Findings Of Fact By letter dated December 16, 1977, the Division of State Planning forwarded Petitioner's request for a hearing on an application for a Binding Letter of Interpretation submitted by North Florida Regional Hospital, Respondent. Respondent sought a determination that a proposed addition to North Florida Regional Hospital was not a Development of Regional Impact (DRI) pursuant to Section 380.06(4)(a), Florida Statutes. Thereafter Respondent filed a request with the State of Florida, Department of Health and Rehabilitative Services (HRS) for a determination that a certificate of need was not required for the proposed addition to the hospital. Petitioner thereupon requested a hearing pursuant to Section 120.57(1), Florida Statutes for a factual determination whether or not the preliminary plans for the proposed addition had been filed by Respondent prior to July 1, 1973, so as to exempt Respondent from the requirement of obtaining a certificate of need. This was forwarded to the Division of Administrative Hearings (DOAH) for the designation of a hearing officer to conduct the hearing, assigned Docket Number 78-054, and referred to the undersigned for hearing. Petitioner moved that these two cases be consolidated for hearing on the grounds that the parties and issues of fact for the two cases are the same. A prehearing conference was held on January 6, 1978, at which all pending motions were considered, and the issues to be contested at the forthcoming hearings were resolved. After full discussion by the parties, oral stipulations were entered into. These stipulations were written down by the Hearing Officer, read back to and accepted by the parties, and thereafter incorporated in the Order entered January 9, 1978. Prior to the motion hearing on July 28, 1978, no party questioned the accuracy or validity of these stipulations. On January 9, 1978, the results of the January 6, 1978 prehearing conference were memorialized in an Order stating that all parties agreed that only two basic issues were involved in this case. One was a factual determination relating to the status of Respondent's application to HRS (Docket 78-054) respecting a certificate of need and the other a legal issue regarding the interpretation of Rule 22F-2.04, Florida Administrative Code. The parties agreed that the factual issues regarding the certificate of need was a threshold question which needed to be resolved before the instant case was decided and, therefore, that case should proceed first. At this prehearing conference the parties stipulated that: If no certificate of need is required pursuant to Section 381.494, F.S. for the 150 bed addition proposed for North Florida General Hospital, and that, if in Rule 22F-2.04 Florida Administrative Code the words "whose application for a certificate of need under Section 381.494, Florida Statutes," refers only to the application under consideration and not to other applications by Respondent for a certificate of need, then the application is not a Development of Regional Impact and the Division of State Planning should issue the binding letter of interpretation re- quested by Respondent. The Hearing Officer submit a Recommended Order to Division of State Planning construing Rule 22F-2.04, Florida Administrative Code and make recommendations regarding the issuance of a binding letter of interpretation. The parties will submit briefs by January 13, 1978 on the interpretation of Rule 22F-2.04, Florida Administrative Rule to Hearing Officer for his consideration in preparing his Recommended Order. By Order entered January 19, 1978 Petitioner's Motion for Consolidation of Dockets 77-2223 and 78-054 was denied and the entering of a Recommended Order in Docket 77-2223 was stayed pending completion of the hearing in Docket 78-054. The hearing in Docket No. 78-054 was held on March 31, 1978 and the Recommended Order was filed April 13, 1978. On July 11, 1978 HRS entered its Final Order in Docket Number 78-054 sustaining the ultimate findings of the Hearing Officer that Respondent had filed preliminary plans for the proposed addition prior to July 1, 1973 and did not now require a certificate of need for the proposed addition to the hospital.
Recommendation RECOMMENDED that Respondent, North Florida Regional Hospital, be issued a Binding Letter of Interpretation that its proposed three-floor addition to the hospital is not a Development of Regional Impact. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 15th day of September, 1978. K. N. AYERS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: William C. Andrews, Esq. and Philip A. Delaney 1133 N.W. 23rd Avenue Gainesville, FL 32601 Robert M. Rhodes, Esq. Post Office Box 1876 Tallahassee, FL 32302 Peter Skoro, Esq. Assistant County Attorney Post Office Drawer "CC" Gainesville, FL 32602 Jon Moyle, Esq. and Daniel H. Jones, Esq. Post Office Box 3888 West Palm Beach, FL 33402 C. Lawrence Keesey, Esq. Staff Attorney Division of State Planning 335 Carlton Building Mailing address: 530 Carlton Bldg. Tallahassee, FL 32304 =================================================================
The Issue Assuming a need for additional hospital beds in Broward County by 1987, the agreed "planning horizon," the question becomes which, if any, of the six or seven proposals advanced in these proceedings would be the best means of meeting the need. Central to the bed need issue in this case is the parties' enigmatic stipulation: 2/ that there is a need for acute care beds in Broward County in 1987, and this need should be determined on a regionalized basis. Pembroke Pines joins in this stipulation only to the extent that a need does not exist in the proposed service area of SBHD. Prehearing Stipulation C.8. The parties were unable to agree on where these regional boundaries should be drawn, among other things.
Findings Of Fact There is a glut of hospital beds in Broward County. Twenty hospitals have some 6,000 licensed or authorized beds in the county exclusive of free- standing psychiatric hospitals and their beds. In 1980, when Broward County's population numbered 1,018,200, six thousand beds would have been at least a quarter again too many by accepted standards. In 1987, Broward County's population has been projected to be between 1,137,160 and 1,276,911 by the University of Florida's Bureau of Economic and Business Research (BEBR). Other population projections for the year 1987 range all the way to 2,260,700, but it is highly unlikely that so many people will ever live in Broward County, much less by the year 1987. There is no assurance that even BEBR's high projection of 1,276,911 will be reached by 1987. If it should be, the ratio of beds to population in Broward County as a whole would only then fall within the upper reaches of arguably appropriate levels, assuming no additional beds in the interim. CENTROID MOVES WEST Whatever its magnitude, there is no reason to expect population growth to cluster around existing hospitals. Contrary trends have, indeed, already emerged. Population growth in western Broward County is expected to continue at a rate in excess of the rate for the county as a whole. From 1970 to 1980, the population in Broward County's western and central planning subregions (see Appendix) combined went from 140,581 to 417,461 while the population in eastern Broward County went from 479,518 to 600,736. Broward County is most densely populated in its eastern portion, but, increasingly, people have been moving into housing further west in the county. The result has been rapidly growing occupancy at Bennett, the county's westernmost hospital; and high occupancy, often to capacity, at University, which is further north than Bennett but almost as far west. Occupancy rates at Pembroke Pines, the southwestern most hospital in the county, have also increased. If additional hospital beds could be added in the west without affecting the efficiency of operations at other hospitals in the west, their addition would still have the effect of depressing demand for hospital beds in eastern Broward County or, at least, of slowing the rate of increase in demand. The four public hospitals along the Atlantic seaboard are operating at efficient occupancy levels and, in the case of SBHD's Memorial Hospital (Memorial), at capacity, but many hospitals in eastern Broward County are operating extremely inefficiently, including HCA's North Beach Medical Center (North Beach) with 1981 average occupancy of 37.1 percent, and Humana's Community Hospital of South Broward (Community), with 1981 average occupancy of 42.7 percent. THE PROPOSALS HCA, NBHD and Humana, the three organizations which together already own and operate half of the short-term hospitals in Broward County are vying for the right to build a new hospital in the northwest part of the county. In addition to its contention that a new hospital should be built in the northwest to open in 1987, HCA argues that present conditions justify expansion of University long before then, and Humana put on evidence tending to show a need for expansion at Bennett by 1987. SBHD has proposed a new hospital for southwest Broward to open at 84 beds in 1987 and go to 128 beds in 1988. Bennett's expansion is the only other proposal to meet (at least in part) the bed need alleged to exist in southwest Broward. THE NORTHWEST By anybody's reckoning, HCA's Margate is located in northwest Broward already. Depending on how far south the boundary of a northwest region is drawn, HCA's University can also be said to be located in northwest Broward. Humana's Cypress Community Hospital (Cypress), the closest hospital to the east, lies north of University and south of Margate; and Bennett is almost due south of University. NBHD's North Broward Hospital lies further east and considerably north of Cypress. HCA acquired Margate by acquiring or merging with Hospital Affiliates International (HAI) the for-profit hospital chain that formerly owned Margate. Even before the acquisition, planning had begun (by HAI) to replace the facility. Licensed at 150 beds, its effective capacity is significantly lower. Situated on 3.7 acres that do not provide adequate parking, Margate is, in numerous respects, an example of how hospitals should not be built. Hospital ancillary departments were added to a physical plant originally designed as a nursing home and the result has been narrow, dead end corridors and a pathetic 400 gross square feet per bed. There was uncontroverted testimony that the corridors amounted to "life and safety code" violations. No other such violations were specified, however, nor was any statute or regulation cited with respect to the corridors. The testimony was, in fact, that HRS has granted a variance for the corridors based on a similar variance by the Joint Commission on Accreditation. The evidence revealed no request by any licensing or other authority to renovate or to replace Margate, nor any threat to delicense so much as a single bed at Margate. HCA proposes nevertheless to close Margate down when it opens a new 250-bed hospital on 15-acres of a 21-acre site two miles to the north, at a total project cost of $33,750,577. Alternatively, HCA argues it is statutorily entitled to build a 150- bed replacement hospital, and uncontroverted testimony put the project cost at $25,696,403, rather than three-fifths of the 250-bed hospital cost used by HRS. Replacing Margate on its existing site, like renovating it, would not be economical, and for many of the same reasons. Whether at 150 or 250 beds, the HCA proposals include 24 intermediate care, 20 obstetric, 14 pediatric and 12 critical care beds. The proposed hospital would have Margate's medicare and medicaid provider numbers, so that it would not be a "new hospital" under TEFRA regulations. At 150 beds, 929 square feet per bed are contemplated at a cost of $171,309 per bed. At 250 beds, 766 square feet per bed are contemplated at a cost of $135,002 per bed. Humana proposes to build a new 150 bed hospital on a site yet to be acquired in northwest Broward at a project cost of $27,772,500. As proposed, 3/ Coral Ridge General Hospital would have 20 obstetrical beds, 20 pediatric beds, 10 critical care beds and 100 medical-surgical beds. There would be 972 square feet per bed at a cost per bed of $185,150. Larger by a third but in many other ways comparable to Humana's proposed Coral Ridge is NBHD's proposal for a new hospital. At 200 beds, the total project cost would be $37,203,658 or $186,018 per bed and there would be some 950 square feet per bed. Twenty-four obstetric, 20 pediatric, 16 critical care and 140 medical-surgical beds are proposed. A site of approximately 20 acres has been donated, subject to CON approval of the project. University seeks immediate authority to house 73 additional medical- surgical beds in shelled-in space now available on site. University's 209 beds had 83.2 percent average occupancy in 1981, and, at the time of hearing, when it was full to overflowing, University had experienced 87 percent average occupancy for 1982. The uncontroverted evidence was that University can add 73 beds at a total project cost in the neighborhood of $310,000, or $4,227 per bed, resulting in 576 square feet per bed at University. These figures do not reflect associated ancillary costs already or to be incurred. SOUTH AND CENTRAL Although Bennett has not yet reached efficient occupancy levels, a strong trend in that direction has been demonstrated. Average occupancy in 1981 was 63.5 percent, up from 58.5 percent in 1980. By CON number 1996, dated March 15, 1982, Bennett was authorized to spend $8,780,100 to build a parking garage, establish a separate day surgery and expand ancillaries. In these proceedings it seeks authority to add 64 beds in existing shelled-in space. Of these beds 30 would be "minimal care" beds and the remainder would be medical-surgical beds. Exclusive of ancillary costs already authorized, the project cost would be $1,600,000 or $25,000 per bed. Finally SBHD's proposed WBH would have 128 beds at a total project cost of $38,386,000 or $299,891 per bed. WBH would have 852 square feet per bed, 8 critical care beds and 120 medical-surgical beds, and would be built with a view toward expansion. It would operate as a "satellite" of Memorial. DRAWING LINES In order to analyze the County by regions, boundaries must be drawn. Each applicant for a certificate of need (CON) to add hospital beds in northwest Broward county defined "northwest" differently. Both Humana and NBHD saw the hospitals they proposed as serving the 1987 need each identified in its particular northwest planning area. For its purposes, Bennett defined a west central region of Broward County; and SBHD defined its proposed service area for WBH to include the southwest and part of the south central Broward County planning regions. Objections to the WBH proposal focused on southern Broward County, an aggregate of planning subregions extending east to the ocean. SBHD, HCA and Bennett all analyzed bed need on the basis of regions coterminous with the service areas of specific institutions: that of the proposed WBH, in the case of the SBHD; the combined service areas of University and Margate, in the case of HCA; and Bennett's own service area. Defining the service area of an existing institution is a different problem than forecasting the perimeters of a hospital's service area, before the hospital is built. The key to defining historical service areas is information about where patients served by a hospital lived. Hospitals keep data on patient origin by zip code, and the South Florida Hospital Association compiled some of this information for 1979, in its Hospitalization Utilization and Patient Origin Project (HUPOP). Studies like HUPOP provide a basis for judgments about whether a particular zip code furnishes a hospital a great enough fraction of its total patients (or patient days) to be considered part of the hospital's primary or secondary service area. A lightly populated zip code might be included in a hospital's service area on the basis of the size of the share of all patients it sends to hospitals who go to that particular institution, even if the number is a small fraction of the total for the hospital. As the parties demonstrated at great length, it is possible to attach undue significance to regional or other boundaries. They are not, after all, magical barriers through which persons seeking hospital care cannot pass. Beds available to people living within a region do not cease to exist just because they are located on the other side of some arbitrary line. No hospital in Broward County meets the need of the whole population within its service area, or serves nobody outside its service area. There are substantial overlaps in hospital service areas. Any calculation of need must take beds already available into account. The parties' stipulation that there is a need for an unspecified number 3/ of additional beds in an unspecified northwest region does not address the question of what beds outside any such area are nevertheless available to residents of the area. DEMOGRAPHIC PROJECTIONS Once an area is defined, the next step is forecasting its population for the year 1987. Such forecasts begin with census counts or population estimates, which require judgment and extrapolation themselves, unless an actual count in a census block or other census division is relied on. Taking points at either end of a time interval, future projections are made using linear extrapolation, proportional growth, shift-share and other methodologies. Forecasts represent a weighted average of these projections, informed by a judgment on such things as "ultimate build out," and the likely effects of anticipated transportation improvements. Forecasts of population cohorts or components are also pertinent because child bearing women and children have special needs, and because older people are more likely to use hospital beds than younger people. John Short and Associates, Inc., forecast a total population of 256,800 in the northwest area defined by HCA (NW-HCA) in 1987, based on medium projections by the Bureau of Economic and Business Research at the University of Florida. Urban Decision Systems, Inc. forecast a total population of 110,053 for the northwest Broward County planning subregion used by NBHD (NW-NBHD), and Dr. Ladner projected a population increase in the northwest area as defined by Humana (NW-HU) of 76,812 between 1982 and 1987. In making his only population projection for NW-HU, Dr. Ladner assumed an 8.6 percent compound annual growth rate, which the weight of the evidence showed to be unrealistically high. For that and other reasons, Dr. Ladner's population forecast has not been deemed reliable. The John Short and Urban Decisions forecasts are theoretically compatible, pertaining, as they do, to two different areas, They represent compound annual growth rates of 6.69 and 5.86 percent, respectively, and together indicate the likely order of magnitude of the growth of population in northwest Broward County by 1987. The population in western Broward generally, and northwest Broward in particular, is younger on average than the population of the county as a whole. In the northwest planning subregion, 21.7 percent of the population was under 15, 59 percent was 15 to 64, and 19.3 percent was 65 or older in 1980. Also in 1980, women aged 15 to 44 comprised 20.1 percent of the population. Assuming the population of the northwest planning subregion ages slightly in line with the projections for the county as a whole, 19.4 percent of the population in 1987 should be under 15, 80.2 percent should be under 65 and 19.8 percent should be 65 or over. The proportion of women 15 to 44 should grow to 20.8 percent. Dr. Ladner's 1987 projection for Bennett's service area, zip codes 33313, 33314, 33317, 33322, 33323, 33324, 33325, 33326, 33327, 33328, 33330, 33331 and 33332, reflects the same methodology he used for the northwest. Even though the part of Bennett's service area to the south and west of the hospital is not as well developed as northwest Broward, so that there is more justification for Dr. Ladner's growth rate assumption there, his projections for Bennett's service area of 252,644 5/ in 1985 and 368,050 in 1990 are probably too high. Thousands of acres of residential and other development are planned or under construction in these zip codes, however. If Arvida sells 2,680 housing units between now and 1987 in its Indian Trace development in zip code 33327 (whether it can depends on interest rates and other factors) and if household size there averages 2.7, as projected, that development alone would house 7,236 additional persons in 1987. Some time between 1984 and 1988, construction of I-75 will be completed, and southwest Broward will become a 30-minute commute from Miami. When 1-95 was completed in south Palm Beach County, annual population growth jumped from 5,000 to 33,000. The land in Palm Beach County cost less to develop and is closer to the ocean, although further from Miami, than land in southwest Broward County. Population forecasts for the southwest and south central Broward planning regions have been made by Dr. Stanley Smith and by Urban Decisions Systems, Inc. For the two regions combined, their projections for 1987 are 183,700 and 173,800, respectively. For the WBH proposed service area, as revised, zip codes 33025, 33026, 33027, 33028, 33029, 33326, 33327, 33328, 33330, 33331 and 33332, Dr. Smith forecast a 1987 population of 69,128. This number was arrived at without reference to the projected opening of Interstate Highway 75, but Dr. Smith did not think that prospect called for an adjustment in the forecast. For south Broward County, as a whole, i.e., the southwest, southeast and south central planning subregions combined, Dr. Smith projected a population of 380,711 in 1986, and 388,795 in 1987. Gateway's Exhibit No. 16. In 1980, 10.6 percent of the population in the revised WBH proposed service area was 65 or over, as compared to 21.7 percent in the three south regions as a whole. NBHD FORMULAE If facilities in an area serve only that area and nobody enters or leaves the area for hospitalization, the use rate of the population will be the sum of draw rates of the hospitals in the area. In analyzing the need for a specific institution, or assessing the likely draw of a new institution, it is necessary to assign some fraction of the whole population in its service area as its market share. Existing institutions have historical market shares which can be used where historical conditions are not predicted to change, while, for new institutions, other assumptions have to be made. Demand-based need formulae express utilization rates as patient days per 1,000 population. Translating patient days per thousand persons per year to beds needed per thousand persons requires dividing by 365 to get an average daily census per thousand persons then multiplying by the inverse of the optimal average occupancy rate assumed. One hundred percent occupancy of hospital beds on a regular basis would be undesirable, if achievable, because of the lack of reserve capacity to meet fluctuating demand. As a practical matter the problems of matching patients in hospital rooms with more than one bed on the basis of gender, service, smoking habits, and diagnosis prevent 100 percent utilization. For acute care medical-surgical beds, an average occupancy of 80 percent is a desideratum with which no health care planner who testified disagreed, although Dr. Schoeman spoke in terms of 80 to 85 percent average occupancy. Even lower average occupancies are recommended for certain specialty beds, including obstetric (75 percent), pediatric (65 percent) and cardiac intensive care (75 percent) beds. Eighty percent average occupancy as a health planning goal for all short-term beds taken together is supported by the weight of the evidence. (The Florida Task Force on Institutional Needs calls for a 79.4 percent weighted average occupancy). The goal of 80 percent occupancy underlies the national standard of 4 beds per 1,000 persons. This average also reflects the age distribution of the national population and other nationally average conditions. In 1980, 11.3 percent of the population in the United States was 65 or over, while the 65 and older age group made up 22 percent of Broward County's population. In Broward County, where the population is older on average than the population of the country as a whole and where there is significant seasonal variation in population (so that greater reserve capacity is desirable), the consensus is that 4.5 beds per 1,000 persons is a more appropriate rule of thumb. Based on historical demand in Broward County, Mr. Baehr of Amherst Associates, Inc. made an "area specific" analysis. In 1981, 752.1 patient days in Broward County hospitals were attributed on average to every 1,000 persons in Broward County under 65, while 3,442.8 patient days were attributed on average to every 1,000 Broward County residents 65 and older. Mr. Baehr