet Point Hospital is a 200-bed hospital located in Hudson, also in Pasco County. In an earlier batching cycle, Bayonet Point applied for a Certificate of Need to add both a cardiac catheterization laboratory and open heart surgery at its Hudson facility. After an administrative hearing, it was recommended that the application be granted. (Division of Administrative Hearings Case No. 85-3569) The Department of Health and Rehabilitative Services rejected that recommendation by Final Order filed on August 22, 1986, and the matter is currently on appeal to the District Court of Appeal, First District. If Bayonet Point were to offer cardiac catheterization services at its facility in Hudson, a cardiac cath lab at Riverside would have an adverse impact upon Bayonet Point's program.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that Riverside's application for a Certificate of Need to equip and operate a cardiac catheterization laboratory at its hospital in New Port Richey be DENIED. Respectfully submitted and entered this 19th day of March, 1987, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of March, 1987. COPIES FURNISHED: Leonard A. Carson, Esq. and Robert P. Daniti, Esq. Carson & Linn, P.A. 1711-D Mahan Drive Tallahassee, Florida 32308 Darrell White, Esq. Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Blvd. Building 1, Room 407 Tallahassee, Florida 32399-0700 Thomas M. Beason, Esq. and Donna H. Stinson, Esq. Moyle, Flanagan, Katz, Fitzgerald & Sheehan 118 North Gadsden Street Tallahassee, Florida 32301 Gregory L. Coler, Secretary Department of HRS 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of HRS 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 APPENDIX The proposed findings of fact submitted by the petitioner, respondent and intervenor have been fully considered and have been accepted and/or incorporated in this Recommended Order, except as noted below. Petitioner 16. First sentence rejected as contrary to the evidence. 27. Last sentence rejected insofar as it contemplates the reasonableness of the pro forma with regard to the Medicare patient mix and the failure to include expenses relating to an air ambulance. 38,39. Rejected. Failure to account for a proper payor mix and air ambulance service renders the financial feasibility projections unreliable. Rejected. Only the JCAH can render such a factual finding. Last sentence rejected as unsupported by the record of this proceeding. See Order denying second motion to reopen record. Rejected as to travel time. Not supported by competent, substantial evidence. Accepted only insofar as it pertains to actual patient flight time. Rejected as not supported by competent, substantial evidence. Second sentence rejected as speculative. Last sentence rejected as unsupported by competent, substantial evidence, although it is recognized that Riverside intends to offer only diagnostic procedures. Last sentence rejected as an absolute statement of fact. Not supported by competent, substantial evidence. 64. Second sentence partially rejected as contradicted by competent, substantial evidence. See Finding of Fact 10 in this Recommended Order. Respondent HRS 20. Rejected insofar as it applies to all ambulance drivers. Not supported by competent, substantial evidence. Intervenor Bayonet Point 5. Rejected as irrelevant and immaterial. Fourth sentence is rejected as not supported by competent substantial evidence. Third sentence partially rejected. See Finding of Fact Number 11. 16. While accepted as an accurate statement of fact, it is concluded that such considerations should not be included within the 30 minute travel time rule. 17,18. Rejected as irrelevant and immaterial to the issues in dispute. First sentence accepted as factually correct but not determinative of the reasonableness of the pro formas. First sentence accepted as factually correct but not determinative of the reasonableness of the pro formas. 22,23. Partially rejected as speculative and unsupported by competent, substantial evidence. Rejected as an improper finding of fact, as opposed to a conclusion of law after considering the factual circumstances. Accepted only if the words "if approved" are added.
The Issue The issue in this case is whether Jose Rosado, M.D., (Respondent), violated Section 458.331(1)(t), and, if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency charged with regulating the practice of medicine pursuant to Florida law. At all times material to these proceedings, Respondent has been a licensed physician in the State of Florida, having been issued license number ME 0068035. Respondent is board-certified in internal medicine and cardiovascular diseases. On March 10, 1997, Patient W.B.C., a 72-year-old man, arrived at the Leesburg Regional Medical Center (LRMC) emergency room. He complained of a sudden onset of weakness in his left hand and arm with numbness and tingling. Respondent was Patient W.B.C.'s primary care physician. Respondent admitted Patient W.B.C. with a diagnosis of cerebrovascular accident, mitral regurgitation, sick sinus syndrome and a history of myocardial infarction. Respondent ordered that Patient W.B.C. undergo a head CT scan, carotid Doppler, 2-D echocardiogram, an electroencephalogram, and a neurological consultation. Based on the test results and the consultation, Respondent diagnosed Patient W.B.C. with right cerebrovascular accident, mitral regurgitation, sick sinus syndrome, and history of myocardial infarction. Respondent then discharged the patient with Ticlid, a medication to prevent further cerebrovascular accidents and aspirin. On March 16, 1997, Patient W.B.C. was admitted to LRMC complaining of weakness, dizziness and a fever. His vital signs revealed a temperature of 103.0 F, a pulse of 118, and a blood pressure of 139/75. The emergency room physician ordered a chest x-ray, EKG, and urine and blood cultures. The chest x-ray revealed no acute cardiopulmonary abnormality. Urine tests revealed features consistent with the possibility of urosepsis. Blood work showed a white blood count of 9.15, elevated but