The Issue The issue for determination is whether Petitioner should be awarded a certificate of need authorizing the establishment of cardiac catheterization laboratory services at its facility in Port Charlotte, Florida. As a result of stipulations of the parties presented at hearing, matters for consideration were limited to whether Petitioner meets the criteria of availability of funds for capital expenditures for the project in accordance with Section 381.705(1)(h), Florida Statutes; and whether Petitioner has shown the existence of need for additional services by any existing medically underserved groups in the service area.
Findings Of Fact The parties have stipulated that Petitioner does not meet the criteria of Section 381.705(1)(a), Florida Statutes, because there is no numeric need for the program established by any agency rule formula and that no emergency or other not normal circumstances exist, including problems of geographic, financial or programmatic access, justifying the program in the absence of such enumerated need. Petitioner's agreement to this stipulation was conditioned upon an assumption that previous Certificates of Need, formerly granted by final orders of Respondent to other entities in previous batching cycles and now the subject of legal appeals by Petitioner in the appellate court, will eventually be confirmed by that court to have been properly issued. The parties have stipulated that Petitioner, as the result of nonexistence of numeric or nonnumeric need, has not met criteria regarding its ability to provide quality care, a requirement of subparagraph (c) of Section 381.705(1), Florida Statutes; has not met criteria regarding availability and adequacy of other health care facilities in the applicant's service district, a review component set forth in Section 381.705(1)(d), Florida Statutes; has not met criteria regarding immediate and long term financial feasibility of Petitioner's proposal, a requirement of Section 381.705(1)(i), Florida Statutes; has not met criteria regarding the impact of the proposed project on the costs of providing such health services, a requirement of Section 381.705(1)(l), Florida Statutes; and has not met criteria, as required by Section 381.705(2)(a)-(d), Florida Statutes, regarding alternative services, efficiency of existing services, alternatives to new construction or the likelihood of patients obtaining the proposed service in the absence of Petitioner's proposal. The parties have stipulated that review requirements of subparagraphs (e), (f), (g), (j), and (k) of Section 381.705(1), Florida Statutes, are found not to be applicable to this proceeding. Those subparagraphs relate, respectively, to economics of shared services, need for special services, need for research and educational facilities, special needs of health maintenance organizations and needs of entities serving residents outside the service area. The parties have stipulated that the criteria ofSection 381.705(1)(b), Florida Statutes, has not been met because they were not addressed or challenged by Petitioner. However, Petitioner does contest the accessibility by medically underserved groups of existing and approved providers in the service district. With the exception of the availability of funds for capital and operating expenditures related to the project in Petitioner's application and the extent to which the proposed services will be accessible to all residents of the service district, further stipulation between the parties also establishes that the review criteria contained in Section 381.705(1)(h), Florida Statutes, does not apply to this proceeding. Portions of Rule 10-5.011(b), Florida Administrative Code, relating to accessibility of services to residents of the service district are also excepted from consideration in this proceeding by the parties' stipulation. By stipulation of the parties, it is established that the review requirement of Section 381.705(1)(l), Florida Statutes, relating to the probable impact of the proposed project on the cost of providing services proposed by Petitioner, is met. The parties' stipulation further establishes that requirements of Section 381.705(1)(m) and Section 381.705(1)(n), Florida Statutes, have been met. These statutory subparagraphs relate, respectively, to methods and costs of proposed construction, and Petitioner's past and proposed provision of health care services to medicaid and medically indigent patients. Petitioner is a separate, albeit subsidiary,corporation from its parent, Bon Secours Health Systems, Inc., (Bon Secours) a "not for profit" corporation based in Marriottsville, Maryland. Approximately 80 percent of the total project cost of $1,450,000 cost is expected to come from the parent organization and not Petitioner's corporation. The project has been approved by Petitioner's corporation and management approval has been granted by Bon Secours, subject only to final board approval and reevaluation by the parent corporation on an annual basis until the actual capital expenditure is incurred. Petitioner's parent corporation uses either a line of credit or goes to the tax exempt bond market to meet capital expenditure needs. The bond market is utilized when capital needs exceed $15 million for the year. Whether the funding source for Petitioner's project would come from a line of credit or bond financing would not be known until the actual year in which the expenditure is incurred. Bon Secours includes Petitioner in its obligated group which consists of a system-wide master trust indenture established in 1985. The group consists of eight hospitals and three long term care facilities. Weaker entities in the group have the benefit of the credit strength of the group's entire system. In this regard, Bon Secours enjoys a Standard & Poors and Moodys' bond rating of A+ and A-1, respectively. The corporation is a good credit risk with a strong financial position and good earnings record. Over the next five years, Bon Secours has the ability to raise in excess of $100,000,000 in the bond market for funding purposes, inclusive of the project which is the subject of theseproceedings. Although final approval of Petitioner's project by Bon Secours' board of directors is expected shortly, that approval had not occurred at the time of final hearing. As a result, the proof fails to establish that Bon Secours is committed to provide financing for Petitioner's project. Petitioner presented expert testimony regarding accessibility by medically underserved groups to Petitioner's and other cardiac catheterization programs. Petitioner's expert placed the size of the medically indigent population, a subcategory of the medically underserved group, at six to seven percent of the total population of the service area. Due to the lack of specificity of the methodology used in arriving at the cited percentage figure, no credibility can be ascribed to that population percentage. However, both Respondent and Petitioner concede the existence of this group in the district service area sought to be served by Petitioner's project. Petitioner has not established whether the medically indigent population is denied access to cardiac catheterization programs within the district service area. While Petitioner's hospital is a medicaid provider with a proactive policy of aiding the medically indigent, the availability of cardiac catheterization services exist for this group at Intervenor's medical center facilities, located only five miles from Petitioner's hospital. Intervenor is also a medicaid provider. The proof fails to establish that medicaid patients or medically indigentpatients are presently denied or turned away from Intervenor's facility. Further, the duplication of such services at Petitioner's hospital could effectively reduce the number of cardiac catheterization procedures required for the medical staff of Intervenor's laboratory to maintain proficiency. In point of fact, there is unused cardiac catheterization capacity at Intervenor's facility. As established by Intervenor's exhibit number one, there were 562 cardiac catheterization procedures performed at Intervenor's facility in 1988. The State Health Plan recites a minimum goal of 600 such procedures a year as a proficiency measurement; the Local Health Plan maintains that a minimum of 300 procedures should be performed to insure proficiency.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered denying Petitioner's application for approval of a cardiac catheterization Certificate of Need. DONE AND ENTERED this 29th day of June, 1989, in Tallahassee, Leon County, Florida. DON W.DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Fl 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of June, 1989. APPENDIX The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's Proposed Findings. 1.-3. Adopted in substance, except that part (l) of proposed finding 3 was met by Petitioner. 4.-5. Addressed in part. To the extent that the last sentence of proposed finding 5 suggests the establishment of final approval by the parent corporation, it is rejected. 6. Accepted with the exception of approval by the parent corporation. The record supports a finding of approval by management of that corporation, but not the board of directors. 7.-8. Adopted in substance. Adopted in part, remainder rejected due to witness's inability to support her calculations as to percentages of the population within the service district classified as medically indigent. Addressed in part, remainder unnecessary to conclusion. Addressed in part, remainder rejected on basis of relevancy. Addressed. Rejected on basis of relevancy. Addressed in part, remainder rejected as argumentative and speculative. Respondent's Proposed Findings. 1.-2. Rejected. Treated in preliminary discussion. 3.-21. Adopted in substance. 22.-23. Adopted by reference. 24.-25. Addressed in substance. 26.-30. Adopted by reference. 31.-33. Adopted by reference. Intervenor's Proposed Findings. 1.-3. Adopted in substance. 4. Rejected as unnecessary. 5.-9. Adopted in substance. 10. Adopted by reference. 11.-12. Adopted in substance. COPIES FURNISHED: Joseph R. Buchanan, Esq. Suite 900, Sun Bank Building 777 Brickell Avenue Miami, FL 33131 Edgar Lee Elzie, Jr., Esq. 215 South Monroe Street, Suite 804 Tallahassee, FL 32301 E. G. Boone, Esq. 1001 Avenida del Circo Venice, FL 34284 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Sam Power Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Miller, Esq. General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700
The Issue Whether Florida Administrative Code Rule 59C-1.008(4) (Rule) constitutes an invalid exercise of delegated legislative authority because it enlarges, modifies, or contravenes the specific provisions of law implemented.