also calculated service specific use rates and, on that basis, the need for, obstetric and pediatric beds. These specialized use rates are reflected in the aggregate use rates for the under 65 age cohort, but breaking them out separately permits the use of service specific occupancy rates. Mr. Baehr's 1981 Broward County use rates correspond to 2.58 beds per 1,000 persons under 65 (at 80 percent occupancy for all services) and 11.79 beds per 1,000 persons 65 and older. Free-standing psychiatric facilities were excluded from the calculations. To the extent the number of people leaving Broward County for hospitalization exceeds the number entering Broward County for that purpose, these utilization rates understate demand. A net outflow of this kind can be inferred from Medpar data reflecting such movement by medicare patients. Dr. Schoeman adjusted Broward County use rates for out-migration and concluded that county-wide use rates were 810.2 patient days per 1,000 population under age 65 and 3623.8 patient days per 1,000 population 65 and over. Dr. Schoeman's 1981 Broward County use rates correspond to 2.7747 beds per 1,000 under 65 (at 80 percent occupancy for all services) and 12.41 beds per 1,000 persons 65 and older (at 80 percent occupancy). The Health Systems Plan, which lacks any legal significance, but purportedly reflects local conditions, uses 861.8 patient days per 1,000 population under 65 and 3204.6 patient days per 1,000 population 65 and over. These numbers correspond to 2.95 and 10.97 beds per 1,000, respectively. At least in the absence of area-specific utilization rates, other utilization rates are used by health care planners. Dr. Kennedy calculated use rates specific to five zip codes in South Broward County for the year 1979 for each of four age cohorts, but testified that the most reasonable utilization rates to use in South Broward were those developed by the Florida Task Force on Institutional Need (TFIN), viz.: Medical-Surgical Patient Days per 1,000 Persons 0-64 565.9 65 and over 2982.2 ICC and CCU 0-64 43.1 65 and over 321.1 Psychiatric 0-64 44.9 65 and over 44.6 Obstetrics Females 15-44 186.3 Pediatrics 0-14 149.2 Gateway's Exhibit No. 12, Table 2, page 4. These figures supposedly represent the experience in Florida statewide. Finally, in the southern United States in 1980, utilization rates calculated from the National Hospital Discharge Survey (NHDS) were 348.2 patient days per 1,000 population under 15, 796.5 patient days per 1,000 population aged 15 to 44, 1,554.9 patient days per 1,000 population aged 45 to 64 and 3,994.2 patient days per 1,000 population 65 or over. The choice of appropriate utilization rates is complicated by the fact that there is no guarantee that historic rates will persist. Advances in medical science may make hospitalization for some conditions obsolete. Aging of the population over 65 on account of continued disproportionately elderly in- migration may result in greater utilization rates. Aging of the 15 to 64 age cohort would presumably result in greater utilization of certain services but might result in less utilization of obstetric beds, and so forth. The 1981 Broward County use rates adjusted for out-migration may prove an unreliable guide to future hospital utilization rates but no other use rates were shown by the evidence to be more reliable. Assuming these rates and applying the average occupancy rate of 80 percent, bed need in Broward County can appropriately be predicted by a weighted average of 2.7747 beds per 1,000 population under age 65, and 12.41 beds per 1,000 population 65 and older. FINANCIAL FEASIBILITY The two-tined "immediate and long-term" financial feasibility criterion was described by HRS' Mr. Konrad as a "go-no go gauge." With respect to each application, the questions are 1) whether financing for start-up costs is available and 2) whether the facility will have enough revenue to support operations, on a long-term basis. GO It is clear from the evidence that HCA and Humana each have access to massive amounts of capital, much more than needed to accomplish any or all of their respective expansion and construction proposals in Broward County. HCA proposes to use 100 percent equity for each of its projects. Humana plans 22.3 percent equity and 77.7 percent debt for the new hospital; and 86 percent equity and 14 percent debt for its expansion project at Bennett. Issue was not joined as to their contentions, amply supported by expert opinion, that operations at proposed facilities would quickly become profitable. Although HCA's showing in this regard as to the proposed 150-bed version of NWBRMC was fairly broad brush, nothing in the evidence raised any doubt but that, with substantial occupancy assured (by Margate's closing) almost from the start, NWBRMC would be profitable at 150 beds. NBHD is a legislatively created tax district charged with serving the hospital needs of residents of the district. NBHD has ad valorem taxing authority and also has a healthy operating margin, partly because it charges indigent care against tax revenues, not at cost, but at full charges. In addition, it has accumulated, in a funded depreciation account, all the equity it plans to use to build a new 200-bed hospital in northwest Broward. NBHD had originally planned to issue bonds for the total project cost but changed its plans for fear medicare and medicaid reimbursement for the additional interest expense might be jeopardized, because the additional borrowing might be deemed unnecessary. In the past, NBHD has expended five or six million dollars annually for routine equipment and other capital costs. At the time of the hearing, NBHD had CONs authorizing work (to be done over periods of time not specified in the record) at a cost of at least $58,000,000, including expenditures for revenue- generating extra beds at its North Broward Hospital. NBHD's debt capacity is on the order of $100,000,000, in the event it becomes necessary to issue bonds in an amount greater than the $16,815,000 now contemplated. NBHD also has a line of bank credit ($35,000,000 at half of prime) that should give it some flexibility in timing going to market for its permanent financing, even though, under its charter, NBHD's short-term borrowing is limited to no more than 15 percent of its assets for no more than one year. HCA sought to show that NBHD's proposal was not financially feasible by trying to show that NBHD could not muster the capital necessary to build a new 200 bed hospital, sustain the loss anticipated during the initial year of operations, and meet its other commitments, but these efforts fell short of the mark. There was no attempt to discredit the revenue projections for the 200-bed hospital or to prove that it would not become profitable in the second year of operations, if built. NO GO The evidence showed that WBH is not financially feasible as far as financing construction, unless planned renovations at SBHD's Memorial are scaled down to levels significantly below those contemplated in an outstanding CON, or delayed past completion times contemplated when the outstanding renovation CON was applied for. At the time of the hearing, no amendment of the renovation CON had been obtained, nor, as far as the evidence showed, had any been applied for. SBHD filed its application for a CON for the modernization of Memorial at or about the time (in the same batching cycle) as it filed its application for a CON for WBH. In the Memorial modernization application it sought, and it has since received, authorization to make capital improvements to Memorial costing $95,419,000 to be completed in November of 1985. Gateway's Exhibit No. In order to accomplish this, it planned to borrow $75,245,000 by issuing tax-exempt bonds. In order to build WBH, which it planned to open (at 84 beds) in January of 1987, SBHD planned to issue tax-exempt bonds in the amount of $31,930,000. Arthur R. Guastella, a municipal investment banker retained by SBHD, testified that SBHD was not in a position to incur additional indebtedness of more that $80,000,000, in May of 1981. (Vol. 36, 37) Because of tax revenues, SBHD's revenues have exceeded expenses in the last few years despite operating losses at Memorial and the walk-in center SBHD operates near Pembroke Pines. SBHD has nevertheless been able to put aside only $1,000,000 for WBH. Management conceded that building WBH was incompatible with renovating Memorial on schedule. In short, SBHD is in the posture of seeking authority for projects which, taken together, it lacks the financial wherewithal to accomplish. SBHD failed to demonstrate financial feasibility in another important respect, counsel's heroic efforts notwithstanding. The basic assumptions of average annual occupancy at WBH in the beginning years, which underlie the Price, Waterhouse projections, were not established as reasonable by competent evidence. These assumptions were first predicated on an analysis, prepared by Herman Smith Associates, of demand in the service area originally proposed by WBH; but faulty population projections came to light and the work of Herman Smith Associates was not relied on at hearing. Instead, a much larger service area was drawn, including some zip codes closer to other hospitals than to the site proposed for WBH, and various problematic assumptions were made (e.g., a 100 percent draw rate from several zip codes). This work was done by a certified public accountant with an admitted lack of expertise in projecting bed need, and no health care planner or other qualified expert testified that the utilization or occupancy rates projected for WBH were reasonable. Detailed information about the population of south Broward County and its likely growth was put on by SBHD and other parties. The record is replete with competent evidence of various methods of projecting a population's bed need, based on the number, age and sex of the population. It is thus possible to calculate bed need for southern Broward County, each of the three planning subregions there, and the service areas proposed for WBH. Even when reduced by the number of beds already available in an area, bed need does not automatically translate into demand for beds at a particular institution, however; and SBHD failed to prove the reasonableness of its demand or utilization assumptions for WBH. SBHD has argued that Gateway's expert, Dr. Kennedy, supplied this omission with his Newtonian "spatial interaction model," but the record does not support this contention. For one thing, the model was shown to be a highly unreliable predictor of real world phenomena. For another, time unrelated to population change is not a variable in the model, nor is a lag in utilization at a new hospital otherwise taken into account, so that the 46 percent occupancy figure for WBH in 1987 on which SBHD seeks to rely is, according to Dr. Kennedy, unrealistically high for an initial operating year. Even if WBH opened in 1986, Dr. Kennedy predicted something like 33 percent average occupancy for 1987. Gateway's Exhibit No. 12, p. 28. For 1989, the Price, Waterhouse compilation that SBHD offered in an effort to prove WBH's financial feasibility, SBHD Exhibit No. 184, assumes 39,274 patient days at WBH, which represents an average daily census of 107.6 or average occupancy for 1989 of 84 percent. Without the "start-up curve" adjustment, Dr. Kennedy's model predicts less than 50 percent occupancy on average for 1989 at WBH. With the adjustment, the figure is lower. SBHD has also argued that evidence of record of utilization projections at other proposed hospitals should be looked to in order to show the reasonableness of its utilization assumptions for WBH. For the first two years, occupancy levels projected at WBH do closely parallel similar projections for, e.g., the new 200 bed hospital proposed by NBHD, but this in no way shows the reliability of the utilization assumptions used for the projections at WBH. Assuming some bed need arguendo, WBH's draw rate and so its utilization and occupancy levels would depend on, among other things, its location vis-a-vis physicians' offices, other hospitals, patients' residences and so forth, factors that differ in south Broward from conditions in northwest Broward. As proposed, WBH would be smaller, have fewer services and a different medical staff than the hospital proposed by NBHD. Among the consequences of the opening of Interstate 75 may be a dramatic shift to utilization of Dade County hospitals by the population of southwest Broward County. Lifemark, who owns and operates Palmetto General located in North Dade County on I-75, did not prove, however, that any such shift can be counted on to occur. Palmetto is currently operating at efficient levels and management is contemplating expansion based on the prospect of population growth in Dade County alone, although no letter of intent to apply for a CON has yet been filed. While Palmetto serves about four percent of the need for patient days attributable to southwest Broward's population, this represents something under one percent of Palmetto's total patient days. EXPANSION PROPOSALS COMPARED University hospital, at the time of the hearing, had occupancy rates which interfered with its efficient operation and required frequent emergency room to emergency room and other transfers. The parties stipulated: that University has experienced an occupancy level for the past year of approximately 87 percent including an occupancy level in excess of 90 percent during certain winter months. The parties further stipulate that in the case of University such occupancy levels have resulted in an adverse impact on certain aspects of patient care. Specifically, there have been problems in treating emergency room patients because of the emergency room being used as a holding area for patients that are waiting for beds to be available. There is difficulty in assuring continuity of care as patients have had to receive hospital care at facilities for which their regular physician does not have staff privileges, and a new physician had to be involved. There have been significant problems and inconveniences to patients as a result of the unavailability of beds. Furthermore, there have been difficulties encountered in spouses, relatives, and friends being able to visit patients when such patients have had to receive their care at other hospitals because of transportation difficulties (which is particularly a problem for the elderly). The demand for University's services has been convincingly demonstrated by real people seeking hospital care there. Beginning with a 1987 population forecast (extrapolated linearly from Dr. Ladner's 1985 and 1990 projections) that was probably too high for the area within zip codes 33313, 33314, 33317, 33322, 33323, 33324, 33325, 33326, 33327, 33328, 33330, 33331, and 33332 (Bennett's service area), Mr. Richardson multiplied by a use rate that was probably too low and assumed an 80 percent occupancy rate to calculate a 1987 bed need for the area of 1,291 beds. The understated use rate tends to compensate for the overstated population projection, and the end result is not unreasonable. From 1,291, beds already available at Bennett (204), Florida Medical Center (400), Plantation General (262) and Doctors General (202) were subtracted and a net bed need of 221 was forecast for Bennett's service area. Proceeding in the same manner with reference to Bennett's primary service area only (the same area except for zip codes 33317, 33330, 33331 and 33332), a net bed need of 145 was forecast there for 1987. Finally, applying the same utilization rate to the increment by which the population of Bennett's service area is projected (extrapolation from Ladner) to increase between 1982 and 1987 yields a prediction that the incremental population alone will use 323 beds a day on average. Allotting 177 of these full beds (average daily census) among Bennett and the other hospitals in the service area would bring each of them to 80 percent average occupancy and still leave an average daily census of 146, which, again assuming 80 percent occupancy, is a prediction of bed need in Bennett's service area of 183 for 1987. These predictions assume that the hospitals in Bennett's service area will draw no more patient days from outside the service area in 1987 than they do in 1982, but also unrealistically assume that the hospitals in the service area will have a combined 100 percent draw of patients in the service area. Bennett's primary service area overlaps University's secondary service area. No allowance has been made for any increase in University's draw that might result from expansion at University, nor has the historical draw of hospitals outside the service area been taken into account. Due east of Bennett is the largest aggregation of underutilized hospital beds in the county. In the east central planning subregion, the ratio of beds to population is 7.1 per 1,000. Among the 64 beds Bennett proposes to add are 30 "minimal care" beds. At least by that name, there are no such hospital beds in Florida, and only 52 in the United States. The room charge for a "minimal care" bed is expected to be 25 or 30 percent less than the comparable charge for a medical-surgical bed, reflecting lower nurse to bed ratios for "minimal care" beds than for ordinary medical-surgical beds. A condominium medical office complex adjacent to Bennett is expected to be finished by the fall of this year. The complex' 55,000 square feet are expected to provide office space for 41 physicians who together already account for 34 percent of Bennett's admissions. These condominium offices are already sold even though construction has not been completed. NEW HOSPITAL PROPOSALS FOR NORTHWEST COMPARED HCA contends that 73 new beds are needed in NW-HCA now and an additional 100 by 1987, for a total of 173; HRS and NBHD contend that 200 new beds are needed in NW-NBHD in 1987; and Humana contends that 223 beds are needed in NW-HU, plus 64 beds at Bennett, for a total of 287 by 1987. In making its case for the low number, HCA unilaterally assumed it should have the same market share it now enjoys in NW-HCA in 1987, and ignoring the increased attractiveness of a new 250 bed facility, as compared to Margate, put on evidence tending to show that, if all 173 beds were allotted to HCA, population increase in NW-HCA would assure their efficient utilization in 1987 without increasing the proportion of patient days from NW-HCA at University and the proposed 250-bed NWBRMC combined over the proportion now received by Margate and University combined. The evidence showed that adding 173 beds in NW-HCA would still leave a bed NBHD of 76 assuming 80 percent average occupancy, to be met by hospital beds outside of NW-HCA. NBHD put on evidence tending to show that the 1987 population in NW- NBHD could efficiently use 471 hospital beds. Assuming Margate or a hospital replacing Margate supplied 150 beds, 321 beds would still be needed in 1987 to serve the residents of NW-NBHD, NBHD contends. These forecasts ate based on the most conservative population and utilization predictions for northwest Broward County. Humana tried to prove that 254 additional beds will be needed in NW-HU by 1987, of which an expansion at University would supply 73, leaving 181. The 181 figure should be reduced by 34, Humana contends, because "since Margate experienced an average occupancy of 57.5 percent in 1981, it must be allocated an additional 34 patients per bed [sic] to raise it to the 80 percent occupancy level," Proposed Findings of Fact, Conclusions of Law and Recommended Order of Petitioners, Humedicenter, Inc. d/b/a Coral Ridge General Hospital and Humana of Florida, Inc. d/b/a Bennett County Hospital, p. 72, leaving 147 beds needed which Humana's proposed 150 bed hospital would supply. This argument is difficult to follow, but Humana's incremental analysis (with low use rates tending to compensate for exaggerated population projections) does suggest that opening 250 or so beds in NW-HU in 1987 would not depress patient flows to hospitals outside NW-HU below current levels. Unlike HCA, neither Humana nor NBHD has a hospital in northwest Broward County (NW-NBHD, NW-HU or NW-HCA). Competition would be enhanced there by building a new non-HCA hospital in the area, although it is true that most people presently leave the area to go to non-HCA hospitals. It is possible to overstate the advantage of competition in this context, moreover, inasmuch as people generally go to the hospital a physician recommends or, in emergencies, to the closest hospital. Competition may only foster better amenities for the medical staff rather than lower charges to the patients, but efforts by physicians or others to improve quality of care for patients would presumably have more chance of success in a competitive environment. Miami-Dade puts on continuing education programs for nurses at Humana's five south Florida hospitals and a new Humana hospital in northwest Broward would presumably also make space available for them. HCA and NBHD also have various training programs at their Broward County facilities. There was no showing that facilities for training in Broward County were limited. Humana publishes pamphlets about new medical technology for physicians on staff at its hospitals. With respect to expansion and new hospital proposals alike, the parties stipulated: The applicants and HRS agree that each applicant can adequately staff its project with all necessary personnel, including technical, nursing, and-medical personnel, and that this is not a comparative issue in this proceeding. Pembroke Pines does not join in this stipulation. The applicants and HRS agree that each applicant has adequate community support for its proposed project, and that this is not a comparative issue in this proceeding. Pembroke Pines does not join in this stipulation. 