within the normal range. Also on March 16, Respondent ordered that antibiotics be given prophylactically until the blood cultures came back from the laboratory. The cultures came back positive for staphylococcus aureus (staph). Staph is a notoriously “bad bug” and Staphylococci aureus bacteremia has a high mortality rate. Staph aureus can originate from several possible sources including infections through the urinary tract system, IV sites, aspiration into the lungs, and pneumonia (although not very common). Staphylococci in the bloodstream is known as bacteremia. Bacteremia can lead to endocarditis which is an infection of the inner lining of the heart and the heart valves. Endocarditis is a life-threatening condition that can quickly damage the heart valves and lead to heart failure or even death. Patients with certain cardiac conditions such as mitral valve regurgitation have a higher risk of developing endocarditis. Patient W.B.C. had such a history. On March 17, 1997, Patient W.B.C. was started on intravenous antibiotics by Respondent. Patient W.B.C. continued to receive the intravenous antibiotics for four days from March 17, 1997, through March 20, 1997. Respondent then switched Patient W.B.C. to oral antibiotics and kept the patient in the hospital one more day prior to discharging him with instruction to continue on the oral antibiotics for another ten days. Patient W.B.C. was discharged on March 21, 1997. He was not referred to an infectious disease specialist nor had Respondent obtained a consultation with any specialist to determine the length of time that the patient's infection should be treated. Respondent felt that he was adequately qualified to treat this patient, and the treatment appeared to work. Respondent thought the bacteria growing in the patient's blood "likely" originated from a lung infection. An infectious disease specialist should have been consulted to give guidance as to how long to treat the infection. The standard of care for treating a staph aureus infection where there is a known source of infection requires 14 days of intravenous antibiotics. Where the source is not known, then four to six weeks of antibiotics is recommended. In this case, the infection, a resistant staph infection found in the patient's blood, could have originated from several sources. While such staph could have sprung from a source in the lung, this is by no means likely and the infection could have originated from another source. The standard of care required that Respondent contact an infectious disease specialist for an evaluation and/or that he treat Patient W.B.C.’s staphylococcus with a minimum of 10 to days of intravenous antibiotics. On or about April 11, 1997, Patient W.B.C., presented to the emergency room at LRMC complaining of congestion, shortness of breath, fever of 100.3° F, and a cough. The emergency room physician performed a physical exam which revealed vital signs of a temperature of 101.3° F, a pulse of 104, and a blood pressure of 90/54. A chest x-ray, blood work and a urine culture were ordered. Patient W.B.C. was then admitted on April 11, 1997, with a diagnosis of pneumonia, an old cerebrovascular accident and coronary artery disease. The ER physician started Patient W.B.C. on a plan of treatment which included intravenous antibiotics, Vancomycin, IV fluids, and blood cultures. A physical examination on the patient revealed a temperature of 101.3° F, a pulse of 104 and blood pressure of 91/53. The attending physician diagnosed him with probable sepsis with pneumonia. On April 12, 1997, the blood cultures came back positive for Staphylococcus aureus bacteremia. On April 15, 1997, Patient W.B.C. was afebrile (without fever) and his white blood cell count was 10.23, which is within the normal range of 4.0 to 11.0. The patient continued in this condition through April 18, 1997, despite suffering from sepsis. On April 18, 1997, Respondent approved Patient W.B.C. for transfer to another institution for consideration for urgent mitral valve replacement. On April 19, 1997, Patient W.B.C. arrested and was pronounced dead at 5:53 a.m. Petitioner’s expert, Carlos Sotolongo, M.D., is board- certified in internal medicine, cardiovascular disease and nuclear cardiology. As established by Dr. Sotolongo's testimony, Respondent practiced below the standard of care by failing to treat Patient W.B.C. with a sufficient number of days of intravenous antibiotics and by failing to consult an infectious disease specialist. According to Dr. Sotolongo, there is a difference in the way that an uncomplicated pneumonia is treated as opposed to a pneumonia complicated by bacteremia. The latter must be treated more aggressively. Based on the foregoing, Respondent violated Section 458.331(1)(t), by failing to practice medicine with that level of care, skill and treatment which is recognized by a reasonably prudent similar physician as being acceptable under similar conditions and circumstances.
Recommendation Based on the foregoing, it is recommended that a Final Order be entered finding that Respondent violated Section 458.331(1)(t), and imposing a penalty which includes a formal reprimand, payment of an Administrative Fine in the amount of $5,000.00 within 180 days, and eight hours of Continuing Medical Education (CME) to be completed within the next 12 months dealing with the diagnosis and treatment of infections and/or risk management. DONE AND ENTERED this 1st day of October, 2003, in Tallahassee, Leon County, Florida. S DON W. DAVIS 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 1st day of October, 2003. COPIES FURNISHED: William M. Furlow, Esquire Katz, Kutter, Alderman, Bryant & Yon, P.A. Post Office Box 1877 Tallahassee, Florida 32302-1877 Kim M. Kluck, Esquire Department of Health 4052 Bald Cypress Way, Bin C-65 Tallahassee, Florida 32399-3265 R. S. Power, Agency Clerk Department of Health 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1701 Larry McPherson, Executive Director Board of Medicine Department of Health 4052 Bald Cypress Way Tallahassee, Florida 32399-1701