Findings Of Fact The Parties VRBH is an existing hospital in Sarasota County. In the second batching cycle of 2016, VRBH applied to AHCA for a CON to establish a Class I Acute Care Replacement Hospital of up to 312 beds in AHCA District VIII, Subdistrict 8-6, Sarasota County. The CON application was preliminarily approved by AHCA on December 2, 2016. SMH is a public hospital system serving Sarasota County. In the second batching cycle of 2016, SMH applied for a CON to establish a new acute care hospital with 90 beds in AHCA District 8, Acute Care Subdistrict 8-6, Sarasota County. As with the VRBH application, the SMH application also received preliminary approval from AHCA on December 2, 2016. AHCA is designated as the single state agency responsible for administering the CON program under the Health Facility and Services Development Act, sections 408.031 through 408.045, Florida Statutes. The Challenged Rule In part, Florida Administrative Code Rule 59C-1.008(4) requires that CON applications contain the audited financial statements of the applicant, or the applicant’s parent corporation. The Rule states as follows: Certificate of Need Application Contents. An application for a Certificate of Need shall contain the following items: All requirements set forth in Sections 408.037(1), (2) and (3), F.S. The correct application fee. An audited financial statement of the applicant or the applicant’s parent corporation if the applicant’s audited financial statements do not exist. The following provisions apply: The audited financial statement of the applicant, or the applicant’s parent corporation, must be for the most current fiscal year. If the most recent fiscal year ended within 120 days prior to the application filing deadline and the audited financial statements are not yet available, then the prior fiscal year will be considered the most recent. Existing health care facilities must provide audited financial statements for the two most recent consecutive fiscal years in accordance with subparagraph 1. above. Only audited financial statements of the applicant, or the applicant’s parent corporation, will be accepted. Audited financial statements of any part of the applicant or the applicant’s parent corporation, including but not limited to subsidiaries, divisions, specific facilities or cost centers, will not qualify as an audit of the applicant or the applicant’s parent corporation. To comply with Section 408.037(1)(b)1., F.S., which requires a listing of all capital projects, the applicant shall provide the total approximate amount of anticipated expenditures for capital projects which meet the definition in subsection 59C-1.002(7), F.A.C., at the time of initial application submission, or state that there are none. An itemized list or grouping of capital projects is not required, although an applicant may choose to itemize or group its capital projects. The applicant shall also indicate the actual or proposed financial commitment to those projects, and include an assessment of the impact of those projects on the applicant’s ability to provide the proposed project; and, Responses to applicable questions contained in the application forms. The 2008 CON Legislative Changes In 2008, the Florida Legislature made numerous changes to streamline the CON application process for general hospitals. It is these changes that VRBH asserts removed the requirement for general hospitals to submit audited financial statements with CON applications. Section 408.035 was amended to provide as follows: 408.035 Review criteria.— The agency shall determine the reviewability of applications and shall review applications for certificate-of-need determinations for health care facilities and health services in context with the following criteria, except for general hospitals as defined in s. 395.002: The need for the health care facilities and health services being proposed. 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. The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care. The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. The extent to which the proposed services will enhance access to health care for residents of the service district. The immediate and long-term financial feasibility of the proposal. The extent to which the proposal will foster competition that promotes quality and cost-effectiveness. 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. The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. The applicant’s designation as a Gold Seal Program nursing facility pursuant to s. 400.235, when the applicant is requesting additional nursing home beds at that facility. For a general hospital, the agency shall consider only the criteria specified in paragraph (1)(a), paragraph (1)(b), except for quality of care in paragraph (1)(b), and paragraphs (1)(e), (g), and (i). (Emphasis added). Section 408.035 has not been revised since 2008. Additionally, section 408.037 was amended to read as follows: 408.037 Application content.— Except as provided in subsection (2) for a general hospital, an application for a certificate of need must contain: A detailed description of the proposed project and statement of its purpose and need in relation to the district health plan. A statement of the financial resources needed by and available to the applicant to accomplish the proposed project. This statement must include: A complete listing of all capital projects, including new health facility development projects and health facility acquisitions applied for, pending, approved, or underway in any state at the time of application, regardless of whether or not that state has a certificate-of-need program or a capital expenditure review program pursuant to s. 1122 of the Social Security Act. The agency may, by rule, require less- detailed information from major health care providers. This listing must include the applicant’s actual or proposed financial commitment to those projects and an assessment of their impact on the applicant’s ability to provide the proposed project. A detailed listing of the needed capital expenditures, including sources of funds. A detailed financial projection, including a statement of the projected revenue and expenses for the first 2 years of operation after completion of the proposed project. This statement must include a detailed evaluation of the impact of the proposed project on the cost of other services provided by the applicant. An audited financial statement of the applicant or the applicant’s parent corporation if audited financial statements of the applicant do not exist. In an application submitted by an existing health care facility, health maintenance organization, or hospice, financial condition documentation must include, but need not be limited to, a balance sheet and a profit-and-loss statement of the 2 previous fiscal years’ operation. An application for a certificate of need for a general hospital must contain a detailed description of the proposed general hospital project and a statement of its purpose and the needs it will meet. The proposed project’s location, as well as its primary and secondary service areas, must be identified by zip code. Primary service area is defined as the zip codes from which the applicant projects that it will draw 75 percent of its discharges. Secondary service area is defined as the zip codes from which the applicant projects that it will draw its remaining discharges. If, subsequent to issuance of a final order approving the certificate of need, the proposed location of the general hospital changes or the primary service area materially changes, the agency shall revoke the certificate of need. However, if the agency determines that such changes are deemed to enhance access to hospital services in the service district, the agency may permit such changes to occur. A party participating in the administrative hearing regarding the issuance of the certificate of need for a general hospital has standing to participate in any subsequent proceeding regarding the revocation of the certificate of need for a hospital for which the location has changed or for which the primary service area has materially changed. In addition, the application for the certificate of need for a general hospital must include a statement of intent that, if approved by final order of the agency, the applicant shall within 120 days after issuance of the final order or, if there is an appeal of the final order, within 120 days after the issuance of the court’s mandate on appeal, furnish satisfactory proof of the applicant’s financial ability to operate. The agency shall establish documentation requirements, to be completed by each applicant, which show anticipated provider revenues and expenditures, the basis for financing the anticipated cash- flow requirements of the provider, and an applicant’s access