11. The parties agree that a new hospital in the northwest Broward area would attract a large number of physicians presently practicing in that area to join the medical staff of the new hospital. The need to cover this hospital, in addition to hospitals currently being covered, will result in physician inconvenience and more travel time. The most important comparative issues joined by the parties involved financial projections. FINANCIAL COMPARISONS The parties' proposed construction costs are not strictly comparable. The incremental costs per bed stated by Bennett, University and for the "additional" 100 beds at the proposed 250 bed version of NWBRMC do not reflect all of the costs that are properly associated with making a hospital bed available for occupancy. But it is true that construction costs for expansion are less than those for new construction when there is excess ancillary capacity and ordinarily even where there is not. Even among the non-incremental projections for new hospitals, there have been different assumptions about, among other things, inflation rates for different items and the dates operations would begin. Under one view, the site donated to NBHD, and any other gifts to NBHD for a new hospital, should be counted as costs of the new hospital. The parties have stipulated that projected construction costs are reasonable, and the costs of constructing a hospital are only the beginning, in any event. Once occupancies projected for the second or third year of operations are reached, any of the three new hospitals proposed for the northwest will have gross revenues every year well in excess of the "total project costs" expected to be incurred to build the hospital in the first place. CHARGE COMPARISONS Since people are hospitalized for a whole range of maladies, and receive different kinds and combinations of diagnostic and therapeutic services while in hospital, it is difficult to compare the charges for or cost of care at one hospital with the charges for or cost of care at another. It will not do to look at room charges only as a sort of gauge, because the medicare program has created pressure to keep room charges down, and hospitals have responded to the pressure by increasing charges for ancillary services. To take the most recent increases into account, therefore, ancillaries have to be included, even though they vary from patient to patient. NBHD's Exhibit 55 reflects one approach to comparing hospital charges. There charges for the 30 services most frequently "sold" by hospitals are listed for three of the four HCA Broward County hospitals, two of Humana's three Broward County hospitals and all three of NBHD's hospitals, for fiscal years ended in 1982. One difficulty with this approach is that at least one service listed on this exhibit (as "chemical profile"), evidently means one thing to one hospital laboratory and something else to another. Affecting all the comparisons on the chart is the difference among fiscal year ends for NBHD (June 30), Humana (August 31), and HCA (December 31). With hospital charges in Broward County escalating at annual rates on the order of 14 or 15 percent, a half year's difference in fiscal year ends can make essentially identical charge structures appear to differ significantly. HCA complains, in addition, that there is no justification for including one (Margate) but not the other (North Beach) of the Broward County hospitals it acquired from HAI. Humana's Community Hospital of South Broward was also omitted. Both Community and North Beach have extremely low occupancy rates, however, well below what anybody is projecting for a new hospital in northwest Broward County. Even making a rough adjustment for inflation, NBHD's charges were lower, on average, in more categories than the two Broward Humana Hospitals' average charges, than vice versa; and the same is true as between NBHD's average charges and the three Broward HCA hospitals' average charges. Invoking formulas developed by the Health Care Cost Containment Board, the parties made various comparisons using "gross revenue per adjusted patient day, gross revenue per admission," "total net revenue per adjusted patient day," and "total net revenue per adjusted admission." See NBHD Exhibit No. 71. The for-profit hospitals, but not NBHD's hospitals, subtract income taxes in arriving at "total net revenue." Using the same HCA and Humana Broward County hospitals whose charges were compared to all of NBHD's hospitals in NBHD Exhibit No. 55, average gross revenues were computed for fiscal years ended 1981 and stated per adjusted patient day ($340.60 for NBHD, $475.72 for HCA and $476.38 for Humana) and per adjusted admission ($2,870.70 for NBHD $3,154.67 for HCA, and $3,365.70 for Humana). NBHD Exhibit No. 56. On average, HCA's Florida hospitals' total net revenue per adjusted patient day is about five percent lower than the average for Humana's hospitals in Florida in 1980. HCA Exhibit No. 20. In 1980, the average total net revenue per adjusted patient day for HCA's Plantation General and University Community was $291.50 as compared to the $252.80 average for the two smaller of the three NBHD hospitals. HCA Exhibit No. 18. On the other hand, the 1980 average total net revenue per adjusted admission for the same two HCA hospitals was $1,842.60, as opposed to $2,363.60 for the same two NBHD hospitals. HCA Exhibit No. 18. Since indigent patients have longer average stays than other hospital patients, and NBHD treats significantly more indigent patients than HCA's University, Margate and Plantation, or Humana's Bennett and Cypress, the NBHD "adjusted admission" in charge or cost per adjusted admission comparisons represents more patient days. COST COMPARISONS In Broward County historically, average net operating expense per adjusted patient day and per adjusted admission at HCA's Plantation and University exceeded the NBHD averages in 1981. HCA Exhibit No. 25. For fiscal years ended 1981, HCA (Margate, University and Plantation) Humana (Cypress and Bennett) and NBHD incurred average costs per adjusted patient day of, respectively, $311.29, $289.79 and $262.27. NBHD Exhibit No. 56. NBHD's average cost per adjusted admission was higher than the others, on account of longer average stays. Because of the differing assumptions underlying the various pro forma financial statements, expenses stated there are not strictly comparable, although HCA produced a witness who made arithmetic adjustments purportedly simulating uniform inflation assumptions for comparative purposes, with reference to the proposed 250 bed NWBRMC. Hospitals have variable operating costs, fixed operating costs and fixed capital costs (which are related to construction costs and reflect financing costs). It is because fixed costs are so high (60 percent on average in the industry) that occupancy levels are crucial to a hospital's financial viability. In general, hospitals with 200 to 400 beds are more efficient than larger or smaller hospitals. Satellite hospitals like the proposed WBH enjoy certain economies by sharing administration, purchasing and the like with another established hospital. Both HCA and Humana buy hospital equipment and supplies at substantial discounts, comparable to those available through shared purchasing organizations to which NBHD (which has 1,304 approved beds itself as well as the possibility of discounts on account of governmental status) belongs. Private patients and insurers pay charges but hospitals are reimbursed through the medicare and medicaid programs in amounts fixed by a cost-based formula. (This amount comes to less than charges, and the difference is known as the medicaid or medicare "contractual.") Changes in the reimbursement formula have been dictated by the Tax Equity and Fiscal Responsibility Act of 1981 (TEFRA), but not yet fully implemented. The consensus is that new TEFRA regulations will slow the rate of growth in reimbursement rates. These new regulations designate a base year for existing institutions by which to measure cost increases, but exempt new hospitals from certain reimbursement caps. HCA showed that it makes better economic sense to start over and build a new hospital than to renovate Margate, but did not show it was under legal compulsion to do either. Taking replacement of Margate as a given, HCA argues that the cost of adding 100 beds in northwest Broward County should be viewed as the difference between the cost of building NWBRMC at 250 beds and the cost of building it at 150 beds. In projecting both of these costs, HCA ignored the cost of closing Margate, 6/ but the cost of closing Margate would be the same whether it was replaced by a 150-bed or a 250-bed hospital, so the difference between the replacement costs would be unaffected. The incremental cost per bed is less meaningful than the relative per-bed costs for the whole institution at 150 as opposed to 250 beds. Any savings in construction costs inures first to the benefit of HCA. Such savings benefit the public directly only to the extent they may affect costs for medicaid or medicare reimbursement purposes. With respect to the proposed Margate replacement, the question of medicare and medicaid reimbursement is complicated by the change proposed in the ratio of debt to equity. Assuming optimal occupancies, however, operating a hospital with 200 to 400 beds would be less costly per bed than operating a 150-bed hospital, and these economies should be reflected in lower medicaid and medicare reimbursement. INDIGENT CARE Not all hospitals seek to serve the poor. Those that do receive medicaid reimbursement for services rendered to some, but not all, of their patients who are otherwise uninsured and unable to pay. Humana's Cypress did not have a medicaid provider number at the time of hearing. HCA's University had no medicaid contract until September of 1982 and has had less than one percent medicaid utilization since then. At its three hospitals, on average, NBHD has six to eight percent medicaid utilization. While NBHD hospitals are reimbursed for services to indigent persons ineligible for medicaid benefits at full charges, paid from NBHD's ad valorem tax revenues, HCA and Humana's hospitals in Broward County receive nothing for services rendered to medically indigent persons who are medicaid-ineligible. 7/ In addition, some patients with the ability to pay for hospital services fail to do so. Their charges are cumulated under the heading "bad debts." For want of complete information, some charges for indigent care may end up in this category. In the fiscal year ending August 31, 1982, Cypress' bad debts amounted to 3.3 percent of total revenues as compared to NBHD's 11 or 12 percent in recent years. NBHD has deposit requirements, but does not enforce them in every case at its hospitals. Some 27 to 30 percent of NBHD's hospitals' services are provided to persons unable to make full payment. Nobody is denied medical care for inability to pay at NBHD's existing hospitals. This policy would apply at the proposed 200 bed hospital in the northwest, as well. The sole exception to this policy has been NBHD's refusal to accept "economic transfers." Attempts by for-profit hospitals to transfer patients whose resources have been exhausted or whose inability to pay has become clear, in order to free beds for paying patients, have been resisted by NBHD, although medically indigent patients are accepted for transfer to NBHD hospitals whenever they need services that are unavailable at the transferring hospital. The HCA and Humana hospitals in Broward County do not turn emergencies away for inability of patients to pay, but do not, as a general rule, accept non-emergent cases when there is no assurance they will be paid. There are exceptions: On occasion medical staff admit non-emergent, indigent patients. Northwest Broward County is attractive to HCA, Humana and NBHD just because of the low numbers of indigent persons there, perhaps three or four percent of the population. In its second year of operation, a new hospital in northwest Broward County can expect less than one admission of an indigent patient per day. Medicare utilization should also be significantly lower than elsewhere in the county, where 56.4 percent of total patient days are attributable to medicare patients on average. TAXES AND SUBSIDIES Under current regulations, for-profit hospitals like HCA's and Humana's, but not nonprofit hospitals like NBHD's receive a return on equity component in medicare and medicaid reimbursement. (The rate is a healthy 150 percent of an average interest rate on certain government securities.) All other things being equal, an HCA or Humana hospital in northwest Broward would, if financed even in part by equity, receive more governmental reimbursement for rendering the same medicare or medicaid services than a hospital owned and run by NBHD, how much more depending on the debt-equity mix. HCA proposes to use 100 percent equity, in replacing Margate. On the other hand, HCA and Humana pay federal income and other taxes which NBHD does not pay. For comparative purposes, it is appropriate to assess the net fiscal impact of each proposal on government, but, with consolidated tax accounting and the number and diverse financial circumstances of HCA and Humana hospitals, setting medicare and medicaid payments off against federal income taxes can be viewed in more than one way. Federal tax liability that would otherwise arise from profits from operations at one HCA or Humana hospital can be offset by losses from operations at another hospital. NBHD not only pays no taxes, it also levies a tax, on real property within District boundaries. About four fifths of these revenues, on the order of $28,000,000 or $29,000,000 annually, are allocated to charges for "indigent care." There would be no NBHD for a tax increase to finance a new hospital, however. The "funded depreciation" account from which the equity contribution is to come does not, moreover, contain past tax receipts, except to the extent the fraction of NBHD's operating margin attributable to indigent care made its way into "funded depreciation." Similarly, tax revenues would not be used to operate the proposed hospital, except to the extent tax revenues were used to pay charges for the care of indigent patients. The terms "cost-shifting" or "charge shifting" describe the fact that some payers subsidize other payers. In the case of for-profit hospitals, private pay patients and third party payors other than the government pay rates that are set high enough to cover expenses incurred in treating patients whose bills go unpaid and to make up for the medicaid and medicare contractuals. With respect to NBHD hospitals, tax revenues are looked to to pay the full cost of the care of medically indigent persons, but bad debts are still reflected in the NBHD charge structures. To the extent for-profit hospitals provide services to medically indigent persons, the cost of those services is shifted to uninsured private pay patients, persons who pay premiums for hospital insurance, and the medicare and medicaid programs. On the other hand, all owners of taxable real property within the North Broward Hospital District bear the expense of the treatment of medically indigent persons at NBHD hospitals. Aside from expanding by building new hospitals, a course on which HCA, Humana, and NBHD alike seem to have embarked, these organizations have different uses for profits or any positive operating margin which a new hospital in the northwest might generate. Humana uses such money for corporate overhead, including shareholders' dividends, and to finance things like the work of Dr. Rollo who, in conjunction with researchers at Vanderbilt University and elsewhere, evaluates new medical technology as it becomes available. Humana also designates some of its hospitals "centers of excellence" in certain fields, encouraging research and specialized treatment of particular afflictions. HCA uses money from operations of its hospitals for overhead and other corporate purposes. Money from the NBHD hospitals' operations is used to finance specialized services in Broward County, principally at Broward General, which has, among other costly and unprofitable services, a substantial neonatology unit. LESS EXPENSIVE FOR WHOM For people who pay no taxes, have no hospitalization insurance, and are unable to pay hospital bills, the cost of each of the proposals for the northwest would be the same: nothing. (These people might not have access to services at a for-profit institution, however.) Private insurers, those that pay their premiums, federal taxpayers who finance the medicaid and medicare programs, taxpayers in the North Broward Hospital District and patients themselves all will bear part of the cost of any new hospital in northwest Broward. Private pay patients and their insurers will supply almost half of the total patient revenue. Historically, charges, which are the basis for these patients' payment, have been lower at NBHD hospitals than at HCA's or Humana's Broward County hospitals, on average, as reflected most clearly by the gross revenue per adjusted patient day comparisons. It is little consolation to private payers that Humana and HCA pay taxes while NBHD does not. But, in forecasting the relative costs to cost-based payors, projected federal income taxes should be subtracted from reimbursement for equity projected to be received by Humana and HCA through the medicare and medicaid programs. Even after income taxes are netted, HCA or Humana would receive compensation for equity that NBHD would not receive. Especially in light of evidence that shows that NBHD's expenses per patient day have been lower in the past than such expenses at the for-profit hospitals, the weight of the evidence established that cost-based reimbursement at a new northwest Broward hospital would, in all probability, be less if the hospital were operated by NBHD than if it were operated by HCA or Humana. Because of the medicare and medicaid rules allowing a return on equity component in reimbursement of providers, an NBHD hospital would receive less medicare and medicaid reimbursement even if the NBHD hospital had the same operating costs. The taxpayers of the District pay for the care of the medically indigent at NBHD hospitals, but not for the care of these persons at Broward County's Humana and HCA hospitals. There is no provision, presently, for using NBHD tax revenues to pay for the care at HCA or Humane hospitals in Broward County of medically indigent persons who are not eligible for medicare or medicaid. On the other hand, to the extent medically indigent persons are cared for by HCA and Humana, the costs of that care are "shifted" to, among others, private pay patients which, if persons paying for hospital insurance are included, constitute a group within the North Broward Hospital District that presumably overlaps substantially with taxpayers in the District. OBSTETRICS AND PEDIATRICS The parties stipulated that 20 to 24 obstetric beds were needed in northwest Broward County. Each proposal for a new hospital in northwest Broward County contemplates an obstetric service of this magnitude. Eighteen obstetric beds and 24 pediatric beds will be needed in 1987 to serve the population of NW- NBHD alone. There is presently a shortage of obstetric beds in Broward County as a whole. The site proposed for the new NBHD hospital in northwest Broward County is considerably further from other obstetric beds in the county than the site proposed for NWBRMC, although NWBRMC is mere central to the northern part of the county where there is a dearth of obstetric beds. In general, traffic in Broward County moves better north and south than east and west. Humana is not so committed to any particular site, that it could not build a hospital even further away. 8/ At NBHD's Broward General a training program for physicians wishing to specialize in obstetrics is already in place. Broward General has an intensity of pediatric and obstetric services that make it a desirable location for such a program for residents. A community hospital serving a population with a significant child bearing cohort, like that proposed for the northwest, would be an appropriate complement to the existing program.
Recommendation It is accordingly, RECOMMENDED: That HRS dismiss Lifemark as a party to these proceedings. That HRS grant NBHD's application for a CON to build a 200-bed hospital, in its entirety. That HRS grant HCA's application to build NWBRMC but only at 150 beds and without an obstetric service; and that HCA be authorized to expend to that end $25,969,403.00, less an appropriate adjustment for the lack of an obstetric service. That HRS deny the application for a CON to build a new hospital filed by South Broward Hospital District in its entirety. That HRS deny the application for a CON to build a new hospital filed by Humedicenter, Inc. d/b/a Coral Ridge General Hospital in its entirety. That HRS deny University Community Hospital's application for a CON to add beds there in its entirety. That HRS deny the application for a CON to add beds filed by Humana of Florida, Inc. d/b/a Bennett Community Hospital, in its entirety. DONE and RECOMMENDED this 12th day of April, 1983, in Tallahassee, Florida. ROBERT T. BENTON II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of April, 1983.
Conclusions THIS CAUSE comes before the State of Florida, Agency for Health Care Administration (“the Agency”) regarding Certificate of Need (“CON”) Application No. 10202, which sought the establishment of a 100-bed acute care hospital in Broward County, District 10, that had been filed by East Florida Healthcare, LLC (“East Florida”), in the second batching cycle of 2013. The Agency preliminarily denied the application. On December 30, 2013, East Florida filed a petition for formal hearing contesting the denial, which was forwarded to the Division of Administrative Hearings (“DOAH”). In January 2014, the above-named intervenors filed motions to intervene, which were granted. On April 15, Filed April 22, 2014 4:57 PM Division of Administrative Hearings 2014, East Florida filed a notice of voluntary dismissal and the DOAH issued an order closing the file and relinquishing jurisdiction back to the Agency. IT IS THEREFORE ORDERED AND ADJUDGED THAT: 1. The denial of CON Application 10202 is upheld. ) ORDERED this 5@Any of pur . 2014, in Tallahassee, Florida. , Secretary Agency For Héalth Care Administration
The Issue Whether the Respondent committed the violation alleged in the Amended Administrative Complaint and, if so, what penalty should be imposed.
Findings Of Fact The Department is the state agency charged with the responsibility of regulating the practice of nursing in the State of Florida. At all times material the allegations of this case, the Respondent was a licensed registered nurse, license number RN 3254372. At all times material to the allegations of this case the Respondent was employed at the North Shore Medical Center located in Miami, Florida. The Respondent was assigned to the pediatric floor and was to provide nursing services to patients on that floor during her duty hours. Tamy Ziaukas was also employed at North Shore and had been there prior to the Respondent's employment. Ms. Ziaukas was designated the senior nurse for the pediatric floor from 11:00 p.m. until 7:00 a.m. As such, she helped coordinate the work for the nurses assigned to the floor. Although technically not a supervisor, Ms. Ziaukas did perform duties as a charge nurse for the floor. The Respondent did not appreciate the manner in which Ms. Ziaukas assumed and performed the duties of charge nurse for the floor. Although their disagreement was little more than a personality conflict, the Respondent maintains that such disagreement fueled the allegations of the instant case. Such contention is not supported by the persuasive evidence in this case. To the contrary, the weight of the credible evidence supports the finding that the Respondent inappropriately handled a pediatric patient on or about September 29, 1998. The Respondent responded to a pediatric patient whose I-V had come out. The patient was agitated and did not want the line to be reinserted. Three nurses were present for the procedure. Respondent was to insert the I-V while Ms. Ziaukas and another nurse, Ms. Mezadieu, assisted. The patient continued to be difficult. When the patient refused to cooperate, the Respondent either slapped or pushed the patient on his face to get him to submit to the procedure. The force of the slap was not sufficient to leave a mark on the patient's face. Nevertheless, Ms. Ziaukas reported the incident to her supervisor; moreover, the Respondent reported the incident to the patient's physician. When the nurses were questioned about the incident Ms. Ziaukas characterized the touch as a "slap." The Respondent did not deny touching the child but said it was a "push" to get the child to calm down. The third witness to the incident has no current recollection of the event. Statements taken from the witnesses at or near the time of the incident confirmed that the Respondent touched the child's face. The use of a forceful push or slap to a pediatric patient's face would not be medically necessary. A difficult patient may be held down or subdued without inappropriately touching the face. Prior to this incident, the Respondent had performed all aspects of her job in a satisfactory manner. The Respondent was given the opportunity to attend an anger management class but declined the employer's offer. Subsequently, the Respondent left employment at North Shore Medical Center.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health, Board of Nursing enter a Final Order imposing an administrative fine in the amount of $250, requiring the Respondent to remit the agency's costs in prosecuting this case, requiring the Respondent to complete an anger management course, and placing the Respondent on probation for a period of three years. DONE AND ENTERED this 3rd day of October, 2001, in Tallahassee, Leon County, Florida. J. D. PARRISH 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 3rd day of October, 2001. COPIES FURNISHED: Reginald D. Dixon, Esquire Agency for Health Care Administration Post Office Box 14229, Mail Stop 39 Tallahassee, Florida 32317-4229 Peter Loblack, Esquire Law Office of Peter Loblack, P.A. Office Parks at California Club 1030 Ives Dairy Road, Suite 132 Miami, Florida 33179 Lawrence Allen Schwartz, Esquire 8005 Northwest 155th Street Miami, Florida 33016 Theodore M. Henderson, Agency Clerk Department of Health 4052 Bald Cypress Way Bin A00 Tallahassee, Florida 32399-1701 Ruth R. Stiehl, Ph.D., R.N., Executive Director Board of Nursing 4080 Woodcock Drive, Suite 202 Jacksonville, Florida 32207-2714
The Issue The ultimate issue is whether the application of Petitioner, University Medical Park, for a certificate of need to construct a 130-bed acute care hospital in northern Hillsborough County, Florida should be approved. The factual issues are whether a need exists for the proposed facility under the Department's need rule and, if not, are there any special circumstances which would demonstrate the reasonableness and appropriateness of the application notwithstanding lack of need. The petitioner, while not agreeing with the methodology, conceded that under the DHRS rule as applied there is no need because there is an excess of acute care beds projected for 1989, the applicable planning horizon. The only real factual issue is whether there are any special circumstances which warrant issuance of a CON. The parties filed post-hearing findings of fact and conclusions of law by March 18, 1985, which were read and considered. Many of those proposals are incorporated in the following findings. As indicated some were irrelevant, however, those not included on pertinent issues were rejected because the more credible evidence precluded the proposed finding. Having heard the testimony and carefully considered the Proposed Findings of Fact, there is no evidence which would demonstrate the reasonableness and appropriateness of the application. It is recommended that the application be denied.
Findings Of Fact General Petitioner is a limited partnership composed almost entirely of physicians, including obstetricians/gynecologists (OB/GYN) and specialists providing ancillary care, who practice in the metropolitan Tampa area. (Tr. Vol. 1, pp. 103-104). Petitioner's managing general partner is Dr. Robert Withers, a doctor specializing in OB/GYN who has practiced in Hillsborough County for over thirty years. (Tr. Vol. 1, pp. 24- 26, 28-29.) Dr. Withers was a prime moving force in the founding, planning and development of University Community Hospital and Women's Hospital. (Tr. Vo1. 1, pp. 26-28, 73; Vol. 4, pp. 547-548.) Petitioner seeks to construct in DHRS District VI a specialty "women's" hospital providing obstetrical and gynecological services at the corner of 30th Street and Fletcher Avenue in northern Hillsborough County and having 130 acute care beds. 1/ (Tr. Vol. 1, pp. 34, 74-75, Vol. 5, pp. 678-679, Northside Ex.-1, pp. 1-2, Ex.-4A.) The proposed hospital is to have 60 obstetrical, 66 gynecological and 4 intensive care beds. (Tr. Vol. 8, P. 1297, Northside Ex.-1 Table 17, Ex.-B.) DHRS District VI is composed of Hardy, Highlands, Hillsborough, Manatee and Polk counties. Each county is designated a subdistrict by the Local Health Council of District VI. Pasco County, immediately north of Hillsborough, is located in DHRS District V and is divided into two subdistricts, east Pasco and west Pasco. If built, Northside would be located in the immediate vicinity of University Community Hospital (UCH) in Tampa, Hillsborough County, Florida. Less than 5 percent of the total surgical procedures at UCH are gynecologically related, and little or no nonsurgical gynecological procedures arc performed there. (Tr. Vol. 4, p. 550.) There is no obstetrical practice at UCH, although it has the capacity to handle obstetric emergencies. The primary existing providers of obstetrical services to the metropolitan Tampa area are Tampa General Hospital (TGH) and Women's Hospital (Women's). (Tr. Vol. 1, p. 79, Northside Ex.-4, Tr. Vol. 7, pp. 1074-1075.) TGH is a large public hospital located on Davis Islands near downtown Tampa. (Tr. Vol. 1, pp. 47-48, Vol. 8, pp. 1356, 1358.) TGH currently has a 35 bed obstetrical unit, but is currently expanding to 70 beds as part of a major renovation and expansion program scheduled for completion in late 1985. (Tr. Vol. 7, pp. 1049, 1095, Vol. 8, pp. 1367-1368, Vol. 10, P. 1674, Northside Ex.- 2, P. 3.) In recent years, the overwhelming majority of Tampa General's admissions in obstetrics at TGH have been indigent patients. (Tr. Vol. 1, P. 61, Vol. 8, pp. 1375- 1379; Vol. 9, P. 1451; TGH Ex.-3.) Tampa General's internal records reflect that it had approximately 2,100 patient days of gynecological care compared with over 38,000 patient days in combined obstetrical care during a recent eleven month period. (TGH Ex.-3..) Women's is a 192 bed "specialty" hospital located in the west central portion of the City of Tampa near Tampa Stadium. (Tr. Vol. 1, pp. 63-64, 66-67; Vol. 10 P. 1564; Northside Ex.-4.) Women's Hospital serves primarily private-pay female patients. (Vol. 1, pp. 79, 88-89; Vol. 6, pp. 892-893.) Humana Brandon Hospital, which has a 16 bed obstetrics unit, and South Florida Baptist Hospital in Plant City, which has 12 obstetric beds, served eastern Hillsborough County. (Tr. Vol. 7, P. 1075; Northside Ex.-2, P. 3; Northside Ex.-4 and Tr. Vol. 1, P. 79; Northside Ex.-4.) There are two hospitals in eastern Pasco County, which is in DHRS District V. Humana Hospital, Pasco and East Pasco Medical Center, each of which has a six bed obstetric unit. Both hospitals are currently located in Dade City, but the East Pasco Medical Center will soon move to Zephyrhills and expand its obstetrics unit to nine beds. (Tr. Vol. 1, pp. 108- 109; Tr. Vol. 7, P. 1075; Vol. 8, pp. 1278-1281; Northside Ex.-4.) There are no hospitals in central Pasco County, DHRS District V. Residents of that area currently travel south to greater Tampa, or, to a lesser extent, go to Dade City for their medical services. (Tr. Vol. 2, pp. 266-267, 271-272; Vol. 7, p. 1038.) Bed Need There are currently 6,564 existing and CON approved acute care beds in DHRS District VI, compared with an overall bed need of 5,718 acute care beds. An excess of 846 beds exist in District VI in 1989, the year which is the planning horizon use by DHRS in determining bed need applicable to this application. (Tr. Vol. 7, pp. 1046-1047, 1163, 1165-66; DHRS Ex.-1.) There is a net need for five acute care beds in DHRS District V according to the Department's methodology. (Tr. Yolk. 7, pp. 1066, 1165; DHRS Ex.-1.) The figures for District VI include Carrollwood Community Hospital which is an osteopathic facility which does not provide obstetrical services. (Tr. Vol. 1, P. 158; Vol. 7, p. 1138; Vol. 8, P. 1291.) However, these osteopathic beds are considered as meeting the total bed need when computing a11 opathic bed need. DHRS has not formally adopted the subdistrict designations of allocations as part of its rules. (Tr. Vol. 7, pp. 1017-1017, 1019; Vol. 8, pp. 1176, 1187.) Consideration of the adoption of subdistricts by the Local Health Council is irrelevant to this application. 2/ Areas of Consideration in Addition to Bed Need Availability Availability is deemed the number of beds available. As set forth above, there is an excess of beds. (Nelson, Tr. Vol. VII, P. 1192.) Tampa General Hospital and Humana Women's Hospital offer all of the OB related services which UMP proposes to offer in its application. These and a number of other hospitals to include UCH, offer all of the GYN related services proposed by Northside. University Community Hospital is located 300 yards away from the proposed site of Northside. UCH is fully equipped to perform virtually any kind of GYN/OB procedure. Humana and UCH take indigent patients only on an emergency basis, as would the proposed facility. GYN/OB services are accessible to all residents of Hillsborough County regardless of their ability to pay for such services at TGH. (Williams, Tr. Vol. IX, P. 1469; Baehr, Tr. Vol. X, P. 1596; Splitstone, Tr. Vol. IV, P. 582; Hyatt, TGH Exhibit 19, P. 21.) Utilization Utilization is impacted by the number of available beds and the number of days patients stay in the hospital. According to the most recent Local Health Council hospital utilization statistics, the acute care occupancy rate for 14 acute care hospitals in Hillsborough County for the most recent six months was 65 percent. This occupancy rate is based on licensed beds and does not include CON approved beds which are not yet on line. This occupancy rate is substantially below the optimal occupancies determined by DHRS in the Rule. (DHRS Exhibit 4; Contis, Tr. Vol. VII, P. 1069.) Utilization of obstetric beds is higher than general acute care beds; however, the rules do not differentiate between general and obstetric beds. 3/ Five Hillsborough County hospitals, Humana Women's, St. Joseph's, Tampa General, Humana Brandon, and South Florida Baptist, offer obstetric services. The most recent Local Health Council utilization reports indicate that overall OB occupancy for these facilities was 82 percent for the past 6 months. However, these computations do not include the 35 C0N-approved beds which will soon be available at Tampa General Hospital. (DHRS Exhibit 4). There will be a substantial excess of acute care beds to include OB beds in Hillsborough County for the foreseeable future. (Baehr, Tr.w Vol. X, pp. 1568, 1594, 1597.) The substantial excess of beds projected will result in lower utilization. In addition to excess beds, utilization is lowered by shorter hospital stays by patients. The nationwide average length of stay has been reduced by almost two days for Medicare patients and one day for all other patients due to a variety of contributing circumstances. (Nelson, Tr. Vol. VII, P. 1192; Contis, Tr. Vol. VII, P. 1102; Baehr, Tr. Vol. X, pp. 1583-84; etc.) This dramatic decline in length of hospital stay is the result of many influences, the most prominent among which are: (1) a change in Medicare reimbursement to a system which rewards prompt discharges of patients and penalizes overutilization ("DGRs"), (2) the adaptation by private payers (insurance companies, etc.) of Medicare type reimbursement, (3) the growing availability and acceptance of alternatives to hospitalization such as ambulatory surgical centers, labor/delivery/recovery suites, etc. and (4) the growing popularity of health care insurance/delivery mechanisms such as health maintenance organizations ("HMOs"), preferred provider organizations ("PPOs"), and similar entities which offer direct or indirect financial incentives for avoiding or reducing hospital utilization. The trend toward declining hospital utilization will continue. (Nelson, Tr. Vol. VII, pp. 1192-98; Baehr, Tr. Vol. X, pp. 1584-86; etc.) There has been a significant and progressive decrease in hospital stays for obstetrics over the last five years. During this time, a typical average length of stay has been reduced from three days to two and, in some instances, one day. In addition, there is a growing trend towards facilities (such as LDRs) which provide obstetrics on virtually an outpatient basis. (Williams, Tr. Vol. IX, P. 1456; Hyatt, Tr. Vol. IV, P. 644.) The average length of stay for GYN procedures is also decreasing. In addition, high percentage of GYN procedures are now being performed on an outpatient, as opposed to inpatient, basis. (Hyatt, Tr. Vol. IV, P. 644, etc.) The reduction in hospital stays and excess of acute care beds will lower utilization of acute care hospitals, including their OB components, enough to offset the projected population growth in Hillsborough County. The hospitals in District VI will not achieve the optimal occupancy rates for acute care beds or OB beds in particular by 1989. The 130 additional beds proposed by UMP would lower utilization further. (Paragraphs 7, 14, and 18 above; DHRS Exhibit 1, Humana Exhibit 1.) Geographic Accessibility Ninety percent of the population of Hillsborough County is within 30 minutes of an acute care hospital offering, at least, OB emergency services. TGH 20, overlay 6, shows that essentially all persons living in Hillsborough County are within 30 minutes normal driving time not only to an existing, acute care hospital, but a hospital offering OB services. Petitioner's service area is alleged to include central Pasco County. Although Pasco County is in District V, to the extent the proposed facility might serve central Pasco County, from a planning standpoint it is preferable to have that population in central Paso served by expansion of facilities closer to them. Hospitals in Tampa will become increasingly less accessible with increases in traffic volume over the years. The proposed location of the UMP hospital is across the street from an existing acute care hospital, University Community Hospital ("UCH"). (Splitstone, Tr. Vol. IV, P. 542.) Geographic accessibility is the same to the proposed UMP hospital and UCH. (Smith, Tr. Vol. III, P. 350; Wentzel, Tr. Vol. IV, p. 486; Peters, Tr. Vol. IX, P. 1532.) UCH provides gynecological services but does not provide obstetrical services. However, UCH is capable of delivering babies in emergencies. (Splitstone, Tr. Vol. IV, p. 563.) The gynecological services and OB capabilities at UCH are located at essentially the same location as Northside's proposed site. Geographic accessibility of OB/GYN services is not enhanced by UMP's proposed 66 medical-surgical beds. The accessibility of acute care beds, which under the rule are all that is considered, is essentially the same for UCH as for the proposed facility. As to geographic accessibility, the residents of Hillsborough and Pasco Counties now have reasonable access to acute care services, including OB services. The UMP project would not increase accessibility to these services by any significant decrease. C. Economic Accessibility Petitioner offered no competent, credible evidence that it would expand services to underserved portions of the community. Demographer Smith did not study income levels or socioeconomic data for the UMP service area. (Smith, TR. Vol. III, pp. 388, 389.) However, Mr. Margolis testified that 24 percent of Tampa General's OB patients, at least 90 percent of who are indigents, came from the UMP service area. (Margolis, Tr. Vol. X, P. 1695.) The patients proposed to be served at the Northside Hospital are not different than those already served in the community. (Withers, Tr. Vol. II, P. 344.) As a result, Northside Hospital would not increase the number of underserved patients. Availability of Health Care Alternative An increasing number of GYN procedures are being performed by hospitals on an outpatient basis and in freestanding ambulatory-surgical centers. An ambulatory-surgical center is already in operation at a location which is near the proposed UMP site. In fact, Dr. Hyatt, a UMP general partner, currently performs GYN procedures at that surgical center. (Withers, Tr. Vol. I, P. 150; Hyatt, Tr. Vol. IV, pp. 644, 646. Ambulatory surgical centers, birthing centers and similar alternative delivery systems offer alternatives to the proposed facility. Existing hospitals are moving to supply such alternatives which, with the excess beds and lower utilization, arc more than adequate to preclude the need for the UMP proposal. (Nelson, Tr. Vol. VII, P. 1204, 1205, 1206; Williams, Tr. Vol. IX, pp. 1453, 1469; Contis, Tr. Vol. VII, pp. 1154; Contis, Tr. Vol. VII, pp. 1151, 1154.) Need for Special Equipment & Services DHRS does not consider obstetrics or gynecology to be "special services" for purposes of Section 381.494(6)(c)6, Florida Statutes. In addition, the services proposed by UMP are already available in Hillsborough and Pasco Counties. (Nelson, Tr. Vol. VII, pp. 1162, 1210.) Need for Research & Educational Facilities USF currently uses Tampa General as a training facility for its OB residents. TCH offered evidence that the new OB facilities being constructed at Tampa General were designed with assistance from USF and were funded by the Florida Legislature, in part, as an educational facility. (Powers, Tr. Vol. IX, P. 1391; Williams, Tr. Vol. IX, pp. 1453-1455.) The educational objectives of USF for OB residents at Tampa General are undermined by a disproportionately high indigent load. Residents need a cross section of patients. The UMP project will further detract from a well rounded OB residency program at Tampa General by causing Tampa General's OB Patient mix to remain unbalanced. (Williams, Tr. Vol. IX, P. 1458; Margolis, Tr. Vol. X, P. 1695.) UMP offered no evidence of arrangements to further medical research or educational needs in the community. (Nelson, Tr. Vol. VII, P. 1213. UMP's proposed facility will not contribute to research and education in District VI. Availability of Resources Management UMP will not manage its hospital. It has not secured a management contract nor entered into any type of arrangement to insure that its proposed facility will be managed by knowledgeable and competent personnel. (Withers, Tr. Vol. I, p. 142.) However, there is no alleged or demonstrated shortage of management personnel available. Availability of Funds For Capital and Operating Expenditures The matter of capital funding was a "de novo issue," i.e., evidence was presented which was in addition to different from its application. In its application, Northside stated that its project will be funded through 100 percent debt. Its principal general partner, Dr. Withers, states that this "figure is not correct." However, neither Dr. Withers nor any other Northside witness ever identified the percentage of the project, if any, which is to be funded through equity contributions except the property upon which it would be located. (UMP Exhibit 1, p. 26; Withers, Tr. Vol. I, P. 134.) The UMP application contained a letter from Landmark Bank of Tampa which indicates an interest on the part of that institution in providing funding to Northside in the event that its application is approved. This one and one half year year old letter falls short of a binding commitment on the part of Landmark Bank to lend UMP the necessary funds to complete and operate its project and is stale. Dr. Withers admitted that Northside had no firm commitment as of the date of the hearing to finance its facility, or any commitment to provide 1196 financing as stated in its application. (UMP Exhibit I/Exhibit Dr. Withers, Tr. Vol. I, P. 138.) Contribution to Education No evidence was introduced to support the assertion in the application of teaching research interaction between UMP and USF. USF presented evidence that no such interaction would occur. (Tr. Vol. IX, P. 1329.) The duplication of services and competition for patients and staff created by UMP's facility would adversely impact the health professional training programs of USF, the state's primary representative of health professional training programs in District VI. (Tr. Vol. IX, pp. 1314-19; 1322-24; 1331-1336.) Financial Feasibility The pro forma statement of income and expenses for the first two years of operation (1987 and 1988) contained in the UMP application projects a small operating loss during the first year and a substantial profit by the end of the second year. These pro formas are predicated on the assumption that the facility will achieve a utilization rate of 61 percent in Year 1 and 78 percent in its second year. To achieve these projected utilization levels, Northside would have to capture a market share of 75-80 percent of all OB patient days and over 75% of all GYN patient days generated by females in its service area. (UMP, Exhibit 1; Withers, Tr. Vol. I, P. 145, Dacus; Tr. Vol. V, P. 750-755.) These projected market shares and resulting utilization levels are very optimistic. It is unlikely that Northside could achieve these market shares simply by making its services available to the public. More reasonable utilization assumptions for purposes of projecting financial feasibility would be 40-50 percent during the first year and 65 percent in the second year. (Margolis, Tr. Vol. X, P. 1700; Baehr, Tr. Vol. X, pp. 1578, 1579, 1601.) UMP omitted the cost of the land on which its facility is to be constructed from its total project cost and thus understates the income necessary to sustain its project. Dr. Withers stated the purchase price of this land was approximately $1.5 million and it has a current market value in excess of $5 million. (Withers, Tr. Vol. I, pp. 139, 140.) Dr. Withers admitted that the purchase price of the land would be included in formulating patient charges. As a matter of DHRS interpretation, the cost of land should be included as part of the capital cost of the project even if donated or leased and, as such, should be added into the pro formas. UMP's financial expert, Barbara Turner, testified that she would normally include land costs in determining financial feasibility of a project, otherwise total project costs would be understated (Withers, Tr. Vol. I, P. 141; Nelson, Tr. Vol. VII, pp. 1215, 1216; Turner, Tr. Vol. X, P. 1714.) In addition, the pro formas failed to include any amount for management expenses associated with the new facility. Dr. Withers admitted UMP does not intend to manage Northside and he anticipates that the management fee would be considerably higher than the $75,000 in administrator salaries included in the application. (Withers, Tr. Vol. I, pp. 143, 144.) Barbara Turner, UMP's financial expert, conceded that the reasonableness of the percent UMP pro formas is predicated on the reasonableness of its projected market share and concomitant utilization assumptions. These projections are rejected as being inconsistent with evidence presented by more credible witnesses. The UMP project, as stated in its application or as presented at hearing, is not financially feasible on the assumption Petitioner projected. VIII. Impact on Existing Facilities Approval of the UMP application would result in a harmful impact on the costs of providing OB/GYN services at existing facilities. The new facility would be utilized by patients who would otherwise utilize existing facilities, hospitals would be serving fewer patients than they are now. This would necessarily increase capital and operating costs on a per patient basis which, in turn, would necessitate increases in patient charges. (Nelson, Tr. Vol. VII, pp. 1217-1219; Baehr, Tr. Vol. X, P. 1587.) Existing facilities are operating below optimal occupancy levels. See DHRS Exhibit 4. The Northside project would have an adverse financial impact on Humana, Tampa General Hospital, and other facilities regardless of whether Northside actually makes a profit. See next subheading below. The Northside project would draw away a substantial number of potential private-pay patients from TGH. Residents of the proposed Northside service area constitute approximately 24 percent of the total number of OB patients served by TGH. The Northside project poses a threat to TGH's plans to increase its non- indigent OB patient mix which is the key to its plans to provide a quality, competitive OB service to the residents of Hillsborough County. (Nelson, Tr. Vol. VIII, P. 1225; Margolis, Tr. Vol. X, P. 1695.) Impact Upon Costs and Competition Competition via a new entrant in a health care market can be good or bad in terms of both the costs and the quality of care rendered, depending on the existing availability of competition in that market at the time. Competition has a positive effect when the market is not being adequately or efficiently served. In a situation where adequate and efficient service exists, competition can have an adverse impact on costs and on quality because a new facility is simply adding expense to the system without a concomitant benefit. (Baehr, Tr. Vol. X, p. 1650.) Competition among hospitals in Hillsborough County is now "intense and accelerating." (Splitstone, Tr. Vol. IV, p. 558.) Tampa General is at a competitive disadvantage because of its indigent case load and its inability to offer equity interests to physicians in its hospital. (Blair, Tr. Vol. VI, pp. 945, 947-948); Powers, Tr. Vol. IX, P. 1405.) Tampa General Hospital is intensifying its marketing effort, a physician office building under construction now at Tampa General is an illustration of Tampa General's effort to compete for private physicians and patients. (Powers, Tr. Vol. IX, pp. 1405-1406.) The whole thrust of Tampa General's construction program is to increase its ability to compete for physicians. (Nelson, Tr. Vol. VII, P. 1224; Powers, Tr. Vol. IX, p. 1442.) The Tampa General construction will create new competition for physicians and patients. (Contis, Tr. Vol. VII, p. 1099.) Patients go to hospitals where their doctors practice, therefore, hospitals generally compete for physicians. (Splitstone, Tr. Vol. IV, P. 563; Blair, Tr. Vol. VI, pp. 898, 928.) Because many of the UMP partners are obstetricians who plan to use Northside exclusively, approval of the Northside project would lessen competition. (Popp, TGH Exhibit 18, P. 11.) It is feasible for Tampa General to attract more private pay OB patients. (Williams, Tr. Vol. IX, pp. 1460- 1461.) At its recently opened rehabilitation center, Tampa General has attracted more private pay patients. (Powers, Tr. Vol. IX, pp. 1393-1396.) USF OB residents at Tampa General are planning to practice at Tampa General. (Williams, Tr. Vol. IX, pp. 1460-1461.) The state-of-the-art labor, delivery, recovery room to be used at Tampa General will be an attractive alternative to OB patients. (Williams, Tr. Vol. IX, pp. 1460- 1461); Popp, TGH Exhibit 18, p.26) IX. Capital Expenditure Proposals The proposed Northside hospital will not offer any service not now available in Tampa. (Hyatt, TGH Exhibit 19, p. 21).
Recommendation Petitioner having failed to prove the need for additional acute care beds to include OB beds or some special circumstance which would warrant approval of the proposed project, it is recommended that its application for a CON be DENIED. DONE and ORDERED this 25th day of June, 1985, in Tallahassee, Florida STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of June, 1985.
The Issue The Petitioner, St. Joseph's Hospital, Inc., d/b/a St. Joseph's Hospital (Petitioner, Applicant, or St. Joseph's) filed Certificate of Need (CON) Application No. 9833 with the Agency for Health Care Administration (Agency or AHCA). The application seeks authority to establish a 90-bed acute care satellite hospital in southeastern Hillsborough County, Florida. St. Joseph's intends to transfer 90 acute care beds from its existing location in Tampa to the new facility. The issue in this case is whether the Agency should approve the CON application.