to contingency financing. A party participating in the administrative hearing regarding the issuance of the certificate of need for a general hospital may provide written comments concerning the adequacy of the financial information provided, but such party does not have standing to participate in an administrative proceeding regarding proof of the applicant’s financial ability to operate. The agency may require a licensee to provide proof of financial ability to operate at any time if there is evidence of financial instability, including, but not limited to, unpaid expenses necessary for the basic operations of the provider. The applicant must certify that it will license and operate the health care facility. For an existing health care facility, the applicant must be the licenseholder of the facility. (Emphasis added). Section 408.037 has only been amended once since 2008. The revisions are not relevant to the issue presented in this Rule challenge.2/ The Parties’ Positions In support of its argument that the Rule contravenes the statutes, VRBH asserts that the Rule is an invalid exercise of delegated legislative authority because it enlarges, modifies, or contravenes the laws implemented. Simply put, VRBH contends that the Rule is contrary to sections 408.035 and VRBH advances three reasons for its position that the Rule modifies the laws implemented; all three center on the assertion that in 2008, the Legislature removed the requirement for the submission of audited financial statements with general hospital CON applications: Requiring a general hospital to comply with the requirements of section 408.037(1), Florida Statutes, by submitting an audited financial statement with its CON application violates the express provision of the statute which specifically excludes general hospitals from the requirements of subsection (1); Requiring a general hospital to submit an audited financial statement with the CON application directly contradicts the submission requirements set forth in section 408.037(2), Florida Statutes, which only requires a general hospital to provide a statement of intent that it will “furnish satisfactory proof of the applicant’s financial ability to operate” if the CON application is approved by final order of the agency. Requiring a general hospital to submit an audited financial statement with the CON application contradicts the 2008 legislative changes to section 408.035, Florida Statutes, which streamlined the application process for general hospitals by removing the short and long term financial feasibility of the project as a review criteria. (VRBH Petition, ¶¶ 15-17). AHCA’s ultimate position is that the Rule should be interpreted as not requiring audited financial statements for general hospital CON applicants. To reach this conclusion, AHCA relies on 59C-1.008(4)(a), which provides that a CON application must contain “all requirements set forth in Sections 408.037(1), (2), and (3), Florida Statutes.” AHCA interprets the introductory phrase contained in section 408.037(1)--“except as provided in subsection (2) for a general hospital, an application for a certificate of need must contain”--to mean that only subsection (2) of section 408.037 applies to an application for general hospitals. Because section 408.037(2) does not mention audited financial statements, AHCA reasons that they are not required. Therefore, despite the plain language of the Rule, AHCA contends that the Rule does not require the submission of audited financial statements because: the Rule references sections 408.037(1), (2), and (3); AHCA interprets only section 408.037(2) as applying to general hospitals; and section 408.037(2) does not mention audited financial statements. SMH contends that the Rule does not enlarge, modify, or contravene the laws implemented and, therefore, is a valid exercise of delegated legislative authority. Specifically, SMH contends that section 408.037 itself requires general hospital applicants to submit audited financial statements because subsection (2) does not wholesale replace subsection (1) for general hospitals. Subsection (1) applies to general hospitals, unless there is an exception to those requirements listed in subsection (2). Subsection (1) requires the submission of audited financial statements for all CON applicants; nothing in subsection (2) creates an exception to that requirement. SMH also argues that audited financial statements are reliable documents that AHCA can quickly access for relevant information, including an applicant’s provision of health care services to Medicaid patients and the medically indigent, both of which are prominent considerations during the review of a general hospital’s CON application. See § 408.035(1)(i), (2), Fla. Stat. Post 2008 Rule Challenged Rule 59C-1.008(4) does not expressly exclude or differentiate between general hospital CON applications and other CON applications. Instead the Rule cross-references to the statutory requirement. AHCA asserts that by doing so, the Rule incorporates the statutory scheme by reference and does not require a CON application for a general hospital to include audited financial statements. The above-cited statutory provisions clearly state that a general hospital CON application need not include an audited financial statement and that financial condition is not relevant to the CON application review process. Any rule that requires a general hospital CON applicant to provide an audited financial statement with the application would be contrary to the requirements of section 408.037. It follows, therefore, that a rule contrary to the requirements of a statute would be invalid as it would exceed AHCA’s delegated legislative authority. Requiring a general hospital applicant to comply with the requirements of section 408.037(1) would violate the provision of the statute, which expressly excludes general hospitals from the requirements of subsection (1). Further, requiring a general hospital applicant to submit an audited financial statement with its CON application directly contradicts the submission requirements set forth in section 408.037(2). AHCA’s interpretation of rule 59C-1.008 is that it must be read in conjunction with section 408.037, subsections (1), (2), and (3), and accordingly, AHCA does not require that a general hospital applicant submit an audited financial statement as part of its application. AHCA’s interpretation is consistent with the differences in the content of the CON application forms published by AHCA for general hospital applications when compared to non-general hospital applications, for instance, those seeking other beds and services such as comprehensive medical rehabilitation, psychiatric, hospice, and other CON- regulated beds in a hospital. The requirements of each application type correspond to the statutory requirements for each application type. Application forms for projects “except for general hospitals” correspond to the CON application content requirements of section 408.037(1), which requires a statement of financial resources that must include capital projects (Schedule 2 of the CON application); capital expenditures and source of funds (Schedules 1 and 3 of the CON application); and a detailed financial projection, including revenues and expenses for the first two years (Schedules 5 through 8 of the CON application). The general hospital CON application does not have these requirements. General hospitals are not required to submit proof of financial ability to operate at the time of the submission of the CON application. In accordance with rule 59C-1.010(2)(d), general hospitals are required to comply with the requirements of sections 408.035(2) and 408.037(2). Neither of those statutes requires that a general hospital applicant submit proof of financial ability to operate until 120 days after the issuance of the final CON to the applicant. AHCA’s representative, Marisol Fitch, testified that AHCA does not require applicants for general hospitals to submit audited financial statements in the CON application, and that proof of financial ability to operate is required within 120 days after the final approval of the CON application, consistent with the statutory provisions. She testified that the Rule being challenged, when read in conjunction with the AHCA CON application form (incorporated by reference into the Rule) and other AHCA rules, including 59C-1.010 and 59C-1.030, is consistent with the statute, and that no audited financial statements are required. SMH asserts that an audited financial statement for hospitals might contain useful information, such as information on a hospital’s current payor mix. However, the unrefuted testimony is that audited financial statements are not required to include payor mix information, and normally do not since they are typically used to look at an