Findings Of Fact The Parties AHCA is the state agency charged with the responsibility of administering the CON program for the state of Florida. The Agency serves as the state heath planning entity. See § 408.034, Fla. Stat. (2007). As such, it was charged to review the CON application at issue in this proceeding. AHCA has preliminarily denied St. Joseph's CON application No. 9833. The Petitioner is the applicant for the CON in this case. The Petitioner is a not-for-profit organization licensed to operate St. Joseph's Hospital, a general acute care facility located in the urban center of Tampa, Florida. It was originally founded by a religious order and has grown from approximately 40 beds to a licensed bed capacity of 883 beds. St. Joseph's provides quality care in a comprehensive range of services. Those services include tertiary and Level II trauma services. St. Joseph's provides services to all patients regardless of their ability to pay. To meet its perception of the growing healthcare needs of the greater Hillsborough County residents, St. Joseph's has proposed to construct a satellite hospital on a site it purchased in the mid-1980s. According to St. Joseph's, the satellite hospital, together with its main campus, would better address the growing community needs for acute care hospital services. To that end, St. Joseph's filed CON application No. 9833 and seeks approval of its satellite facility. It proposes to transfer 90 of its acute care beds from its current hospital site to the new satellite facility. The main hospital will offer support services as may be necessary to the satellite facility. Tampa General is an 877-bed acute care hospital located on Davis Island in urban Tampa, Florida. Prior to 1997, it was a public hospital operated by the Hillsborough County Hospital Authority but has since been operated and managed by a non- profit corporation, Florida Health Sciences, Inc. Tampa General provides quality care in a wide range of services that include tertiary and Level I trauma. Tampa General addresses the medical needs of its patients without consideration of their ability to pay. It is a "safety net" provider and is the largest provider of services to Medicaid and charity patients in the AHCA District 6/Subdistrict 1. Medicaid has designated Tampa General a "disproportionate share" provider. Tampa General is also a teaching hospital affiliated with the University of South Florida's College of Medicine. Recently, Tampa General has undergone a major construction project that brings on line a new emergency trauma center as well as additional acute care beds, a women's center, a cardiovascular center and a digestive diagnostic and treatment center. Tampa General opposes the CON request at issue. South Bay and Brandon also oppose St. Joseph's CON application. South Bay is a 112-bed community acute care hospital located in Sun City Center, Florida. South Bay has served the community for about 25 years and offers quality care but does not provide obstetrical services primarily because its closest population and patient base is a retirement community restricted to persons over 55 years of age. In contrast, Brandon is an acute care hospital with 367 beds located to South Bay's north in Brandon, Florida. Brandon provides quality care with a full range of hospital services including obstetrics, angioplasty, and open-heart surgery. Brandon also has neonatal intensive care (NICU) beds to serve Level II and Level III needs. It is expected that Brandon could easily add beds to its facility as it has empty "shelled-in" floors that could readily be converted to add 80 more acute care beds. Both Brandon and South Bay are owned or controlled by Hospital Corporation of America (HCA) and are part of its West Florida Division. The Proposal St. Joseph's has a wide variety of physicians on its medical staff. Those physicians currently offer an array of general acute care services as well as medical and surgical specialties. St. Joseph's provides Levels II and III NICU, open heart surgery, interventional radiology, primary stroke services, oncology, orthopedic, gynecological oncology, and pediatric surgical. Based upon its size, reputation for quality care, and ability to offer this wide array of services, St. Joseph's has enjoyed a well-deserved respect in its community. To expand its ties within AHCA's District 6/Subdistrict 1 healthcare community, St. Joseph's affiliated with South Florida Baptist Hospital a 147-bed community hospital located in Plant City, Florida. This location is east of the main St. Joseph Hospital site. Further, recognizing that the growth of greater Hillsborough County, Florida, has significantly increased the population of areas previously limited to agricultural or mining ventures, St. Joseph's now seeks to construct a community satellite hospital located in the unincorporated area of southeastern Hillsborough County known as Riverview. The Petitioner owns approximately 50 acres of land at the intersection of Big Bend Road and Simmons Loop Road. This parcel is approximately one mile east of the I-75 corridor that runs north-south through the county. In relation to the other parties, the proposed site is north and east of South Bay, south of Brandon, and east and south of Tampa General. South Florida Baptist Hospital, not a party, is located to the north and farther east of the proposed site. The size of the parcel is adequate to construct the proposed satellite as well as other ancillary structures that might compliment the hospital (such as medical offices). If approved, the Petitioner's proposal will provide 66 medical-surgical beds, 14 beds within an intensive care unit, and 10 labor and delivery beds. All 90 beds will be "state-of- the-art" private rooms along with a full-service emergency department. The hospital will be fully digital, use an electronic medical record and picture archiving system, and specialists at the main St. Joseph's hospital will be able to access images and data at the satellite site in real time. A consultation would be, theoretically, as close as a computer. In reaching its decision to seek the satellite hospital, St. Joseph's considered input from many sources; among them: HealthPoint Medical Group (HealthPoint) and BayCare Health System, Inc. (BayCare). HealthPoint is a physician group owned by an affiliate of St. Joseph's. HealthPoint has approximately 80 physicians who operate 21 offices throughout Hillsborough County. All of the HealthPoint physicians are board certified. At least five of the HealthPoint offices would have quicker access to the proposed satellite hospital than to the main St. Joseph's Hospital site. The HealthPoint physicians support the proposal so that their patients will have access to, and the option of choosing, a St. Joseph facility in the southeastern part of the county. BayCare is an organization governed by a cooperative agreement among nonprofit hospitals. Its purpose is to assist its member hospitals to centralize and coordinate hospital functions such as purchasing, staffing, managed care contracting, billing, and information technology. By cooperatively working together, its members are able to enjoy a cost efficiency that individually they did not enjoy. The "synergy" of their effort results in enhanced quality of care, efficient practices, and a financial savings to their operations. The proposed St. Joseph's satellite would also share in this economy of efforts. Understandably, BayCare supports the proposal. Review Criteria Every new hospital project in Florida must be reviewed pursuant to the statutory criteria set forth in Section 408.035, Florida Statutes (2007). Accordingly, the ten subparts of that provision must be weighed to determine whether or not a proposal meets the requisite criteria. Section 408.035(1), Florida Statutes (2007) requires that the need for the health care facilities and health services being proposed be considered. In the context of this case, "need" will not be addressed in terms of its historical meaning. The Agency no longer calculates "need" pursuant to a need methodology. Therefore, looking to Florida Administrative Code Rule 59C-1.008, requires consideration of the following pertinent provisions: ...If an agency need methodology does not exist for the proposed project: The agency will provide to the applicant, if one exists, any policy upon which to determine need for the proposed beds or service. The applicant is not precluded from using other methodologies to compare and contrast with the agency policy. If no agency policy exists, the applicant will be responsible for demonstrating need through a needs assessment methodology which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria: Population demographics and dynamics; Availability, utilization and quality of like services in the district, subdistrict or both; Medical treatment trends; and, Market conditions. The existence of unmet need will not be based solely on the absence of a health service, health care facility, or beds in the district, subdistrict, region or proposed service area. According to St. Joseph's, "need" is evidenced by a large and growing population in the proposed service area (PSA), sustained population growth that exceeds the District and state average, highly occupied and seasonally over capacity acute care beds at the existing providers, highly occupied and sustained increases in demand for hospital services, a scarcity of emergency medical service resources within the PSA compounded by budget cuts, increases in traffic congestion and travel times to the existing hospitals, the lack of a nonprofit community hospital near the proposed site, and the lack of local obstetrical services. In this case the Petitioner has identified the PSA as a 10 zip code area with 7 being designated the "primary" area of service (PSA) and 3 zip codes to the north being identified as the "secondary" area of service (SSA). The population of this PSA is projected to reach 322,913 by the year 2011 (from its current 274,696). All parties used Claritas data to estimate population, the PSA growth, and various projections. Claritas is a conservative estimator in the sense that it relies on the most recent U. S. census reports that may or may not track the most recent growth indicators such as building starts or new home sales. Nevertheless, if accurate, the estimated 17.5 percent population growth expected in the new satellite hospital's PSA exceeds the rate of growth estimated for AHCA District 6 as well as the projected State of Florida growth rate. From the 7 primary zip codes within the PSA alone the area immediately adjacent to the subject site is estimated to grow by 14,900 residents between 2006 and 2011. Over the last 20 years the PSA has developed from rural farming and mining expanses with scattered housing and trailer parks to an area characterized by modern shopping centers, apartment complexes, housing subdivisions, churches, libraries, and new schools. Physicians in the area now see as many as 60 patients per day and during the winter peak months may admit up to 20 patients per week to hospitals. Travel times from the southern portion of the PSA to St. Joseph's Hospital, Tampa General, or Brandon, can easily exceed 30 minutes. Travel times to the same providers during "rush" or high traffic times can be longer. All of the opponent providers have high occupancy rates and experience seasonal over capacity. During the winter months visitors from the north and seasonal residents add significant numbers to the population in Hillsborough County. These "snow birds" drive the utilization of all District 6/Subdistrict 1 hospitals up. Further, increased population tends to slow and congest traffic adding to travel times within AHCA District 6/Subdistrict 1. Both Brandon and Tampa General have recently added beds to address the concerns of increased utilization. Additionally, Tampa General has expanded its emergency department to provide more beds. South Bay has elected to not increase its bed size or emergency department. South Bay has experienced difficulty staffing its emergency department. When faced with capacity problems, South Bay "diverts" admissions to other hospitals. When the emergency rooms of the Opponent providers are unable to accommodate additional patients, the county emergency transport is diverted to other facilities so that patients have access to emergency services. During the winter season and peak flu periods this diversion is more likely to occur. Another hospital in the southeastern portion of the county, within St. Joseph's satellite PSA, would alleviate some of the crowding. More specifically, South Bay's annual occupancy rate in 2006 was 80.1 percent. For the first seven months of 2007, South Bay's average occupancy rate was 88.4 percent. These rates indicate that South Bay is operating at a high occupancy. Operating at or near capacity is not recommended for any hospital facility. Long term operation at or near occupancy proves to be detrimental to hospital efficiencies. Similarly, Brandon operates at 70 percent of its bed capacity. Even though it has recently added beds it intends to add more beds to address continuing increases in admissions. Brandon's emergency room is also experiencing overcrowded conditions. When Brandon's emergency room diverts patients their best option may be to leave District 6/Subdistrict 1 for care. Tampa General is a large complex and its emergency department has been expanded to attempt to address an obvious need for more services. It is unknown whether the new emergency department will adequately cure the high rates of diversion Tampa General experienced in 2007. New beds were added and an improved emergency department was designed and constructed with the expectation that Tampa General's patients would be better served. Based upon Tampa General's expansion and its projected growth, Tampa General could experience an occupancy rate over 75 percent by 2011. If so, Tampa General could easily return to the utilization problems previously experienced. There are no obstetrical services offered south of Brandon in AHCA District 6/Subdistrict 1. The proposed St. Joseph's satellite hospital would offer obstetrics and has designated a 10-bed unit to accommodate those patients. There are no nonprofit hospitals south of Brandon in AHCA District 6/Subdistrict 1. The proposed St. Joseph's satellite hospital would offer patients in the PSA with the option of using such a hospital. Section 408.035(2), Florida Statutes (2007), requires the consideration of the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant. As previously stated, all of the parties provide quality care to their patients. Although delays in emergency departments may inconvenience patients, the quality of the medical care they receive is excellent. Similarly, hospital services are available and can be accessed in AHCA District 6/Subdistrict 1. The parties provide a full range of healthcare service options that address the medical and surgical needs of the residents of AHCA District 6 Subdistrict 1. An additional hospital would afford patients with another choice of provider in the southeastern portion of the county. The St. Joseph satellite hospital would afford such patients with a hospital option within 30 minutes of the areas within the PSA. This access would promote shorter wait times and less crowded facilities. Section 408.035(3), Florida Statutes (2007), mandates review of CON applications in light of the ability of the applicant to provide quality of care and the applicant's record of providing quality of care. As previously stated St. Joseph's has a well-deserved reputation for providing quality care within a wide range of hospital services to its patients. It is reasonable to expect the satellite hospital would continue in the provision of such care. The management team and affiliations established by St. Joseph's will continue to pursue quality care to all its patients regardless of their ability to pay. Section 408.035(4), Florida Statutes (2007), considers the availability of resources for project accomplishment and operation. Resources that must be considered include healthcare personnel, management personnel, and funds for capital and operating expenditures. St. Joseph's has the resources to accomplish and operate the satellite hospital proposed. St. Joseph's has a successful history of recruiting and retaining healthcare personnel and management personnel. The estimates set forth in its CON application for these persons were reasonable and conservative. Salaries and benefits for healthcare personnel and management personnel should be within the estimated provisions set forth in the application. Although there is a nationwide shortage of nursing personnel and physicians in certain specialties, St. Joseph's has demonstrated it has a track record of staffing its facility to meet appropriate standards and provide quality care. There is no reason to presume it will not be similarly successful at the satellite facility. St. Joseph's has also demonstrated it has the financial ability to construct and operate the proposed satellite hospital. The occupancy rates projected for the new hospital will produce a revenue adequate to make the hospital financially feasible. Further, if patients who reside closer to the satellite facility use it instead of the main St. Joseph Hospital, a lower census at the main hospital will not adversely impact the financial strength of the organization. There will be adequate growth in the healthcare market for this PSA to support the new facility as well as the existing providers. It must be noted, however, that construction costs for the satellite hospital will exceed the amounts disclosed by the CON application. Some of the increases in cost are significant. For example, the estimate for the earthwork necessary for site preparation has risen from $417,440 to $1,159,296. Additionally, most of the unit prices for construction have gone up dramatically in the past couple of years. Hurricanes and the resulting increased standards for building codes have also driven construction costs higher. More stringent storm water provisions have resulted in higher construction costs. For this project it is estimated the storm water expense will be $500,000 instead of the original $287,000 proposed by the CON application. In total these increases are remarkable. They may also signal why development in AHCA's District 6/Subdistrict 1 has slowed since the CON application was filed. Regardless, St. Joseph's should have the financial strength to construct and operate the project. Section 408.035(5), Florida Statutes (2007), specifies that the Agency must evaluate the extent to which the proposed services will enhance access to health care for residents of the service district. In the findings reached in this regard, the criteria set forth in Administrative Code Rule 59C-1.030(2) have been fully considered. Those provisions are: (2) Health Care Access Criteria. The need that the population served or to be served has for the health or hospice services proposed to be offered or changed, and the extent to which all residents of the district, and in particular low income persons, racial and ethnic minorities, women, handicapped persons, other underserved groups and the elderly, are likely to have access to those services. The extent to which that need will be met adequately under a proposed reduction, elimination or relocation of a service, under a proposed substantial change in admissions policies or practices, or by alternative arrangements, and the effect of the proposed change on the ability of members of medically underserved groups which have traditionally experienced difficulties in obtaining equal access to health services to obtain needed health care. The contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified in the applicable local health plan and State health plan as deserving of priority. In determining the extent to which a proposed service will be accessible, the following will be considered: The extent to which medically underserved individuals currently use the applicant’s services, as a proportion of the medically underserved population in the applicant’s proposed service area(s), and the extent to which medically underserved individuals are expected to use the proposed services, if approved; The performance of the applicant in meeting any applicable Federal regulations requiring uncompensated care, community service, or access by minorities and handicapped persons to programs receiving Federal financial assistance, including the existence of any civil rights access complaints against the applicant; The extent to which Medicare, Medicaid and medically indigent patients are served by the applicant; and The extent to which the applicant offers a range of means by which a person will have access to its services. In any case where it is determined that an approved project does not satisfy the criteria specified in paragraphs (a) through (d), the agency may, if it approves the application, impose the condition that the applicant must take affirmative steps to meet those criteria. In evaluating the accessibility of a proposed project, the accessibility of the current facility as a whole must be taken into consideration. If the proposed project is disapproved because it fails to meet the need and access criteria specified herein, the Department will so state in its written findings. AHCA does not require a CON applicant to demonstrate that the existing acute care providers within the PSA are failing in order to approve a satellite hospital. Also, AHCA does not have a travel time standard with respect to the provision of acute care hospital services. In other words, there is no set geographical distance or travel time that dictates when a satellite hospital would be appropriate or inappropriate. In fact, AHCA has approved satellite hospitals when residents of the PSA live within 20 minutes of an existing hospital. As a practical matter this means that travel time or distance do not dictate whether a satellite should be approved based upon access. With regard to access to emergency services, however, AHCA does consider patient convenience. In this case the proposed satellite hospital will provide a convenience to residents of southeastern Hillsborough County in terms of access to an additional emergency department. Further, physicians serving the growing population will have the convenience of admitting patients closer to their residences. Medical and surgical opportunities at closer locations is also a convenience to the families of patients because they do not have to travel farther distances to visit the patient. Patients and the families of patients seeking obstetrical services will also have the convenience of the satellite hospital. Patients who would not benefit from the convenience of the proposed satellite hospital would be those requiring tertiary health services. Florida Administrative Code Rule 59C- 1.002(41) defines such services as: (41) Tertiary health service means a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service. Examples of such service include, but are not limited to, organ transplantation, specialty burn units, neonatal intensive care units, comprehensive rehabilitation, and medical or surgical services which are experimental or developmental in nature to the extent that the provision of such services is not yet contemplated within the commonly accepted course of diagnosis or treatment for the condition addressed by a given service. In terms of tertiary health services, residents of AHCA District 6/Subdistrict 1 will continue to use the existing providers who offer those services. The approval of the St. Joseph satellite will not adversely affect the tertiary providers in AHCA District 6/Subdistrict 1 in terms of their ability to continue to provide those services. The new satellite will not compete for those services. Tampa General has a unique opportunity to provide tertiary services and will continue to be a strong candidate for any patient in the PSA requiring such services. As a teaching hospital and major NICU and trauma center, Tampa General offers specialties that will not be available at the satellite hospital. If non-tertiary patients elect to use the satellite hospital, Tampa General should not be adversely affected. Tampa General has performed well financially of late and its revenues have exceeded its past projections. With the added conveniences of its expanded and improved facilities it will continue to play a significant roll in the delivery of quality health care to the residents of the greater Tampa area. Section 408.035(6), Florida Statutes (2007) provides that the financial feasibility of the proposal both in the immediate and long-term be assessed in order to approve a CON application. In this case, as previously indicated, the utilizations expected for the new satellite hospital should adequately assure the financial feasibility of the project both in the immediate and long-term time frames. Population growth, a growing older population, and technologies that improve the delivery of healthcare will contribute to make the project successful. The satellite hospital will afford PSA residents a meaningful option in choosing healthcare and will not give any one provider an unreasonable or dominant position in the market. Section 408.035(7), Florida Statutes (2007) specifies that the extent to which the proposal will foster competition that promotes quality and cost-effectiveness must be addressed. AHCA's District 6/Subdistrict 1 enjoys a varied range of healthcare providers. From the teaching hospital at Tampa General to the community hospital at South Bay, all demonstrate strong financial stability and utilization. A new satellite hospital will promote continued quality and cost-effectiveness. As a member of the BayCare group the satellite will benefit from the economies of its group and provide the residents of its PSA with quality care. Physicians will have another option for admissions and convenience. Section 408.035(8), Florida Statutes (2007), notes that the costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction should be reviewed. The methodology used to compute the construction costs associated with this project were reasonable and accurate at the time prepared. The costs, however, are not accurate in that most have gone up appreciably since the filing of the CON application. No more effective method of construction has been proposed but the financial soundness of the proposal should cover the increased costs associated with the construction of the project. The delays in resolving this case have worked to disadvantage the Applicant in this regard. Unforeseeable acts of nature, limitations of building supplies, and increases inherent with the passage of time will make this project more costly than St. Joseph's envisioned when it filed the CON application. Further, it would be imprudent to disregard the common knowledge that oil prices have escalated while interest rates have dropped. These factors may also impact the project's cost. Section 408.035(9), Florida Statutes (2007), provides that the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent should be weighed in consideration of the proposal. St. Joseph's has a track record of providing health care services to Medicaid patients and the medically indigent without consideration of any patient's ability to pay. The satellite hospital would be expected to continue this tradition. Moreover, as a provision of its CON application, St. Joseph's has represented it will provide 12.5 percent of its patient days to Medicaid/Medicaid HMO/Charity/Indigent patients. 57 Section 408.035(10), Florida Statutes, relates to nursing home beds and is not at issue in this proceeding. The Opposition The SAAR set forth the Agency's rationale for the proposed denial of the CON application. The SAAR acknowledged that the proposal had received 633 letters of support (80 from physicians, 365 from St. Joseph employees, and 191 from members of the community); that funding for the project would be available; that the short-term position, long-term position, capital requirements, and staffing for the proposal were adequate; that the project was financially feasible if the Applicant meets its projected occupancy levels; that the project would have a marginally positive effect on competition to promote quality and cost-effectiveness; and that the construction schedule "seems to be reasonable" for the project. Notably in opposition to the CON application, the SAAR represented that: It is not clear that projected population growth for this area will outpace the ability of subdistrict facilities to add beds to accommodate population growth. The subdistrict's most recent average utilization rate was 63.40 percent, and an additional facility has already been approved for this applicant in this county for the purpose of handling forecasted growth. Growth projected for females aged 15-44 is not significantly higher for the county than for the district or state, and it is not demonstrated that need exists for obstetric services in the subdistrict. The foregoing analysis did not credit the projected population growth for the PSA applicable to this proposal heavily. The population growth expected for the PSA will support the utilization necessary for the proposed project. Applying the Agency's assessment, all existing hospital providers could add beds to meet "need" for a Subdistrict and thereby eliminate the approval of any satellite community facility that would address local concerns. Also, South Bay has conceded it will not add beds at its location. Additionally, the SAAR stated: While both South Bay Hospital and Brandon Regional Hospital have occupancy rates such that the introduction of a competing facility would not likely inhibit their abilities to maintain operations, the same cannot be stated for Tampa General Hospital, the only designated Disproportionate Share Hospital in this subdistrict. Any impact on Tampa General Hospital as a result of the proposed project would likely be negative, limiting Tampa General's ability to offset its Medicaid and charity care services. The applicant facility does not currently have a significant presence in the proposed market, and would have to gain market share in this PSA in order to meet its projected occupancy levels. Much of the market share gained by the applicant with the proposed facility would likely be at the expense of existing facilities in this area, most notably Tampa General due to its lower occupancy level and higher Medicaid and charity care provisions. In reaching its decision, the Agency has elected to protect Tampa General from any negative impact that the proposed satellite hospital might inflict. Tampa General has invested $300 million in improvements. It is a stand-alone, single venue hospital that has not joined any group or integrated system. It relies on its utilization levels, management skill and economies of practice to remain solvent. Tampa General considers itself a unique provider that should be protected from the financial risks inherent in increased competition. It is the largest provider of services to indigent patients in AHCA District 6/Subdistrict. Brandon opposes the proposed satellite hospital in part because it, too, has expanded its facility and does not believe additional beds are needed in AHCA District 6/Subdistrict 1. Nevertheless when a related facility sought to establish a satellite near the St. Joseph's site, Brandon supported the project. Brandon provides excellent quality of care and has a strong physician supported system. It will not be adversely affected in the long run by the addition of a satellite hospital in St. Joseph's PSA. Similarly, South Bay opposes the project. South Bay will not expand and does not provide obstetric services. It has had difficulty staffing its facility and believes the addition of another competitor will exacerbate the problem. Nevertheless, South Bay has a strong utilization level, a track record of financial strength, and will not likely be adversely impacted by the St. Joseph satellite. The opponents maintain that enhanced access for residents of the PSA does not justify the establishment of a new satellite hospital since the residents there already have good access to acute care services.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Agency for Health Care Administration that approves CON Application No. 9833 with the conditions noted. DONE AND ENTERED this 13th day of May, 2008, in Tallahassee, Leon County, Florida. J. D. PARRISH 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 13th day of May, 2008. COPIES FURNISHED: Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Craig H. Smith, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 Holly Benson, Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308 Stephen A. Ecenia, Esquire Richard M. Ellis, Esquire Rutledge, Ecenia, Purnell & Hoffman, P. A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32304-0551 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 Elizabeth McArthur, Esquire Jeffrey L. Frehn, Esquire Radey, Thomas, Yon & Clark, P.A. 301 South Bronough Street, Suite 200 Post Office Box 10967 Tallahassee, Florida 32301 Karin M. Byrne, Esquire Agency for Health Care Administration 2727 Mahan Drive, Building 3 Mail Station 3 Tallahassee, Florida 32308
The Issue Whether the certificate of need (CON) applications filed by New Port Richey Hospital, Inc., d/b/a Community Hospital of New Port Richey (Community Hospital) (CON No. 9539), and Morton Plant Hospital Association, Inc., d/b/a North Bay Hospital (North Bay) (CON No. 9538), each seeking to replace and relocate their respective general acute care hospital, satisfy, on balance, the applicable statutory and rule criteria.