applicant’s financial feasibility to operate. Further, regardless of whether such information might be “useful,” the specific requirement of section 408.037(2) expressly “excepts” general hospitals from the requirement to include such statements in the CON application. Pursuant to rule 59C-1.010(2)(d), “an application for a general hospital must meet the requirements of Sections 408.035(2) and 408.037(2), F.S.,” neither of which require that a general hospital CON applicant provide audited financials or financial feasibility data with the CON application. However, the challenged language in rule 59C-1.008(4) does not contain the “exception” for general hospital applications. Rule 59C-1.008(4) provides, without qualification, that a CON application must contain audited financial statements. Therefore, rules 59C-1.008(4) and 59C-1.010(2)(d) are contradictory. The primary purpose of an audited financial statement in a CON application is to review the short-term and long-term financial feasibility of the proposal. Requiring this financial information is contrary to the clear language of the 2008 changes to section 408.035, which removed the short-term and long-term financial feasibility of the project as review criteria in order to streamline the general hospital CON application process. AHCA has stated that their interpretation of rule 59C-1.008(4) is that it must be read in pari materia with rule 59C-1.010(2)(d) and sections 408.037 and 408.035, therefore, general hospital CON applicants are not required to submit audited financials with the CON application. According to AHCA’s interpretation, rule 59C-1.008(4) does not require a general hospital CON applicant to submit an audited financial statement with the CON application. However, regardless of AHCA’s interpretation, rule 59C-1.008(4) expressly states that a CON application must contain audited financial statements, in contravention of sections 408.035 and 408.037.
The Issue Whether Respondent, a medical doctor, in his treatment of Patient M.A., failed to keep legible medical records in violation of section 458.331(1)(m), Florida Statutes (2007); prescribed or administered inappropriate or excessive quantities of controlled substances in violation of section 458.331(1)(q), Florida Statutes (2007); committed medical malpractice by practicing below the standard of care in violation of section 458.331(1)(t), Florida Statutes (2007); failed to perform a statutory or legal obligation placed upon a licensed physician in violation of section 458.331(1)(g), Florida Statutes (2007); and violated any provision of chapter 458 or chapter 456, or any rules adopted pursuant thereto in violation of section 458.331(1)(nn), Florida Statutes (2007), as Petitioner alleges in the Third Amended Administrative Complaint; if so, whether (and what) disciplinary measures should be imposed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board of Medicine enter a final order: Finding that Paul M. Goldberg, M.D., violated sections 458.331(1)(g) and (nn), Florida Statutes, as charged in Counts IV and V of the Complaint; Dismissing Counts I-III of the Complaint; Imposing $20,000 in administrative fines; issuing a reprimand against Dr. Goldberg's medical license; requiring Dr. Goldberg to complete the "Laws and Rules" Course; suspending Dr. Goldberg's medical license until such time as Dr. Goldberg undergoes a "UF CARES" evaluation; and placing Dr. Goldberg's license on probation for three years under indirect supervision with 100 percent chart review of cosmetic surgery patients and 25 percent chart review of all other patients. DONE AND ENTERED this 4th day of March, 2015, in Tallahassee, Leon County, Florida. S TODD P. RESAVAGE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of March, 2015.
The Issue The issue presented for decision herein is whether or not Proposed Rule 10- 5.005(2), Florida Administrative Code, as promulgated by DHRS constitutes an invalid exercise of delegated legislative authority. Based upon the following findings of fact, conclusions and analysis, proposed Rule 10-5.005(2)(a) and (b) is invalid.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, documentary evidence received and the entire record compiled herein, I hereby make the following relevant factual findings. DHRS' Office of Health Planning and Development is divided into two separate divisions: The Office of Community Medical Facilities, which administers the State Certificate of Need Program and has responsibility for making recommendations regarding CON applications, and (2) the Office of Comprehensive Health Planning, which has primary responsibility for development of rules pertaining to Certificate of Need policy. Mr. Robert Maryanski, Administrator of the Office of Community Medical Facilities, believes his office made no formal comments (perhaps informal comments,) concerning the proposed rule. Mr. Maryanski considered that the proposed rule was objectionable based on his understanding of the statutes. (TR 33, 54). Elfie Stamm is employed by the Office of Comprehensive Health Planning and has primary responsibility for development of Proposed Rule 10-5.005. The text of the proposed rule is as follows: 10-5.005 Exemptions. * * * (2)(a) Physician offices or physician group practices which do not exist for the primary purpose of providing elective surgical care are exempt from certificate of need requirements for ambulatory surgical centers as specified in 10-5.011(30). This certificate of need exemption applies to offices and associated surgical suites maintained by one or more private physicians or a physician group which is used only by the physician or the physicians of the group practice, and in which 50 percent or more of the patients treated annually are non-surgical patients. (b) Physician offices, or physician group practices applying for designation as an ambulatory surgical center (ASC) by the Health Care Financing Administration (HCFA) and who meet the requirements for exemption from certificate of need review under the provisions delineated under paragraph (2), shall submit a request for exemption from certificate of need to the Department. The physician office or physician group practice shall provide the Department with at least 30 day's written notice of the proposed exemption from the certificate of need requirements for ambulatory surgical centers. Within 30 days of receipt of such written notice, the Department shall determine if the physician office or physician group practice is exempt and advise the applicant of its determination in writing. (Petitioner's Exhibit 6). The proposed rule exempts physician offices and physician group practices from CON requirements for ambulatory surgical centers (ASC) when at least 50 percent of the patients treated annually in these facilities are non- surgical patients. The proposed rule purportedly implements the Federal Health Care Financing Administration's (HCFA) policy allowing physician offices which are exempt from State CON and licensure requirements to apply directly (to HCFA) to receive ASC designation for medical facility reimbursement purposes without first obtaining a CON. Currently, "Ambulatory Surgical Center" means a facility, the primary purpose of which is to provide elective surgical care and in which the patient is admitted to and discharged from such facility within the same working day and which is not part of a hospital. However, a facility existing for the primary purpose of performing therapeutic abortions, an office maintained by a physician for the practice of medicine, or an office maintained for the practice of dentistry shall not be construed to be an ASC. Section 395.002(2), Florida Statutes (1985). DHRS is trying to implement what it believes to be a statutory CON exemption for doctor's offices through the proposed rule. In so doing, HRS considers physicians' offices to be indistinguishable from physician group practices. In this regard, the relevant statutes do not reference physician group practices. Historically, HRS would not certify physician offices as medicare providers (in its role as surveyor for HCFA) because such certification entails the requirement that a physician's office comply with the State ASC Law. In short, a physician's office wishing to become an ASC had to satisfy both CON and State licensure requirements in order to be certified as a medicare providing ASC. Prior to promulgation of the proposed rule, DHRS never had a policy that group practices or physicians with operating suites are excluded from the statutory definition of an ASC. DHRS has no exemptions or exclusions for physicians' groups with surgical suites so that they could become ASCs for medicare certification. (Testimony of Tom Porter, previous supervisor for DHRS' Certificate of Need Program). DHRS took the position that it was without authority