Findings Of Fact The Parties AHCA AHCA is the single state agency responsible for the administration of the CON program in Florida pursuant to Chapter 408, Florida Statutes (2000). The agency separately reviewed and preliminarily approved both applications. Community Hospital Community Hospital is a 300,000 square feet, accredited hospital with 345 licensed acute care beds and 56 licensed adult psychiatric beds, located in southern New Port Richey, Florida, within Sub-District 5-1. Community Hospital is seeking to construct a replacement facility approximately five miles to the southeast within a rapidly developing suburb known as "Trinity." Community Hospital currently provides a wide array of comprehensive inpatient and outpatient services and is the only provider of obstetrical and adult psychiatric services in Sub-District 5-1. It is the largest provider of emergency services in Pasco County with approximately 35,000 visits annually. It is also the largest provider of Medicaid and indigent patient days in Sub-District 5-1. Community Hospital was originally built in 1969 and is an aging facility. Although it has been renovated over time, the hospital is in poor condition. Community Hospital's average daily census is below 50 percent. North Bay North Bay is a 122-bed facility containing 102 licensed acute care beds and 20 licensed comprehensive medical rehabilitation beds, located approximately one mile north of Community Hospital in Sub-District 5-1. It serves a large elderly population and does not provide pediatric or obstetrical care. North Bay is also an aging facility and proposes to construct a replacement facility in the Trinity area. Notably, however, North Bay has spent approximately 12 million dollars over the past three years for physical improvements and is in reasonable physical condition. Helen Ellis Helen Ellis is an accredited hospital with 150 licensed acute care beds and 18 licensed skilled nursing unit beds. It is located in northern Pinellas County, approximately eight miles south of Community Hospital and nine miles south of North Bay. Helen Ellis provides a full array of acute care services including obstetrics and cardiac catheterization. Its daily census average has fluctuated over the years but is approximately 45 percent. Mease Mease operates two acute care hospitals in Pinellas County including Mease Dunedin Hospital, located approximately 18 to 20 miles south of the applicants and Mease Countryside Hospital, located approximately 16 to 18 miles south of Community and North Bay. Each hospital operates 189 licensed beds. The Mease hospitals are located in the adjacent acute care sub-district but compete with the applicants. The Health Planning District AHCA's Health Planning District 5 consists of Pinellas and Pasco Counties. U.S. Highway 41 runs north and south through the District and splits Pasco County into Sub- District 5-1 and Sub-District 5-2. Sub-District 5-1, where Community Hospital and North Bay are located, extends from U.S. 41 west to the Gulf Coast. Sub-District 5-2 extends from U.S. 41 to the eastern edge of Pasco County. Pinellas County is the most densely populated county in Florida and steadily grows at 5.52 percent per year. On the other hand, its neighbor to the north, Pasco County, has been experiencing over 15 percent annual growth in population. The evidence demonstrates that the area known as Trinity, located four to five miles southeast of New Port Richey, is largely responsible for the growth. With its large, single- owner land tracts, Trinity has become the area's fuel for growth, while New Port Richey, the older coastal anchor which houses the applicants' facilities, remains static. In addition to the available land in Trinity, roadway development in the southwest section of Pasco County is further fueling growth. For example, the Suncoast Highway, a major highway, was recently extended north from Hillsborough County through Sub-District 5-1, west of U.S. 41. It intersects with several large east-west thoroughfares including State Road 54, providing easy highway access to the Tampa area. The General Proposals Community Hospital's Proposal Community Hospital's CON application proposes to replace its existing, 401-bed hospital with a 376-bed state- of-the-art facility and relocate it approximately five miles to the southeast in the Trinity area. Community Hospital intends to construct a large medical office adjacent to its new facility and provide all of its current services including obstetrical care. It does not intend to change its primary service area. North Bay's Proposal North Bay's CON application proposes to replace its existing hospital with a 122-bed state-of-the-art facility and also plans to relocate it approximately eight miles to the southeast in the Trinity area of southwestern Pasco County. North Bay intends to provide the same array of services it currently offers its patients and will not provide pediatric and obstetrical care in the proposed facility. The proposed relocation site is adjacent to the Trinity Outpatient Center which is owned by North Bay's parent company, Morton Plant. The Outpatient Center offers a full range of diagnostic imaging services including nuclear medicine, cardiac nuclear stress testing, bone density scanning, CAT scanning, mammography, ultrasound, as well as many others. It also offers general and specialty ambulatory surgical services including urology; ear, nose and throat; ophthalmology; gastroenterology; endoscopy; and pain management. Approximately 14 physician offices are currently located at the Trinity Outpatient Center. The Condition of Community Hospital Facility Community Hospital's core facilities were constructed between 1969 and 1971. Additions to the hospital were made in 1973, 1975, 1976, 1977, 1979, 1981, 1992, and 1999. With an area of approximately 294,000 square feet and 401 licensed beds, or 733 square feet per bed, Community Hospital's gross area-to-bed ratio is approximately half of current hospital planning standards of 1,600 square feet per bed. With the exception of the "E" wing which was completed in 1999, all of the clinical and support departments are undersized. Medical-Surgical Beds And Intensive Care Units Community Hospital's "D" wing, constructed in 1975, is made up of two general medical-surgical unit floors which are grossly undersized. Each floor operates 47 general medical-surgical beds, 24 of which are in three-bed wards and 23 in semi-private rooms. None of the patient rooms in the "D" wing have showers or tubs so the patients bathe in a single facility located at the center of the wing on each floor. Community Hospital's "A" wing, added in 1973, is situated at the west end of the second floor and is also undersized. It too has a combination of semi-private rooms and three-bed wards without showers or tubs. Community Hospital's "F" wing, added in 1979, includes a medical-surgical unit on the second and third floor, each with semi-private and private rooms. The second floor unit is centrally located between a 56-bed adult psychiatric unit and the Surgical Intensive Care Unit (SICU) which creates security and privacy issues. The third floor unit is adjacent to the Medical Intensive Care Unit (MICU) which must be accessed through the medical-surgical unit. Neither intensive care unit (ICU) possesses an isolation area. Although the three-bed wards are generally restricted to in-season use, and not always full, they pose significant privacy, security, safety, and health concerns. They fail to meet minimum space requirements and are a serious health risk. The evidence demonstrates that reconfiguring the wards would be extremely costly and impractical due to code compliance issues. The wards hinder the hospital's acute care utilization, and impair its ability to effectively compete with other hospitals. Surgical Department and Recovery Community Hospital's surgical department is separated into two locations including the main surgical suite on the second floor and the Endoscopy/Pain Management unit located on the first floor of "C" wing. Consequently, the department cannot share support staff and space such as preparation and recovery. The main surgical suite, adjacent recovery room, and central sterile processing are 25 years old. This unit's operating rooms, cystoscopy rooms, storage areas, work- stations, central sterile, and recovery rooms are undersized and antiquated. The 12-bay Recovery Room has no patient toilet and is lacking storage. The soiled utility room is deficient. In addition, the patient bays are extremely narrow and separated by curtains. There is no direct connection to the sterile corridor, and staff must break the sterile field to transport patients from surgery to recovery. Moreover, surgery outpatients must pass through a major public lobby going to and returning from surgery. The Emergency Department Community Hospital's existing emergency department was constructed in 1992 and is the largest provider of hospital emergency services in Pasco County, handling approximately 35,000 visits per year. The hospital is also designated a "Baker Act" receiving facility under Chapter 394, Florida Statutes, and utilizes two secure examination rooms for emergent psychiatric patients. At less than 8,000 total square feet, the emergency department is severely undersized to meet the needs of its patients. The emergency department is currently undergoing renovation which will connect the triage area to the main emergency department. The renovation will not enlarge the entrance, waiting area, storage, nursing station, nor add privacy to the patient care areas in the emergency department. The renovation will not increase the total size of the emergency department, but in fact, the department's total bed availability will decrease by five beds. Similar to other departments, a more meaningful renovation cannot occur within the emergency department without triggering costly building code compliance measures. In addition to its space limitations, the emergency department is awkwardly located. In 1992, the emergency department was relocated to the front of the hospital and is completely separated from the diagnostic imaging department which remained in the original 1971 building. Consequently, emergency patients are routinely transported across the hospital for imaging and CT scans. Issues Relating to Replacement of Community Hospital Although physically possible, renovating and expanding Community Hospital's existing facility is unreasonable. First, it is cost prohibitive. Any significant renovation to the 1971, 1975, 1977, and 1979 structures would require asbestos abatement prior to construction, at an estimated cost of $1,000,000. In addition, as previously noted, the hospital will be saddled with the major expense of complying with all current building code requirements in the 40-year-old facility. Merely installing showers in patient rooms would immediately trigger a host of expensive, albeit necessary, code requirements involving access, wiring, square footage, fireproofing columns and beams, as well as floor/ceiling and roof/ceiling assemblies. Concurrent with the significant demolition and construction costs, the hospital will experience the incalculable expense and loss of revenue related to closing major portions, if not all, of the hospital. Second, renovation and expansion to the existing facility is an unreasonable option due to its physical restrictions. The 12'4" height of the hospital's first floor limits its ability to accommodate HVAC ductwork large enough to meet current ventilation requirements. In addition, there is inadequate space to expand any department within the confines of the existing hospital without cannibalizing adjacent areas, and vertical expansion is not an option. Community Hospital's application includes a lengthy Facility Condition Assessment which factually details the architectural, mechanical, and electrical deficiencies of the hospital's existing physical plant. The assessment is accurate and reasonable. Community Hospital's Proposed Replacement Community Hospital proposes to construct a six- story, 320 licensed beds, acute care replacement facility. The hospital will consist of 548,995 gross square feet and include a 56-bed adult psychiatric unit connected by a hallway to the first floor of the main hospital building. The proposal also includes the construction of an adjacent medical office building to centralize the outpatient offices and staff physicians. The evidence establishes that the deficiencies inherent in Community Hospital's existing hospital will be cured by its replacement hospital. All patients will be provided large private rooms. The emergency department will double in size, and contain private examination rooms. All building code requirements will be met or exceeded. Patients and staff will have separate elevators from the public. In addition, the surgical department will have large operating rooms, and adequate storage. The MICU and SICU will be adjacent to each other on the second floor to avoid unnecessary traffic within the hospital. Surgical patients will be transported to the ICU via a private elevator dedicated to that purpose. Medical-surgical patient rooms will be efficiently located on the third through sixth floors, in "double-T" configuration. Community Hospital's Existing and Proposed Sites Community Hospital is currently located on a 23-acre site inside the southern boundary of New Port Richey. Single- family homes and offices occupy the two-lane residential streets that surround the site on all sides. The hospital buildings are situated on the northern half of the site, with the main parking lot located to the south, in front of the main entrance to the hospital. Marine Parkway cuts through the southern half of the site from the west, and enters the main parking lot. A private medical mall sits immediately to the west of the main parking lot and a one-acre storm-water retention pond sits to the west of the mall. A private medical office building occupies the south end of the main parking lot and a four-acre drainage easement is located in the southwest corner of the site. Community Hospital's administration has actively analyzed its existing site, aging facility, and adjacent areas. It has commissioned studies by civil engineers, health care consultants, and architects. The collective evidence demonstrates that, although on-site relocation is potentially an option, on balance, it is not a reasonable option. Replacing Community Hospital on its existing site is not practical for several reasons. First, the hospital will experience significant disruption and may be required to completely close down for a period of time. Second, the site's southwestern large four-acre parcel is necessary for storm-water retention and is unavailable for expansion. Third, a reliable cost differential is unknown given Community Hospital's inability to successfully negotiate with the city and owners of the adjacent medical office complexes to acquire additional parcels. Fourth, acquiring other adjacent properties is not a viable option since they consist of individually owned residential lots. In addition to the site's physical restrictions, the site is hindered by its location. The hospital is situated in a neighborhood between small streets and a local school. From the north and south, motorists utilize either U.S. 19, a congested corridor that accommodates approximately 50,000 vehicles per day, or Grand and Madison Streets, two-lane streets within a school zone. From the east and west, motorists utilize similar two-lane neighborhood streets including Marine Parkway, which often floods in heavy rains. Community Hospital's proposed site, on the other hand, is a 53-acre tract positioned five miles from its current facility, at the intersection of two major thoroughfares in southwestern Pasco County. The proposed site offers ample space for all facilities, parking, outpatient care, and future expansion. In addition, Community Hospital's proposed site provides reasonable access to all patients within its existing primary service area made up of zip codes 34652, 34653, 34668, 34655, 34690, and 34691. For example, the average drive times from the population centers of each zip code to the existing site of the hospital and the proposed site are as follows: Zip code Difference Existing site Proposed site 34652 3 minutes 14 minutes 11 minutes 34653 8 minutes 11 minutes 3 minutes 34668 15 minutes 21 minutes 6 minutes 34655 11 minutes 4 minutes -7 minutes 34690 11 minutes 13 minutes 2 minutes 34691 11 minutes 17 minutes 6 minutes While the average drive time from the population centroids of zip codes 34653, 34668, 34690, and 34691 to the proposed site slightly increases, it decreases from the Trinity area, where population growth has been most significant in southwestern Pasco County. In addition, a motorist's average drive time from Community Hospital's existing location to its proposed site is only 10 to 11 minutes, and patients utilizing public transportation will be able to access the new hospital via a bus stop located adjacent to the proposed site. The Condition of North Bay Facility North Bay Hospital is also an aging facility. Its original structure and portions of its physical plant are approximately 30 years old. Portions of its major mechanical systems will soon require replacement including its boilers, air handlers, and chillers. In addition, the hospital is undersized and awkwardly configured. Despite its shortcomings, however, North Bay is generally in good condition. The hospital has been consistently renovated and updated over time and is aesthetically pleasing. Moreover, its second and third floors were added in 1986, are in good shape, and structurally capable of vertical expansion. Medical Surgical Beds and ICU Units By-in-large, North Bay is comprised of undersized, semi-private rooms containing toilet and shower facilities. The hospital does not have any three-bed wards. North Bay's first floor houses all ancillary and support services including lab, radiology, pharmacy, surgery, pre-op, post-anesthesia recovery, central sterile processing and supply, kitchen and cafeteria, housekeeping and administration, as well as the mechanical, electrical, and facilities maintenance and engineering. The first floor also contains a 20-bed CMR unit and a 15-bed acute care unit. North Bay's second and third floors are mostly comprised of semi-private rooms and supporting nursing stations. Although the rooms and stations are not ideally sized, they are in relatively good shape. North Bay utilizes a single ICU with ten critical care beds. The ICU rooms and nursing stations are also undersized. A four-bed ICU ward and former nursery are routinely used to serve overflow patients. Surgery Department and Recovery North Bay utilizes a single pre-operative surgical room for all of its surgery patients. The room accommodates up to five patient beds, but has limited space for storage and pre-operative procedures. Its operating rooms are sufficiently sized. While carts and large equipment are routinely stored in hallways throughout the surgical suite, North Bay has converted the former obstetrics recovery room to surgical storage and has made efficient use of other available space. North Bay operates a small six-bed Post Anesthesia Care Unit. Nurses routinely prepare patient medications in the unit which is often crowded with staff and patients. The Emergency Department North Bay has recently expanded its emergency department. The evidence demonstrates that this department is sufficient and meets current and future expected patient volumes. Replacement Issues Relating to North Bay While it is clear that areas of North Bay's physical plant are aging, the facility is in relatively good condition. It is apparent that North Bay must soon replace significant equipment, including cast-iron sewer pipes, plumbing, boilers, and chillers which will cause some interruption to hospital operations. However, North Bay's four-page written assessment of the facility and its argument citing the need for total replacement is, on balance, not persuasive. North Bay's Proposed Replacement North Bay proposes to construct a new, state-of-the- art, hospital approximately eight miles southeast of its existing facility and intends to offer the identical array of services the hospital currently provides. North Bay's Existing and Proposed Sites North Bay's existing hospital is located on an eight-acre site with limited storm-water drainage capacity. Consequently, much of its parking area is covered by deep, porous, gravel instead of asphalt. North Bay's existing site is generally surrounded by residential properties. While the city has committed, in writing, it willingness to assist both applicants with on-site expansion, it is unknown whether North Bay can acquire additional adjacent property. North Bay's proposed site is located at the intersection of Trinity Oaks Boulevard and Mitchell Boulevard, south of Community Hospital's proposed site, and is quite spacious. It contains sufficient land for the facilities, parking, and future growth, and has all necessary infrastructure in place, including utility systems, storm- water structures, and roadways. Currently however, there is no public transportation service available to North Bay's proposed site. Projected Utilization by Applicants The evidence presented at hearing indicates that, statewide, replacement hospitals often increase a provider's acute care bed utilization. For example, Bartow Memorial Hospital, Heart of Florida Regional Medical Center, Lake City Medical Center, Florida Hospital Heartland Medical Center, South Lake Hospital, and Florida Hospital-Fish Memorial each experienced significant increases in utilization following the opening of their new hospital. The applicants in this case each project an increase in utilization following the construction of their new facility. Specifically, Community Hospital's application projects 82,685 total hospital patient days (64,427 acute care patient days) in year one (2006) of the operation of its proposed replacement facility, and 86,201 total hospital patient days (67,648 acute care patient days) in year two (2007). Using projected 2006 and 2007 population estimates, applying 2002 acute care hospital use rates which are below 50 percent, and keeping Community Hospital's acute care market share constant at its 2002 level, it is reasonably estimated that Community Hospital's existing hospital will experience 52,623 acute care patient days in 2006, and 53,451 acute care patient days in 2007. Consequently, Community Hospital's proposed facility must attain 11,804 additional acute care patient days in 2006, and 14,197 more acute care patient days in 2007, in order to achieve its projected acute care utilization. Although Community Hospital lost eight percent of the acute care market in its service area between 1995 and 2002, two-thirds of that loss was due to residents of Sub- District 5-1 acquiring services in another area. While Community Hospital experienced 78,444 acute care patient days in 1995, it projects only 64,427 acute care patient days in year one. Given the new facility and population factors, it is reasonable that the hospital will recapture half of its lost acute care market share and achieve its projections. With respect to its psychiatric unit, Community Hospital projects 16,615 adult psychiatric inpatient days in year one (2006) and 17,069 adult inpatient days in year two (2007) of the proposed replacement hospital. The evidence indicates that these projections are reasonable. Similarly, North Bay's acute care utilization rate has been consistently below 50 percent. Since 1999, the hospital has experienced declining utilization. In its application, North Bay states that it achieved total actual acute care patient days of 21,925 in 2000 and 19,824 in 2001 and the evidence at hearing indicates that North Bay experienced 17,693 total acute care patient days in 2002. North Bay projects 25,909 acute care patient days in the first year of operation of its proposed replacement hospital, and 27,334 acute care patient days in the second year of operation. Despite each applicant's current facility utilization rate, Community Hospital must increase its current acute care patient days by 20 percent to reach its projected utilization, and North Bay must increase its patient days by at least 50 percent. Given the population trends, service mix and existing competition, the evidence demonstrates that it is not possible for both applicants to simultaneously achieve their projections. In fact, it is strongly noted that the applicants' own projections are predicated upon only one applicant being approved and cannot be supported with the approval of two facilities. Local Health Plan Preferences In its local health plan for District 5, the Suncoast Health Council, Inc., adopted acute care preferences in October, 2000. The replacement of an existing hospital is not specifically addressed by any of the preferences. However, certain acute care preferences and specialty care preferences are applicable. The first applicable preference provides that preference "shall be given to an applicant who proposes to locate a new facility in an area that will improve access for Medicaid and indigent patients." It is clear that the majority of Medicaid and indigent patients live closer to the existing hospitals. However, Community Hospital proposes to move 5.5 miles from its current location, whereas North Bay proposes to move eight miles from its current location. While the short distances alone are less than significant, North Bay's proposed location is further removed from New Port Richey, is not located on a major highway or bus-route, and would therefore be less accessible to the medically indigent residents. Community Hospital's proposed site will be accessible using public transportation. Furthermore, Community Hospital has consistently provided excellent service to the medically indigent and its proposal would better serve that population. In 2000, Community Hospital provided 7.4 percent of its total patient days to Medicaid patients and 0.8 percent of its total patient days to charity patients. Community Hospital provided the highest percentage and greatest number of Medicaid patient days in Sub-District 5-1. By comparison, North Bay provided 5.8 percent of its total patient days to Medicaid patients and 0.9 percent of its total patient days to charity patients. In 2002, North Bay's Medicaid patients days declined to 3.56 percent. Finally, given the closeness and available bed space of the existing providers and the increasing population in the Trinity area, access will be improved by Community Hospital's relocation. The second local health plan preference provides that "[i]n cases where an applicant is a corporation with previously awarded certificates of need, preference shall be given to those which follow through in a timely manner to construct and operate the additional facilities or beds and do not use them for later negotiations with other organizations seeking to enter or expand the number of beds they own or control." Both applicants meet this preference. The third local health plan preference recognizes "Certificate of Need applications that provide AHCA with documentation that they provide, or propose to provide, the largest percentage of Medicaid and charity care patient days in relation to other hospitals in the sub-district." Community Hospital provides the largest percentage of Medicaid and charity care patient days in relation to other hospitals in Sub-District 5-1, and therefore meets this preference. The fourth local health plan preference applies to "Certificate of Need applications that demonstrate intent to serve HIV/AIDS infected persons." Both applicants accept and treat HIV/AIDS infected persons, and would continue to do so in their proposed replacement hospitals. The fifth local health plan preference recognizes "Certificate of Need applications that commit to provide a full array of acute care services including medical-surgical, intensive care, pediatric, and obstetrical services within the sub-district for which they are applying." Community Hospital qualifies since it will continue to provide its current services, including obstetrical care and psychiatric care, in its proposed replacement hospital. North Bay discontinued its pediatric and obstetrical programs in 2001, does not intend to provide them in its proposed replacement hospital, and will not provide psychiatric care. Agency Rule Preferences Florida Administrative Code Rule 59C-1.038(6) provides an applicable preference to a facility proposing "new acute care services and capital expenditures" that has "a documented history of providing services to medically indigent patients or a commitment to do so." As the largest Medicaid provider in Sub-District 5-1, Community Hospital meets this preference better than does North Bay. North Bay's history demonstrates a declining rate of service to the medically indigent. Statutory Review Criteria Section 408.035(1), Florida Statutes: The need for the health care facilities and health services being proposed in relation to the applicable district health plan District 5 includes Pasco and Pinellas County. Pasco County is rapidly developing, whereas Pinellas County is the most densely populated county in Florida. Given the population trends, service mix, and utilization rates of the existing providers, on balance, there is a need for a replacement hospital in the Trinity area. Section 408.035(2), Florida Statutes: The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant Community Hospital and North Bay are both located in Sub-District 5-1. Each proposes to relocate to an area of southwestern Pasco County which is experiencing explosive population growth. The other general acute care hospital located in Sub-District 5-1 is Regional Medical Center Bayonet Point, which is located further north, in the Hudson area of western Pasco County. The only other acute care hospitals in Pasco County are East Pasco Medical Center, in Zephyrhills, and Pasco Community Hospital, in Dade City. Those hospitals are located in Sub-District 5-2, east Pasco County, far from the area proposed to be served by either Community Hospital or North Bay. District 5 includes Pinellas County as well as Pasco County. Helen Ellis and Mease are existing hospital providers located in Pinellas County. Helen Ellis has 168 licensed beds, consisting of 150 acute care beds and an 18-bed skilled nursing unit, and is located 7.9 miles from Community Hospital's existing location and 10.8 miles from Community Hospital's proposed location. Access to Helen Ellis for patients originating from southwestern Pasco County requires those patients to travel congested U.S. 19 south to Tarpon Springs. As a result, the average drive time from Community Hospital's existing and proposed site to Helen Ellis is approximately 22 minutes. Helen Ellis is not a reasonable alternative to Community Hospital's proposal. The applicants' proposals are specifically designed for the current and future health care needs of southwestern Pasco County. Given its financial history, it is unknown whether Helen Ellis will be financially capable of providing the necessary care to the residents of southwestern Pasco. Mease Countryside Hospital has 189 licensed acute care beds. It is located 16.0 miles from Community Hospital's existing location and 13.8 miles from Community Hospital's proposed location. The average drive time to Mease Countryside is 32 minutes from Community Hospital's existing site and 24 minutes from its proposed site. In addition, Mease Countryside Hospital has experienced extremely high utilization over the past several years, in excess of 90 percent for calendar years 2000 and 2001. Utilization at Mease Countryside Hospital has remained over 80 percent despite the addition of 45 acute care beds in April 2002. Given the growth and demand, it is unknown whether Mease can accommodate the residents in southwest Pasco County. Mease Dunedin Hospital has 189 licensed beds, consisting of 149 acute care beds, a 30-bed skilled nursing unit, five Level 2 neonatal intensive care beds, and five Level 3 neonatal intensive care beds. Its former 15-bed adult psychiatric unit has been converted into acute care beds. It is transferring its entire obstetrics program at Mease Dunedin Hospital to Mease Countryside Hospital. Mease Dunedin Hospital is located approximately 18 to 20 miles from the applicants' existing and proposed locations with an average drive time of 35-38 minutes. With their remote location, and the exceedingly high utilization at Mease Countryside Hospital, neither of the two Mease hospitals is a viable alternative to the applicants' proposals. In addition, the construction of a replacement hospital would positively impact economic development and further attract medical professionals to Sub-District 5-1. On balance, given the proximity, utilization, service array, and accessibility of the existing providers, including the applicants, the relocation of Community Hospital will enhance access to health care to the residents. Section 408.035(3), Florida Statutes: The ability of the applicant to provide quality of care and the applicant's record of providing quality of care As stipulated, both applicants provide excellent quality of care. However, Community Hospital's proposal will better enhance its ability to provide quality care. Community is currently undersized, non-compliant with today's standards, and located on a site that does not allow for reasonable expansion. Its emergency department is inadequate for patient volume, and the configuration of the first floor leads to inefficiencies in the diagnosis and treatment of emergency patients. Again, most inpatients are placed in semi-private rooms and three-bed wards, with no showers or tubs, little privacy, and an increased risk of infection. The hospital's waiting areas for families of patients are antiquated and undersized, its nursing stations are small and cramped and the operating rooms and storage facilities are undersized. Community Hospital's deficiencies will be effectively eliminated by its proposed replacement hospital. As a result, patients will experience qualitatively better care by the staff who serve them. Conversely, North Bay is in better physical condition and not in need of replacement. It has more reasonable options to expand or relocate its facility on site. Quality of care at North Bay will not be markedly enhanced by the construction of a new hospital. Sections 408.035(4)and(5), Florida Statutes, have been stipulated as not applicable in this case. Section 408.035(6), Florida Statutes: The availability of resources, including health personnel, management personnel, and funds available for capital and operating expenditures, for project accomplishment and operation The parties stipulated that both Community Hospital and North Bay have available health personnel and management personnel for project accomplishment and operation. In addition, the evidence proves that both applicants have sufficient funds for capital and operating expenditures. Community Hospital proposes to rely on its parent company to finance the project. Keith Giger, Vice-President of Finance for HCA, Inc., Community Hospital's parent organization, provided credible deposition testimony that HCA, Inc., will finance 100 percent of the total project cost by an inter-company loan at eight percent interest. Moreover, it is noted that the amount to be financed is actually $20 million less than the $196,849,328 stated in the CON Application, since Community Hospital previously purchased the proposed site in June 2003 with existing funds and does not need to finance the land acquisition. Community Hospital has sufficient working capital for operating expenditures of the proposed replacement hospital. North Bay, on the other hand, proposes to acquire financing from BayCare Obligated Group which includes Morton Plant Hospital Association, Inc.; Mease; and several other hospital entities. Its proposal, while feasible, is less certain since member hospitals must approve the indebtedness, thereby providing Mease with the ability to derail North Bay's proposed bond financing. Section 408.035(7), Florida Statutes: The extent to which the proposed services will enhance access to health care for residents of the service district The evidence proves that either proposal will enhance geographical access to the growing population in the service district. However, with its provision of obstetrical services, Community Hospital is better suited to address the needs of the younger community. With respect to financial access, both proposed relocation sites are slightly farther away from the higher elderly and indigent population centers. Since the evidence demonstrates that it is unreasonable to relocate both facilities away from the down-town area, Community Hospital's proposal, on balance, provides better access to poor patients. First, public transportation will be available to Community Hospital's site. Second, Community Hospital has an excellent record of providing care to the poor and indigent and has accepted the agency's condition to provide ten percent of its total annual patient days to Medicaid recipients To the contrary, North Bay's site will not be accessible by public transportation. In addition, North Bay has a less impressive record of providing care to the poor and indigent. Although AHCA conditioned North Bay's approval upon it providing 9.7 percent of total annual patient days to Medicaid and charity patients, instead of the 9.7 percent of gross annual revenue proposed in its application, North Bay has consistently provided Medicaid and charity patients less than seven percent of its total annual patient days. Section 408.035(8), Florida Statutes: The immediate and long-term financial feasibility of the proposal Immediate financial feasibility refers to the availability of funds to capitalize and operate the proposal. See Memorial Healthcare Group, Ltd. d/b/a Memorial Hospital Jacksonville vs. AHCA et al., Case No. 02-0447 et seq. Community Hospital has acquired reliable financing for the project and has sufficiently demonstrated that its project is immediately financially feasible. North Bay's short-term financial proposal is less secure. As noted, North Bay intends to acquire financing from BayCare Obligated Group. As a member of the group, Mease, the parent company of two hospitals that oppose North Bay's application, must approve the plan. Long-term financial feasibility is the ability of the project to reach a break-even point within a reasonable period of time and at a reasonable achievable point in the future. Big Bend Hospice, Inc. vs. AHCA and Covenant Hospice, Inc., Case No. 02-0455. Although CON pro forma financial schedules typically show profitability within two to three years of operation, it is not a requirement. In fact, in some circumstances, such as the case of a replacement hospital, it may be unrealistic for the proposal to project profitability before the third or fourth year of operation. In this case, Community Hospital's utilization projections, gross and net revenues, and expense figures are reasonable. The evidence reliably demonstrates that its replacement hospital will be profitable by the fourth year of operation. The hospital's financial projections are further supported by credible evidence, including the fact that the hospital experienced financial improvement in 2002 despite its poor physical condition, declining utilization, and lost market share to providers outside of its district. In addition, the development and population trends in the Trinity area support the need for a replacement hospital in the area. Also, Community Hospital has benefited from increases in its Medicaid per diem and renegotiated managed care contracts. North Bay's long-term financial feasibility of its proposal is less certain. In calendar year 2001, North Bay incurred an operating loss of $306,000. In calendar year 2002, it incurred a loss of $1,160,000. In its CON application, however, North Bay projects operating income of $1,538,827 in 2007, yet omitted the ongoing expenses of interest ($1,600,000) and depreciation ($3,000,000) from its existing facility that North Bay intends to continue operating. Since North Bay's proposal does not project beyond year two, it is less certain whether it is financially feasible in the third or fourth year. In addition to the interest and depreciation issues, North Bay's utilization projections are less reasonable than Community Hospital's proposal. While possible, North Bay will have a difficult task achieving its projected 55 percent increase in acute care patient days in its second year of operation given its declining utilization, loss of obstetric/pediatric services and termination of two exclusive managed care contracts. Section 408.035(9), Florida Statutes: The extent to which the proposal will foster competition that promotes quality and cost-effectiveness Both applicants have substantial unused capacity. However, Community Hospital's existing facility is at a distinct competitive disadvantage in the market place. In fact, from 1994 to 1998, Community Hospital's overall market share in its service area declined from 40.3 percent to 35.3 percent. During that same period, Helen Ellis' overall market share in Community Hospital's service area increased from 7.2 percent to 9.2 percent. From 1995 to the 12-month period ending June 30, 2002, Community Hospital's acute care market share in its service area declined from 34.0 percent to 25.9 percent. During that same period, Helen Ellis' acute care market share in Community Hospital's service area increased from 11.7 percent to 12.0 percent. In addition, acute care average occupancy rates at Mease Dunedin Hospital increased each year from 1999 through 2002. Acute care average occupancy at Mease Countryside Hospital exceeded 90 percent in 2000 and 2001, and was approximately 85 percent for the period ending June 30, 2002. Some of the loss in Community Hospital's market share is due to an out-migration of patients from its service area to hospitals in northern Pinellas and Hillsborough Counties. Market share in Community's service area by out-of- market providers increased from 33 percent in 1995 to 40 percent in 2002. Community Hospital's outdated hospital has hampered its ability to compete for patients in its service area. Mease is increasing its efforts to attract patients and currently completing a $92 million expansion of Mease Countryside Hospital. The project includes the development of 1,134 parking spaces on 30 acres of raw land north of the Mease Countryside Hospital campus and the addition of two floors to the hospital. It also involves the relocation of 51 acute care beds, the obstetrics program and the Neonatal Intensive Care Units from Mease Dunedin Hosptial to Mease Countryside Hospital. Mease is also seeking to more than double the size of the Countryside emergency department to handle its 62,000 emergency visits. With the transfer of licensed beds from Mease Dunedin Hospital to Mease Countryside Hospital, Mease will also convert formerly semi-private patient rooms to private rooms at Mease Dunedin Hospital. The approval of Community Hospital's relocated facility will enable it to better compete with the hospitals in the area and promote quality and cost- effectiveness. North Bay, on the other hand, is not operating at a distinct disadvantage, yet is still experiencing declining utilization. North Bay is the only community-owned, not-for- profit provider in western Pasco County and is a valuable asset to the city. Section 408.035(10), Florida Statutes: The costs and methods of the proposed construction, including the costs and methods or energy provision and the availability of alternative, less costly, or more effective methods of construction The parties stipulated that the project costs in both applications are reasonable to construct the replacement hospitals. Community Hospital's proposed construction cost per square foot is $175, and slightly less than North Bay's $178 proposal. The costs and methods of proposed construction for each proposal is reasonable. Given Community Hospital's severe site and facility problems, the evidence demonstrates that there is no reasonable, less costly, or more effective methods of construction available for its proposed replacement hospital. Additional "band-aide" approaches are not financially reasonable and will not enable Community Hospital to effectively compete. The facility is currently licensed for 401 beds, operates approximately 311 beds and is still undersized. The proposed replacement hospital will meet the standards in Florida Administrative Code Rule 59A-3.081, and will meet current building codes, including the Americans with Disabilities Act and the Guidelines for Design and Construction of Hospitals and Health Care Facilities, developed by the American Institute of Architects. The opponents' argue that Community Hospital will not utilize the 320 acute care beds proposed in its CON application, and therefore, a smaller facility is a less- costly alternative. In addition, Helen Ellis' architectural expert witness provided schematic design alternatives for Community Hospital to be expanded and replaced on-site, without providing a detailed and credible cost accounting of the alternatives. Given the evidence and the law, their arguments are not persuasive. While North Bay's replacement cost figures are reasonable, given the aforementioned reasons, including the fact that the facility is in reasonably good condition and can expand vertically, on balance, it is unreasonable for North Bay to construct a replacement facility in the Trinity area. Section 408.035(11), Florida Statutes: The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent Community Hospital has consistently provided the most health care services to Medicaid patients and the medically indigent in Sub-District 5-1. Community Hospital agreed to provide at least ten percent of its patient days to Medicaid recipients. Similarly, North Bay agreed to provide 9.7 percent of its total annual patient days to Medicaid and charity patients combined. North Bay, by contrast, provided only 3.56 percent of its total patient days to Medicaid patients in 2002, and would have to significantly reverse a declining trend in its Medicaid provision to comply with the imposed condition. Community Hospital better satisfies the criterion. Section 408.035(12) has been stipulated as not applicable in this case. Adverse Impact on Existing Providers Historical figures demonstrate that hospital market shares are not static, but fluctuate with competition. No hospital is entitled to a specific or historic market share free from competition. While the applicants are located in health planning Sub-District 5-1 and Helen Ellis and the two Mease hospitals are located in health planning Sub-District 5- 2, they compete for business. None of the opponents is a disproportionate share, safety net, Medicaid provider. As a result, AHCA gives less consideration to any potential adverse financial impact upon them resulting from the approval of either application as a low priority. The opponents, however, argue that the approval of either replacement hospital would severely affect each of them. While the precise distance from the existing facilities to the relocation sites is relevant, it is clear that neither applicants' proposed site is unreasonably close to any of the existing providers. In fact, Community Hospital intends to locate its replacement facility three miles farther away from Helen Ellis and 1.5 miles farther away from Mease Dunedin Hospital. While Helen Ellis' primary service area is seemingly fluid, as noted by its chief operating officer's hearing and deposition testimony, and the Mease hospitals are located 15 to 20 miles south, they overlap parts of the applicants' primary service areas. Accordingly, each applicant concedes that the proposed increase in their patient volume would be derived from the growing population as well as existing providers. Although it is clear that the existing providers may be more affected by the approval of Community Hosptial's proposal, the exact degree to which they will be adversely impacted by either applicant is unknown. All parties agree, however, that the existing providers will experience less adverse affects by the approval of only one applicant, as opposed to two. Furthermore, Mease concedes that its hospitals will continue to aggressively compete and will remain profitable. In fact, Mease's adverse impact analysis does not show any credible reduction in loss of acute care admissions at Mease Countryside Hospital or Mease Dunedin Hospital until 2010. Even then, the reliable evidence demonstrates that the impact is negligible. Helen Ellis, on the other hand, will likely experience a greater loss of patient volume. To achieve its utilization projections, Community Hospital will aggressively compete for and increase market share in Pinellas County zip code 34689, which borders Pasco County. While that increase does not facially prove that Helen Ellis will be materially affected by Community Hospital's replacement hospital, Helen Ellis will confront targeted competition. To minimize the potential adverse affect, Helen Ellis will aggressively compete to expand its market share in the Pinellas County zip codes south of 34689, which is experiencing population growth. In addition, Helen Ellis is targeting broader service markets, and has filed an application to establish an open- heart surgery program. While Helen Ellis will experience greater competition and financial loss, there is insufficient evidence to conclude that it will experience material financial adverse impact as a result of Community Hospital's proposed relocation. In fact, Helen Ellis' impact analysis is less than reliable. In its contribution-margin analysis, Helen Ellis utilized its actual hospital financial data as filed with AHCA for the fiscal year October 1, 2001, to September 30, 2002. The analysis included total inpatient and total outpatient service revenues found in the filed financial data, including ambulatory services and ancillary services, yet it did not include the expenses incurred in generating ambulatory or ancillary services revenue. As a result, the overstated net revenue per patient day was applied to its speculative lost number of patient days which resulted in an inflated loss of net patient service revenue. Moreover, the evidence indicates that Helen Ellis' analysis incorrectly included operational revenue and excluded expenses related to its 18-bed skilled nursing unit since neither applicant intends to operate a skilled nursing unit. While including the skilled nursing unit revenues, the analysis failed to include the sub-acute inpatient days that produced those revenues, and thereby over inflated the projected total lost net patient service revenue by over one million dollars.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Community Hospital's CON Application No. 9539, to establish a 376-bed replacement hospital in Pasco County, Sub- District 5-1, be granted; and North Bay's CON Application No. 9538, to establish a 122-bed replacement hospital in Pasco County, Sub-District 5- 1, be denied. DONE AND ENTERED this 19th day of March, 2004, in Tallahassee, Leon County, Florida. S WILLIAM R. PFEIFFER 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 19th day of March, 2004. COPIES FURNISHED: James C. Hauser, Esquire R. Terry Rigsby, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Richard M. Ellis, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 Richard J. Saliba, Esquire Agency for Health Care Administration Fort Knox Building III, Mail Station 3 2727 Mahan Drive Tallahassee, Florida 32308 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 Darrell White, Esquire William B. Wiley, Esquire McFarlain & Cassedy, P.A. 305 South Gadsden Street, Suite 600 Tallahassee, Florida 32301 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308
Conclusions THE PARTIES resolved all disputed issues and executed a Settlement Agreement. The parties are directed to comply with the terms of the attached settlement agreement. Based on the foregoing, this file is CLOSED. DONE and ORDERED on this the @ day of Z, Vuctrae. , 2015, in Leon County, Tallahassee, Florida. Filed March 10, 2015 3:08 PM Division of Administrative Hearings A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: William M. Blocker, II Medicaid Finance & Health Systems Chief Counsel Agency for Health Care Administration William.Blocker@ahca.myflorida.com (Electronic Mail) Joanne B. Erde, P.A. DUANE MORRIS, LLP 200 South Biscayne Blvd., Suite 3400 Miami, Florida 33131-2318 JErde@duanemorris.com (Electronic Mail) Thomas J. Wallace, Bureau Chief, Medicaid Program Finance Finance and Accounting Health Quality Assurance CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to _ the above named addressees by electronic mail or inter-office mail on this the re day of L Le ehy , 2015. Richard J. Shoop, Esquire Agency Clerk State of Florida Agency for Health Care Administration 2727 Mahan Drive, MS #3 Tallahassee, Florida 32308-5403 (850) 412-3630/FAX (850) 921-0158