to grant an exemption to physician group practices and the related offices as an associated surgical suite without such facility having first obtained a CON as an ASC prior to offering such services. DHRS also took the position that a physician wishing to do minor surgical procedures as a sub-part of his office practice would not be required to obtain a CON as an ASC. These services could be done as an ancillary part of the physician's office. (Testimony of Gene Nelson, former Administrator, Office of Comprehensive Health Planning and Administrator of the Office of Community Medical Facilities prior to Mr. Maryanski's tenure with DHRS). Section 381.495, Florida Statutes, provides for several defined exemptions from CON review. As stated above, the proposed rule purports to grant an exemption to physician offices or to physician group practices from State CON requirements. Section 381.493 (3)(a), Florida Statutes (1985), states, in relevant part, that an office maintained by a physician for the practice of medicine is excluded from the definition of an ASC. The referenced statute does not grant an exemption from the ASC regulation nor has DHRS previously exempted a person or entity from CON review under such circumstances. DHRS has historically distinguished between a physician performing minor surgical procedures as an ancillary part of his office versus a full service ASC. HCFA clarified in Memorandum FQA-731, Ambulatory Surgical Center regulations relating to compliance with state licensure requirements and the application of state CON provisions as a prerequisite for medicare certification. (Pet. Exh. 8) In states where ASC licensure laws are in effect, facilities seeking to participate in medicare must meet such licensure requirements. Thus, 42 CFR Section 416.40 states, in pertinent part, that the ASC must comply with state licensure requirements. CON provisions must be met as a prerequisite for medicare licensure certification for an entity to operate legally within a state and CON approval is required before the decision to award a license is made. In instances where licensure is not required either by virtue of the absence of an ASC Licensure Law or the exemption of certain entities from the licensure law, compliance with CON provisions is not necessary for medicare eligibility as an ASC. It is through a series of correspondence between Mr. Robert Streimer of HCFA and Mr. Marshall Kelley, DHRS' Assistant Secretary for Program Planning that affords the proffered "basis" for the proposed rule. (TR 87). The Streimer letter provides that ASC services performed in a physician's office which is not required by state law to be licensed as an ASC and which meets all medicare ASC requirements would be covered and reimbursed by medicare at the ASC rate. As noted, DHRS historically took a different position. Nowhere in Mr. Kelley's letter to Mr. Streimer did HRS identify the specific criteria that would relate to an exemption request in Florida as currently stated in the proposed rule. DHRS, based on the proposed rule, now takes the position that any physician having a operating room and furnishing surgical procedures for less than 50 percent of his or her patients would be entitled to an exemption from CON requirements and in turn be entitled to apply for certification from HCFA as an ASC for ASC reimbursement (facility fee). The proposed rule allows for surgery currently performed in a physician's office to qualify for higher reimbursement from medicare (i.e., a facility fee). DHRS uses as authority for the proposed rule, Section 381.493(3)(a), Florida Statutes. Prior to receipt of Streimer's letter, DHRS considered HCFA's policy to be that if a facility did not have a CON and was not licensed as an ASC, there would be no medicare certification forthcoming from HCFA. The Streimer letter purportedly clarifies HCFA's policy although it does not represent a change in that policy. (Petitioner's Exhibit 6). The proposed rule defines "primary as 50 percent or more of the patients treated annually as being non-surgical patients. However, according to the 1982 federal regulations, an entity seeking application and certification as a medicare ASC must be dedicated exclusively to the provision of Ambulatory Surgical Services (42 CFR Section 416.2). Federal Rules provide that the requirement for ASC's to be certified in order to receive medicare payments was expected to exclude physicians offices. There appears to be no federal regulation dealing with reimbursement for the surgical procedures which are to be done in physicians' offices. To satisfy HCFA's certification requirements, an applicant must satisfy the relevant state licensure requirements if any, and meet federal certification requirements. As presently codified, it is impossible to simultaneously satisfy the proposed rule and the federal ASC definition contained in 42 CFR Section 416.02. Thus, an entity could not "exclusively" provide ASC services and at the same time not exist for the "primary" purpose of providing elective surgical care on an outpatient basis. They are mutually exclusive since the two definitions are inconsistent. The Streimer letter initiated HRS's evaluation of current statutes and the proposed rule is, according to HRS, designed to implement current statutes. HCFA's policy is that if a facility legally provides or is allowed to provide elective surgical procedures in Florida, without having to be licensed as an ASC or having gone through the CON process, it is inappropriate to require the facility to obtain a CON and be licensed as an ASC as a condition of that facility being approved for medicare reimbursement at the ASC rate. Prior to HCFA's correspondence, HCFA required an applicant for medicare ASC certification to meet State Law and also meet its certification requirements. This is still the case and the HCFA's correspondence to DHRS did not change that requirement. The purpose of the Health Facility and Health Services Planning Act, more commonly known as the CON law, (sometimes called the Act) is to protect the public health, safety and welfare of Floridians. These protections are further defined as a necessary increase in health care, minimizing duplication in health services, and minimizing situations where there is an underutilization of existing health care resources. The proposed rule does not relate to or otherwise address any "need" issue or capacity issue and contrary thereto, allows for uncontrolled growth of surgery suites as long as the physician group practice has 50 percent or more of total patients treated as non-surgical patients. It can be expected that there will be a proliferation of physicians, solo or group practices, with physician surgical practices developing in addition to hospital out-patient surgery. Additionally, there is no physical constraint on the location of the physician and a physician's group practice. Adoption of the proposed rule will also increase the cost of the total health care system in Florida as follows: The average cost per procedure increases when procedures are spread out over a greater number of fixed facilities and because of incentives that would be inherent in this additional capacity for additional unnecessary utilization. Physicians would receive a facility fee in addition to a professional fee. Physicians would thereby receive more money for doing the same procedures they are currently doing in their offices without the facility fee. The effect of the introduction of surgery centers where there is already excess capacity in hospitals and in freestanding surgery centers is to increase the cost of health care to the community. With the addition of new facilities, there are added fixed costs placed into the system that would remain until the facility becomes outmoded. With the addition of fewer procedures spread over more fixed costs, the average cost per procedure likewise increases even though the cost to an individual patient might appear to be lower in an alternative setting. Excess capacity leads to underutilization with the resultant increase in the rates for surgery. Without a capacity constraint, there will be more elective surgery performed. With the approval of the proposed rule, a doctor's office will be eligible for medicare reimbursement for a facility fee. Medicare reimbursement for a facility fee is unique to ASCs and does not apply to surgical procedures performed in a doctor's office. The purpose behind reimbursing for facility fees is that there is considerable overhead associated with performing relatively complex surgical procedures which require an operating room. If procedures are so simple as to be safely performed in a doctor's office, the intent of the rule is to distinguish between these two settings. It is desirable for procedures to be done in a doctor's office that are simple