Conclusions THIS CAUSE comes before the Agency for Health Care Administration (“the Agency") concerning Certificate of Need ("CON") Application Nos. 10061 — 10065 in the second batching cycle of 2009. The Agency published a fixed numeric need for one new hospice program in Area 4A for the second batching cycle of 2009 — Other Beds and Programs Batching Cycle. No one challenged the published fixed need determination. Compassionate Care Hospice of Florida, Inc. (Compassionate), Odyssey HealthCare of Collier County, Inc. (Odyssey), Seasons Palliative Care of Florida, Inc. (Seasons), United Hospice of Florida, Inc. (United), and VITAS Healthcare Corporation of Florida (VITAS), each submitted letters of intent, initial applications, and omissions responses proposing to establish a new hospice program in Area 4A. The Agency issued its State Agency Action Report (SAAR) preliminarily approving VITAS (CON Application 10065) and denying the others. The Agency published notice of the decision in the March 5, 2010, Florida Administrative Weekly, Volume 36, No. 9, pg. 1079. United and Odyssey filed petitions challenging their respective denials and the approval of VITAS. Community Hospice of Northeast Florida, Inc. filed a petition challenging all co- 2 batched applications. VITAS filed a petition supporting its approval and the Agency’s denial of the other applications. Other applicants and existing providers filed petitions. The Agency referred the petitions for formal hearing to the Division of Administrative Hearings (“DOAH”), and DOAH consolidated the cases. Several parties dismissed their petitions as set forth below. By the time of the final hearing, the remaining parties were Community, VITAS, United, and the Agency. Community did not oppose approval of one application. It maintained, however, that only one should be approved. The final hearing in the consolidated cases convened on October 25, 2010, and concluded on November 9, 2010. On March 22, 2011, DOAH issued a recommended order, which was adopted by the Agency in a Final Order filed on May 2, 2011. Pursuant to the Final Order, the CON application of VITAS was granted with the conditions stated in its application and the CON application of United was denied. Odyssey filed a Petition for Formal Administrative Hearing and Petition for Leave to Intervene contesting the denial of CON Application No. 10062 requesting a CON to establish a hospice program, DOAH Case No. 10-1624CON. On July 23, 2010, Odyssey filed an Amended Notice of Voluntary Dismissal with regard to DOAH Case No. 10-1624CON. On July 26, 2010, DOAH entered an Order Closing File for Case No. 10-1624CON only, and on July 27, 2010, entered an Order Severing Case in regard to DOAH Case No. 10-1624CON. HCR Manor Care Services of Florida, Inc. (““HCR Manor”) and North Central Florida Hospice, Inc. d/b/a Haven Hospice (“Haven Hospice”) filed petitions for a formal administrative hearing concerning the co-batched CON Application Nos. 10061 — 10065, which were forwarded to DOAH. In their petitions, HRC Manor and Haven Hospice maintained that they were existing hospice providers in the same service area as the applicants’ proposed hospices providing hospice services similar to those proposed by the applicants. On July 19, 2010, HCR Manor filed a Notice of Voluntary Dismissal with regard to DOAH Case No. 10-1864CON. On July 20, 2010, DOAH entered an Order Severing Case and an Order Closing File in regard to DOAH Case No. 10-1864CON. On August 10, 2010, Haven Hospice filed its Notice of Voluntary Dismissal with regard to DOAH Case No. 10-1868. On August 10, 2010, DOAH entered an Order Severing Case and an Order Closing File in regard to DOAH Case No. 10-1868CON. It is therefore ORDERED: 1. The Amended Notice of Voluntary Dismissal filed by Odyssey is acknowledged and accepted and the denial of CON Application No. 10062 is UPHELD. 2. The Notice of Voluntary Dismissals filed by HCR Manor and Haven Hospice are acknowledged and accepted. ORDERED on this AX day of ar, 2011, in Tallahassee, Florida. Elizabeth Dutiek, Secretary Agency for Health Care Administration
Findings Of Fact Petitioner, NORTH BROWARD HOSPITAL DISTRICT, is an independent special taxing district created by special act of the Florida legislature, Chapter 27-438, Laws of Florida, (1951). The Petitioner encompasses a geographic area which covers the northern two-thirds of Broward County, bordering Palm Beach County to the north, Collier and Hendry County to the west, the Atlantic Ocean to the east, and a line roughly along the Dania Cutoff Canal to the south. (Petitioner's Ex. 1, Sections 1 and 2) The Petitioner provides health care services within the district. Petitioner is governed by a Board of Commissioners, who are authorized and empowered to establish, construct, operate and maintain public hospitals and related support facilities for the preservation of the public health and welfare of the inhabitants of the Petitioner. (Petitioner's Ex. 1, Sections 4 and 6; T. Watkins, Vol. I, pg. 26). The District may levy up to 2.5 mils of ad valorem taxes to support these purposes. The Hospital District currently owns and operates four public, nonprofit medical centers: Broward General Medical Center, North Broward Medical Center, Coral Springs Medical Center and Imperial Point Medical Center. The medical centers do not exist as separate corporations (T33, 34, Vol. I), nor do they have boards of directors independent from the Petitioner. (T19, Vol. I). The policy and routine operation of each medical center is controlled by the Chief Executive Officer of the North Broward Hospital District. (T20, Vol. I). The district is not regulated by Chapter 395 or Chapter 407, Florida Statutes. Each hospital is separately licensed under Chapter 395, Florida Statutes, and regulated under the Health Care Cost containment Act of 1988, Section 407.001 et seq., Florida Statutes, and the rules and policies of the HCCCB. Each medical center has a different Medicare, Medicaid and Blue Cross provider number. (T34, Vol. I). The district, through its four medical centers, renders virtually all the indigent health care and related services provided within the district and is the second largest indigent care provider in the state. The term "local government" is used in Section 407.002(17), Florida Statutes, but it is not expressly defined in Chapter 407. The Respondent, Health Care Cost Containment Board (HCCCB), is an agency of the State of Florida which operates pursuant to the Health Care Cost Containment Act of 1988, Chapter 407.001, Florida Statutes. Prior to the enactment of this statute, the Respondent operated as the Hospital Cost Containment Board under the Health Care Cost Containment Act of 1979, Section 395.501, et seq., Florida Statutes. The Respondent regulates the rate of increase of hospital rates within the state. The HCCCB regulates hospital rates through a comprehensive program which requires hospitals to submit detailed reports on forms provided by the HCCCB and in accordance with rules and regulations promulgated by the HCCCB. The HCCCB conducts an annual hospital budget review through a review of financial data submitted by licensed hospitals pursuant to the HCCCB's uniform financial reporting system. A licensed hospital may avoid the necessity of detailed budget review by submitting an annual budget letter which proposes an increase in its average gross revenues per adjusted admission in an amount less than or equal to the "maximum allowable rate of increase" or "MARI". Prior to 1988, the maximum allowable rate of increase was computed with a formula in which the MARI consisted of an inflation component, the "market basket index," and additional percentage points added to reflect the highest costs of the Florida specific experience. The statute was amended to address the impact of indigent care with the adoption of the current formula for calculating the MARI provided in Section 407.002(17), Florida Statutes (1988). The statutory provision at issue in this proceeding is Section 407.002(17), Florida Statutes (1988), which provides as follows: (17) "Maximum allowable rate of increase" or "MARI" means the maximum rate at which a hospital is normally expected to increase its average gross revenues per adjusted admission for a given period. The board, using the most recent audited actual experience for each hospital, shall calculate the MARI for each hospital as follows: the projected rate of increase in the market basket index shall be divided by a number which is determined by subtracting the sum of one-half of the proportion of Medicare days plus the proportion of Medicaid days and the proportion of charity care days from the number one. Two percentage points shall be added to this quotient. The formula to be employed by the board to calculate the MARI shall take the following form: MARI = NHIPI + 2 1-[(Me x .5) + Md + Cc] where: MARI = maximum allowable rate of increase applied to gross revenue. NHIPI = national hospital input price index, which shall be the projected rate of change in the market basket index. Me = proportion of Medicare days, including when available and reported to the board Medicare HMO days, to total days. Md = proportion of Medicaid days, including when available and reported to the board Medicaid HMO days, to total days. Cc = proportion of charity care days to total days with a 50-percent offset for restricted grants for charity care and unrestricted grants from local governments. (emphasis added). To calculate "Cc" requires a 50% adjusting offset of the credit for grants restricted to charity care and unrestricted grants from the local government. (T161, Vol. I). The HCCCB seeks to apply this provision to monies used by the Petitioner to cover losses occasioned by its hospitals rendering care to indigents. All financial activities of the Petitioner are conducted by the District's Division of Financial Services, which is located within the District's administrative offices. (T. Watkins, Vol. I, pg. 45). The Division maintains the District's bank accounts and performs all accounting and related financial services for each of the District's medical centers. (T. Watkins, Vol. I, pgs. 32-37; Vol. II, pg. 77; T. Lloyd, Vol. I, pg. 97). All expenses incurred by the medical centers are paid from the general operating fund of the Petitioner through the Division of Financial Services on checks issued in the name of the Petitioner. (T. Watkins, Vol. I, pg. 46). The Division of Financial Services also accounts for all District accounts receivable, as well as other operating and nonoperating revenues. (T. Watkins, Vol. II, pgs. 77-78). All funds of the District are commingled in one general operating account. (I) The individual medical centers have no bank accounts of their own, and they can neither receive nor disburse monies on their own behalf. (T. Watkins, Vol. II, pgs. 77-78). All such transactions are carried out by the Division of Financial Services, on behalf of the District as a whole. (Id.) The Division of Financial Services accounts for the District's revenues and expenses by way of a general ledger covering all financial activities of the District. Within this ledger are subaccounts for all cost and revenue centers, which are administered on a district-wide basis encompassing the four medical centers and related facilities. (T. Lloyd, Vol. I, pgs. 99-101; Petitioner's Ex. 4). The Division of Financial Services also prepares all budgetary reports and related financial materials required by the Respondent and other regulatory entities. (T. Watkins, Vol. I, pg. 37). This include reports to the HCCCB. For purposes of the HCCCB's annual budget review process, the District is required to treat the medical centers as separate entities and prepare individual financial statements. (T. Lloyd, Vol. I, pgs. 117-119). Accordingly, certain costs and revenues are accounted for on an institution-specific basis and are reflected in the profit and loss statements of each individual medical center. (T. Lloyd, Vol. I, pgs. 131-134). However, the District and its medical centers are one legal entity and, for other than HCCCB purposes, one accounting entity. The Petitioner derives a large percentage of its revenues through direct charges to paying patients. The revenue generated by medical center operations makes up approximately 85% of the annual revenues available to the Petitioner. The District also raises revenues through its ad valorem taxation authority. Pursuant to its charter, the District is authorized to impose an annual levy not to exceed 2.5 mills on all taxable real property lying within its boundaries. (Petitioner's Ex. 1, Sections 26 and 27; T. Watkins, Vol. I, pgs. 26-27). The Board of Commissioners of the Petitioner determines the mileage rate to be imposed each year; and after notice and public hearings, the mileage rate is adopted by resolution. (T. Watkins, Vol. I, pgs. 28-29) The ad valorem taxation mileage levied by the District is collected by the Broward County Tax Collector and distributed to the District as collected. (T. Lloyd, Vol. I, pgs. 102-103). The funds are received by the District and deposited into the District's general operating account on an accrual basis, where they are commingled with all other revenues received by the District. (T. Watkins, Vol. I, pgs. 89-90). The District's revenues are restricted in their use by statute to the purposes of the District's enabling legislation. Revenues can be utilized only for purposes authorized by Section 25, Chapter 27438, Laws of Florida, (1951), which are limited to the provision of health care within the District. (T. Watkins, Vol. I, pgs. 32-33, 42-43; Petitioner's Ex. 1, Sections 4 and 6). The Board of the Hospital District has authorized expenditures for a variety of uses, including the purchase of land, construction of facilities, equipment acquisition, capital improvements, and operating expenses. At any time the Board of the Hospital District may change its spending policies within the limits of the statute. Every cost center within each hospital of the District is utilized to some extent in rendering indigent care. The costs for operating the medical centers include indigent care costs. Because of the accounting system generally used by hospitals, costs attributable to the care of any patient are not kept. Therefore, none of the payments made by the District for personnel, laboratories, medical supplies, food service, suppliers, and all other overhead expenses are directly attributable to any specific patient accounts. These costs are incurred by the various cost centers in the hospitals of District in the course of rendering health care to patients. In the recent years, NBHD has used tax and other revenues used to pay for the costs incurred in providing indigent care by the District. (T. Lloyd, Vol. I, pg. 115). To derive the costs of indigent care, the charges of those patients meeting the state poverty guidelines are recorded in the gross revenues of each medical center together with the charges of paying patients. Each medical center then writes off as a loss all those charges occasioned in rendering health care to indigent patients and reports this write off by placing the amount of these charges in a variance account titled Indigent Care - Variance." Each month the Board authorizes covering a percentage of the losses for indigent care at each medical center from the District's general cash account. The Board currently covers 90% of the total indigent care charges as reported in the Indigent Care Variance account. The 90 percent represents the Hospital District's determination of the approximate costs of providing indigent health care services. (T. Lloyd, Vol. I, pgs. 106-110) (T. Watkins, Vol. I, pg. 31). The medical centers do not receive compensation for indigent care on an individual- patient-account basis. (T. Lloyd, Vol. I, pg. 140; T. Watkins, Vol. II, pgs. 80- 81). The District does pay for losses attributable to rendering care to indigent patients with tax and other revenues. (See Paragraph 23, above, on commingling of funds.) Once the expenditure is authorized by the Board, the District debits the general cash account of the District and credits the respective medical center's profit and loss statement. (T. Lloyd, Vol. I, pgs. 102-103 and 107). There is no transfer of funds because the District disburses funds from its general operating account to pay for all costs associated with the provision of health care for each medical center. This includes those costs incurred in rendering indigent care. (T. Lloyd, Vol. I, pg. 140; T. Watkins, Vol. I, pg. 117, Vol. II, pgs. 80-81). The HCCCB has developed a Florida Hospital Uniform Reporting System pursuant to Chapter 407, Florida Statutes. The reporting system requires each hospital regulated by the Respondent to file detailed financial information in the manner and on the forms dictated by the HCCCB. The North Broward Hospital District has done the financial reporting for each of the individual medical centers. s a part of the reporting system, a C-4 worksheet containing a statement of all operating and all nonoperating revenue is prepared for each individual medical centers. Pursuant to the HCCCB's instructions, expenditure of tax revenue derived from special taxing districts are included on line 39(a) of the C-4 worksheet. The HCCCB's reporting system does not correlate to the bookkeeping or accounting system of the Petitioner. The District only reports on tax revenue and its expenditure in the manner provided on the individual financial reports for each medical center because the Respondent requires it. The description of accounts established under the HCCCB'S uniform reporting system includes two specific accounts applicable to the provision of charity care: account numbers 5960 and 5970. Account number 5960 is used to report charges for charity/uncompensated care complying with the requirements of the Hill/Burton Hospital and Medical Facilities Construction Plan. Account number 5970 is used to report the differential between the charge's for hospital services for charity/uncompensated care patients and the amount received from patients or on behalf of patients from governmental agencies in payment for such services. Lump-sum grants or subsidies received from governmental or voluntary agencies for the care of medically-indigent patients must be reported under "restricted donations and grants for indigent care" (Account 5970). Account number 5970 entitled "Restricted Donations and Grants for Indigent Care" is used to report voluntary and governmental agency grants or subsidies for the care of unspecified medically indigent patients during the current reporting period. Prior to 1988, the HCCCB adopted policies and rules that distinguished local government budgeted contributions given to a hospital from tax revenues received by a hospital. In addition, both legislation dealing specifically with charity care provided by hospitals and the rules adopted by the HCCCB implementing that legislation clearly distinguished taxing districts from other types of local government. The distinction between tax revenues from a taxing district and contributions or grants received from a local government is evident in the policies and rules adopted by the Respondent since 1984. The HCCCB, according to minutes of the meeting of October 30-31, 1984, considered and approved a review criteria for the statewide ranking of hospitals providing indigent care which clearly distinguished "tax revenues" from "budgeted contributions" from local governments. The HCCCB initially discussed a proposed formula which gave a 100% offset of "unrestricted tax revenues against bad debts plus charity care write-offs" but then adopted criteria which included a "fifty percent offset of unrestricted tax revenues and a fifty percent offset of unrestricted budgeted contributions against bad debts plus charity care write-offs net restricted donations and grants for charity care". (Petitioner's Ex. 5, pgs. 2-3). On December 13-14, 1984, the HCCCB met to discuss a number of matters, to include how the indigent care ranking methodology should be presented in-publications and whether the 50% offset figure for "unrestricted tax revenue and contributions" was the best indicator to use. The Board agreed to study the 50% offset after a study by the University of Florida was completed. (Petitioner's Ex. 6, pgs. 3-6). The HCCCB adopted in 1984 a "Statement of Facts and Circumstances in Support of Amendments to Rule 4D-1.03 and 4D- 2.11" which discussed the ranking of hospitals based upon provision of indigent care. (Petitioner's Ex. 7). The proposed rule was published in Vol. 10, No. 32, Fla. Admin. Weekly. Petitioner's Ex. 8). The "Statement of Facts" included extensive analysis of including "unrestricted tax revenues" in the ranking statistic in order to "measure more accurately the burden of uncompensated indigent care". (Petitioner's Ex. 7, pg. 2). The Respondent considered tax revenues as a distinct type of revenue received by a hospital and used to offset the provision of charity care. Since 1987, the HCCCB considered revenues derived from taxing districts distinct from revenues derived from local governments in a parallel program distributing funds from the Public Medical Assistance Trust Fund to hospitals which treat an excess of indigent patients. (T. Bracher, Vol. I, pg. 199). The statute establishing the trust fund distribution for 1987-88 was Chapter 87-92, Laws of Florida. The Respondent adopted Rule ION- 1.0075, Florida Administrative Code, in which the Respondent specifically distinguished between unrestricted revenues provided to a hospital from local governments and those provided from taxing districts. (T. Bracher, Vol. I, pg. 197). In Chapter 88-294, Laws of Florida, the Legislature appropriated funds for the Public Medical Assistance Trust Fund for those hospitals which provided a disproportionate share of charity care. The Legislative definition of "charity care days" included an offset of 50% for "restricted and unrestricted revenues provided to a hospital by local governments or taxing districts". Chapter 88-294, Section 30, Laws of Florida.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is recommended that the Health Care Cost Containment Board (HCCCB) enter its final order holding that: The North Broward Hospital District is not a local government as that term is used in Chapter 407, Florida Statutes (Supp. 1988) but is a "local unit of special government," and "Grants" are voluntary and formal gifts. The use of money to cover losses occasioned by rendering statutorily required care to indigents. is not a restricted or unrestricted grant from a hospital district obligated to provide such care. It is unnecessary for the Board to address the remaining issues in its final order. DONE and ENTERED this 12th day of January, 1990, at Tallahassee, Leon County, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings, The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of January, 1990 APPENDIX TO RECOMMENDED ORDER The following is a detailed of the consideration of the proposed findings: Petitioner's Proposed Findings: Paragraph 1 Adopted Paragraph 13 Paragraph 2 Adopted Paragraph 14 Paragraphs 3-6 Statement of Case Paragraph 7 Statement of Issues Paragraph 8 Preliminary Statement Paragraph 9 Adopted Paragraph 1 Paragraph 10 Adopted Paragraph 2 Paragraph 11 Adopted Paragraph 3 Paragraph 12 Adopted Paragraph 6 Paragraph 13 Adopted Paragraph 21 Paragraph 14 Adopted Paragraph 9 Paragraph 15 Adopted Paragraph 9 Paragraph 16 Adopted Paragraph 10 Paragraph 17 Adopted Paragraphs 12,13 Paragraph 18 Adopted Paragraph 13 Paragraph 19 Adopted Paragraph 12 Paragraph 20 Adopted Paragraph 11 Paragraph 21 Adopted Paragraph 15 Paragraph 22 Adopted Paragraph 16 Paragraph 23 Adopted Paragraph 17 Paragraph 24 Adopted Paragraph 18 Paragraph 25 Adopted Paragraph 19 Paragraph 26 Adopted Paragraph 20 Paragraph 27 Adopted Paragraph 21 Paragraph 28 Adopted Paragraph 22 Paragraph 29 Adopted Paragraph 23 Paragraph 30 Adopted Paragraph 24 Paragraph 31 Adopted Paragraph 25 Paragraph 32 Adopted Paragraph 26 Paragraph 33,34 Adopted Paragraph 27 Paragraph 35 Adopted Paragraph 28 Paragraph 36 Adopted Paragraph 27 Paragraph 37 Adopted Paragraph 25 Paragraph 38 Irrelevant Paragraph 39 Argument Paragraph 40 Adopted Paragraph 29 Paragraph 41 Adopted Paragraph 29,30 Paragraph 42 Adopted Paragraph 31 Paragraph 43 Adopted Paragraph 32 Paragraph 44 Adopted Paragraph 33 Paragraph 45 1st sentence-Irrelevant; 2d sentence-Adopted Paragraph 34 Paragraph 46 Adopted Paragraph 35 Paragraph 47 Adopted Paragraph 36 Paragraph 48 Adopted Paragraph 37 Paragraph 49 Adopted Paragraph 38 Paragraph 50 Adopted Paragraph 39 HCCCB's Proposed Findings Paragraph 1 Adopted Paragraph 1 Paragraph 2 Adopted Paragraph 3 Paragraph 3 Adopted Paragraph 4 Paragraph 4 Adopted Paragraph 5 Paragraph 5 Adopted Paragraph 4,5 Paragraph 6 Rejected as contrary to law because status as a governmental hospital is irrelevant. Paragraph 7 Adopted Paragraph 21 Paragraph 8 Rejected-See Paragraph 6. Paragraph 9 Adopted Paragraph 7 and included in conclusions of law Paragraph 10 Argument Paragraph 11 Adopted Paragraph 10 Paragraph 12 Discussed in Paragraphs 8,9,10, and 11 Paragraph 13 Adopted Paragraph 14 Paragraph 14 Adopted Paragraph 4 Paragraph 15 Rejected-cumulative Paragraph 16 Rejected-See Paragraph 6 Paragraph 17 1st sentence is irrelevant; 2d sentence Adopted Paragraph 19 Paragraph 18 Irrelevant Paragraph 19 Adopted Paragraph 14 Paragraph 20 Irrelevant-Parties stipulated that law's interpretation and not amounts were at issue. Paragraph 21-26 Adopted generally and discussed in paragraphs 15- 28. Paragraph 27 1st sentence is irrelevant because the method of transfer is not important. 2d sentence adopted paragraph 27. Paragraph 28 Reject "admission." Paragraph 29 Argument-basic facts are adopted in paragraphs 25,26,27, and 28. Paragraph 30,31 Irrelevant. Paragraph 32,33 Basic facts stated in Paragraphs 29-34. Paragraph 34 Argument Paragraph 35-40 Irrelevant-Argument. Copies furnished to: Stephen Presnell, Esq. Health Care Cost Containment Board Woodcrest Office Plaza Building L, Suite 101 325 John Knox Road Tallahassee, FL 32303 Gary Walker, Director Health Care Cost Containment Board Woodcrest Office Plaza Building L, Suite 101 325 John Knox Road Tallahassee, FL 32303 Patrick J. Phelan, Jr., Esq. and David Eastman, Esq. Parker, Skelding, Labasky & Corry P.O. Box 669 Tallahassee, FL 32303 Robert D. Newell, Jr., Esq. Newell & Stahl, P.A. 817 North Gadsden Street Tallahassee, FL 32303-6313 =================================================================