because it is the lower cost setting. Procedures performed in a physician's office will not qualify for the facility fee reimbursement and overhead payment because of the simplistic nature of the procedures and the lack of need for sophisticated equipment which is currently being used in ASCs. The federal regulations were intended to remove hospital surgery to ASCs, if appropriate, and to remove minor surgery to doctors' offices in order to avoid reimbursement for procedures which can be done in a less sophisticated setting. If more procedures are shifted to medicare certified ASCs, there would be an additional facility fee and physicians would be eligible for this reimbursement. An example of the operational effect of the proposed rule is the scenario surrounding Doctor Stephen S. Spector and the Presidential Eye Surgery Center in Palm Beach County. Doctor Spector was denied a CON for an ASC based on a lack of need for additional operating suites in Palm Beach County. After DHRS made its initial decision denying Dr. Spector's CON, he petitioned for a formal administrative hearing. A Recommended Order was entered denying Dr. Spector a CON and HRS then issued a Final Order denying a CON to Dr. Spector. Dr. Spector has since simply requested an exemption for a freestanding ASC pursuant to the proposed rule. DHRS will entertain this request and if granted, Dr. Spector will be entitled to medicare certification and a facility fee for surgical procedures performed in his office. The proposed rule will encourage the massive proliferation of outpatient surgery facilities and outpatient surgery suites. 3/ Evidence adduced at final hearing indicates that CON approved and licensed freestanding ambulatory surgery centers are currently underutilized and not operating at optimal capacity. The result will be increased hospital and ASC costs per unit because fixed costs must then be spread over a smaller patient base. It is likely that there will be underutilization of existing facilities. The proposed rule does not foster the purposes of Florida's CON law and it will not restrain increases in health care costs. The proposed rule will enhance or maximize unnecessary duplication and promote underutilization of existing resources. Pursuant to Section 120.54(2), Florida Statutes (1985), the Department is required to prepare an economic impact statement of the proposed rule. For the proposed rule, HRS states, in part, in its economic impact statement as follows: The proposed amendment is expected to have an economic impact on hospital outpatient departments and ambulatory surgical centers licensed by the State. It is expected that some Medicare patients who previously have been referred to hospital outpatient departments or a freestanding ambulatory surgical center licensed by the State may have their elective surgeries performed in the physician's group practice. In addition, the proposed rule may encourage the development of physician group practices with surgical suites since they are exempted from the certificate of need process and State licensure requirements. The fiscal impact on hospitals and ambulatory surgical centers cannot be estimated since the Department has no data regarding the number of potential applicants under this Rule, the location of those applicants, the volume of surgeries which may be performed by these entities, or the number of surgeries which would have been performed in hospital outpatient departments or State licensed ambulatory surgical centers in the absence of these new entities. (Petitioner's Exhibit 7). The economic impact statement for the proposed rule does not provide any data or method used in making the required economic impact estimates. The statement does not include any data to analyze whether the rule will impact ASCs having less than one million dollars net worth and less than 25 employees or whether the proposed rule will have an economic impact on hospitals and ambulatory surgery centers. Although HRS has indicated that the exact amount of the fiscal impact is impossible to estimate due to the unknowns respecting the number of physician offices or group practices that will qualify for the exemptions and therefore no analysis was undertaken or developed, studies could have been made to determine the effect any level of participation would have on hospital costs and utilization of existing facilities. Although the task of compiling such data would, no doubt, be arduous, evidence adduced at final hearing indicates that DHRS could have, with effort, compiled a data base with a stratified sample which would have been reliable and could forecast the likely effect of the proposed rule within an acceptable margin of error. DHRS did not compile data which would provide an estimate as to the number of patients who would choose the physician's office over other facilities that perform Ambulatory Surgery. DHRS never requested input from hospitals or outpatient surgery centers with respect to pay or patient mix. DHRS conducted no surveys with respect to the number of potential applicants under the proposed rule. DHRS considered it not relevant to examine the capacity of existing freestanding surgery centers or hospitals having outpatient surgery facilities. DHRS conducted no studies to determine the accessibility of existing ASCs and hospital ASCs. No studies were done to examine the impact, as to the cost to patients, that the proposed rule is likely to have on existing providers. No studies were done to assess the impact the proposed rule will have on the medicare trust fund. No studies were done to determine the impact, if any, on Florida small and minority businesses. It is true that a great deal of the needed data was not readily available to HRS whereas, on the other hand, it made no attempt to gather such data. DHRS has the ability to assess the number of surgeries that could be performed in hospital outpatient departments and ASC's since DHRS does such compilations on a day to day basis when it projects the need for new ASCs. DHRS could have commissioned studies to determine the effect any level of participation would have on hospital costs and utilization. Development of an adequate data base and a meaningful economic impact of the proposed rule is paramount in view of the legislative mandate (to DHRS) to contain health care costs. Rules are promulgated to further the purpose and objective of the statutes they implement. To accomplish this, they must be consistent with the statute. Here, the purpose of the statute is cost containment. Evidence adduced at final hearing reveals, without contradiction, that the proposed rule will increase health care costs, contrary to the major purpose for its existence. Finally, DHRS compiled no data as to the impact on the ability of hospitals to provide indigent care under the proposed rule. As example, Florida Hospital projects that it will provide $48,000,000 in uncompensated care for fiscal year 1986. If the hospital were to lose revenue as result of this proposed rule, the level of indigent care will also correspondingly be reduced in order to offset the loss of revenue. Other parties herein provide services to indigent persons. The proposed rule does not require these exempt facilities to provide indigent care. In addition to the above economic impact which will be brought about by the proposed rule on the Health Care system as a whole, the proposed rule will have an economic impact on the existing hospitals and ASC's. (TR 276-277; 438-440). As example, one Petitioner herein advises that if one surgery suite were added by an existing physician group or formed near the hospital, the hospital will lose approximately $481,000 per annum. By letter dated August 29, 1986, DHRS forwarded a copy of the purposed rule to the statewide and local health councils requesting comments by September 12, 1986. The public hearing on the proposed rule was scheduled for October 20, 1986. Neither health council (state or local) participated in the public hearing for the proposed rule nor has either council submitted comments respecting the proposed rule. The notice provided to the local and statewide health councils for comments on the proposed rule was adequate and afforded the various councils an opportunity to voice any concerns or provide input about the proposed rule. Dr. Montgomery, an Intervenor herein, will receive additional medicare reimbursements of $500.00 per patient for a facility fee under the proposed rule. Dr. Montgomery approximated that he performed 320 cataract surgeries per year of which approximately 300 patients are paying patients. Approximately 85 percent of those patients are over 65. Therefore, Dr. Montgomery will receive medicare reimbursement for 255 patients or approximately $127,500.00 in additional fees if his office is certified as exempt under the proposed rule.
The Issue Whether the Petitioner University Community Hospital's certificate of need application to establish a cardiac catheterization laboratory and open heart program in Tampa, Florida, should be approved.
Findings Of Fact On August 11, 1982, the Petitioner University Community Hospital, a non-profit hospital, (hereafter Petitioner or UCH) filed an application for a certificate of need (hereafter CON) to expend some $934,000 to establish cardiac catheterization and open heart surgical services at its 404 bed facility located at 3100 East Fletcher Avenue, on the north side of Tampa, approximately 9 miles from the Intervenor Tampa General Hospital (hereafter TGH or Tampa General). Petitioner's CON application was reviewed by the Respondent Department of Health and Rehabilitative Services (hereafter Respondent or Department) under Rule 10-5.11, Florida Administrative Code, and compared with other facilities in the Health Systems Agency, Region IV, which consisted of Pasco, Pinellas, Manatee and Hillsborough Counties. On November 30, 1982, the Department denied the Petitioner's application. The basis for the Department's denial as reflected in the State Agency Action Report, was that two hospitals in Health Services Area IV, Medical Center and Morton Plant, were below the 350 open heart procedures threshold required by Rule 10-5.11(16), Florida Administrative Code. Since Petitioner was not entitled to a CON for open heart surgery, it was not entitled to a CON for cardiac catheterization because Rule 10-5.11(15), Florida Administrative Code, which was in existence when Petitioner's application was reviewed, required that an applicant for cardiac catheterization must be able to offer open heart surgery. Following the Department's denial of Petitioner's application and prior to the final hearing, the Legislature abolished the Health Systems Agency Regions and provided instead that health planning be based on HRS Districts. Intervenor TGH, a 611 bed public hospital located on Davis Island in downtown Tampa, in the same service area as the Petitioner, and presently offering cardiac catheterization and open heart surgical services, intervened in this proceeding on the side of the Department. The Need for Cardiac Catheterization Services In the Service District Prior to the final hearing, the Department admitted to the need for an additional cardiac catheterization laboratory in Hillsborough and Manatee counties. See Petitioner's Exhibit 17. There are presently three adult cardiac catheterization labs in Hillsborough-Manatee, two at TGH and one at St. Joseph's Hospital. In the five- county area, Lakeland Regional has an approved and existing program for a total of four programs. Applying the methodology set forth in Rule 10-5.11(15), Florida Administrative Code, the Petitioner has established that a need exists for at least one additional cardiac catheterization lab regardless of whether the service district is defined to include two or five counties. As projected and calculated by Thomas Porter, a Department witness who utilized the rule methodology, five catheterization labs are need in the five-county area by the year 1985. However, based on historical data, the need formulated pursuant to the rule is probably understated. Porter's testimony was confirmed by Dr. Warren Dacus, a hospital planning consultant, who after obtaining population and projection figures from the Department and the University of Florida, Bureau of Business and Economic Research, concluded that a need existed for one additional catheterization lab in 1985 in Hillsborough and Manatee Counties. On June 16, 1983, the Department approved a CON application filed by Tampa Heart Institute (hereafter THI) which authorized the establishment of three cardiac catheterization labs. The Department's proposed agency action to award a CON to THI was challenged by the Intervenor Tampa General and St. Joseph's Hospital and is presently the subject of a pending administrative proceeding. The CON granted to THI was based on the Department's assumption that most, if not all, of its patients would come from Latin America. THI's CON application presented a unique set of circumstances which fell outside the methodology normally considered during CON reviews. Since the CON proposed to be granted to THI was administratively challenged and was based on the assumption that patients would be drawn from outside any defined service district, it is logically inconsistent and legally inappropriate to consider THI's three cardiac catheterization labs in the instant proceeding. If the CON is granted to the Petitioner, there will be sufficient utilization of the cardiac catheterization laboratory to insure quality of services as required by Rule 10-5.11(15)(i), Florida Administrative Code. Based on previous referrals to other hospitals and historical data obtained from other hospitals in the district, the Petitioner can expect to perform in excess of 300 cardiac catheterization procedures annually for the next three years following initiation of the service. The Need for an Open Heart Surgical Program in the Service District In the Hillsborough-Manatee Service District, two open heart programs presently exist, one program is located at St. Joseph's Hospital, the other is at Tampa General. The formula found at Rule 10-5.11(16), Florida Administrative Code, provides that the number of open heart procedures projected to be done in a future year is determined by multiplying the number of procedures per 100,000 population performed in the service area in 1981 by the projected population in the service area in the future year. No additional programs will normally be approved if such program will reduce the volume of an existing program below 350 surgery cases. In the service distract represented by the two-county area, there is a need for four open heart surgical programs by 1985. Using the methodology found at Rule 10-5.11(16), Florida Administrative Code, the two-county area requires the capacity to perform 1,433 open heart surgeries in 1985, which establishes a need for four programs. Although the addition of an open heart program at UCH would draw certain patients from both St. Joseph's and Tampa General, the number of open heart surgeries performed at St. Joseph's and Tampa General would not fall below 350 per year if UCH were granted a CON. In the five-county area which includes Hillsborough, Manatee, Polk, Highlands and Hardee counties, 1,587 open heart surgical procedures are projected for 1984 and 1,623 for 1985. Applying the rule methodology a need exists for five open heart programs in 1984 and 1985. Three programs, Tampa General, St. Joseph's and Lakeland Memorial Medical Center, presently exist or are approved in the five-county area. The petitioner has demonstrated a sufficient projected volume of open heart surgeries to assure quality of service under Rule 10-5.11(16)(e)(4), Florida Administrative Code. UCH can expect to perform in excess of 200 adult open heart surgical procedures during its first year of operation and within three years after initiation of the service. Moreover, UCH's surgery program will be capable of providing 500 open heart operations per year. In 1981, Lakeland Memorial performed 81 open heart surgical procedures which is significantly below the 350 procedures required by the rule. UCH's proposed program would have little if any effect on the open heart program at Lakeland Memorial, or its ability to meet minimum service levels now or in the foreseeable future. The 350 procedures per year threshold is required to ensure that cardiac surgery teams and staff remain proficient so that patient care is not jeopardized. If, due to the low number of procedures performed at Lakeland Memorial, patient care is being jeopardized, the purpose of the rule is not served by denying a CON to the Petitioner on such a basis since the grant or denial of the instant CON would have no effect on Lakeland Memorial's ability to meet the threshold. UCH's non-invasive coronary procedures including echocardiograms, stress testing and halter monitoring have been utilized by patients to a noteworthy degree. The levels of utilization for these non-invasive tests at UGH in comparison to Tampa General and St. Joseph's are as follows for the period July, 1980 to June, 1981: echocardiogram, UCH 1021, Tampa General 1,175, St. Joseph's 539; stress testing, UCH 598, Tampa General 490, St. Joseph's 371; halter monitoring, UCH 618, Tampa General 328, and St. Joseph's 290. A direct relationship exists between the volume of non-invasive coronary procedures and invasive catheterization procedures that can be expected to be performed at UCH. Approximately 30 percent of the patients at UCH are referred to other hospitals for invasive procedures following non-invasive testing. Transferring patients between hospitals for invasive procedures after non-invasive testing lessens the quality of patient care and increases the probability of duplication of testing, thus increasing health care costs. The Adequacy of she Petitioner's Proposed Facility UCH's proposed facilities for open heart and cardiac catheterization services are adequate for their intended purposes. The proposed plans and equipment lists for the cardiac catheterization lab and open heart surgical program are acceptable from a medical and planning perspective, and are similar to other facilities offering such services. UCH has or if the CON is approved will have, the necessary staff and equipment to meet the requirements of Rules 10-5.11(15)(g) and 10-5.11(16)(c), Florida Administrative Code. The Petitioner will provide the training programs set forth at Rule 10-5.11 (15)(i)(3), Florida Administrative Code. The catheterization lab will maintain the hours of operation specified in Rule 10-5 11 (15)(h)(2), Florida Administrative Code, and the open heart surgery program will operate in accordance with the requirements of Rule 10- 5.11(16)(d)(2) and (3), Florida Administrative Code. The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals as required by Rules 10-5.11 (15)(i)(1) and 10-5.11 (16)(e)(1), Florida Administrative Code. The Petitioner has a written plan projecting case loads, and projecting space, support, equipment and supply needs as required by Rule 10- 5.11(16)(e)(5), Florida Administrative Code. The Financial Feasibility of the Petitioner's Proposed Cardiac Program UCH's proposed open heart surgery program and cardiac catheterization lab are financially feasible. Funds for the project are available and no long term debt exists since the projects are to be funded out of cash. Projected net income from the service is in the 5 percent range which is conservative for a not-for-profit hospital which requires a degree of profitability to ensure that sufficient revenue is generated to meet expenses. The projected costs for the proposed cardiac catheterization lab are reasonable. The proposed renovation of the lab is part of a general large scale renovation for which UCH has secured a binding contract for the amount specified in the application. The equipment and personnel budget for the lab is also reasonable. Based upon a comparison of the proposed charges at UCH with the projected 1984 charges at Tampa General, UCH offers the least costly alternative for providing cardiac catheterization and open heart surgery services. For example, at Tampa General, the projected charge for cardiac surgery, exclusive of charges for room and ancillary services, is $1,711 compared to $1,244.81 at UCH. For cardiac catheterization, the projected 1984 charge at Tampa General is $1,338 as compared to $1,093.75 at UCH. The Petitioner's charges and proposed charges for cardiac catheterization, open heart surgery and other hospital services are comparable to other similar hospitals in the service district, and accordingly, the Petitioner has established that the requirements of Rules 10-5.11(15)(j) and 10- 5.11(16)(f)(2), Florida Administrative Code have been met. Petitioner's Proposed Cardiac Program and its Effect on Tampa General The Hillsborough County Hospital Authority, a public agency which was created by special act of the Legislature, see Chapters 67-1498 and 80-510, Laws of Florida, is required by law to treat indigent patients who are in need of immediate or emergency medical treatment. Hillsborough County is required to reimburse the Hospital Board of Trustees for the full cost 2/ of any hospital or related services provided patients properly certified as indigent. Tampa General has experienced severe monetary problems as a result of its role as provider of free medical care to indigent residents of Hillsborough County. Unfunded patients have averaged 80-100 admissions per week at a cost of $280,000-$350,000 per week to the hospital. Approximately 30 percent of the claims that the hospital files with Hillsborough County for reimbursement of indigent expenses are rejected. As a result, Tampa General has been forced to subsidize its cost of providing indigent care through added charges passed on to paying patients. Since the Hospital Authority has no taxing power, Tampa General is dependent upon funds provided by the County. Among public hospitals in Florida's major urban areas, Tampa General receives the least amount of financial assistance from local government. Tampa General has budgeted $24 million worth of free care for 1984 and this amount is projected to increase through 1988. The amount of free care provided to indigents at Tampa General is approximately 16 percent of gross revenues. Tampa General utilizes the profits it derives from the operation of its cardiac programs to subsidize the considerable amount of free care that it provides to indigent residents of Hillsborough County. In 1981, Tampa General embarked on an ambitious expansion program in order to attract additional paying patients and to remain competitive with other private hospitals in the community. In order to finance this project, the Authority issued bonds in the amount of $160,260,000. In deciding to issue these bonds, the Authority considered the revenues generated by the hospital's cardiac programs which constitute 17-18 percent of total net revenues and the relative lack of competition from other coronary programs in the Hillsborough area. In the absence of adequate funding by the State and/or County, Tampa General's cardiac program is an essential element in the hospital's plan to continue to provide free care to indigents. The subsidization or contribution margin of the cardiac program helps offset the bad debt of indigent costs which are not being reimbursed by local government. The amount of subsidization or contribution margin for each cardiac procedure performed at Tampa General in 1984 was $3,721 and is projected to increase to nearly $5,700 in 1988. However, notwithstanding the monies projected by Tampa General which it expects to be contributed by its cardiac program, it is likely that third- party payers will follow the federal government in adopting a prospective payment system based on diagnosis related groups of illnesses which will limit the amount of revenues which can be collected from private pay patients. Assuming that this occurs, the amount of subsidization derived from cardiac programs at Tampa General will be significantly decreased regardless of the outcome of the instant proceeding. The evidence regarding the effect of UCH's proposed cardiac program on Tampa General's existing program is unclear. Unquestionably, some of the patients which would have gone to Tampa General for cardiac care will go to UCH if its program is established. However, since cardiac catheterizations are increasing in volume and a direct relationship exists between cardiac catheterizations and open heart surgery, it can be concluded that while Tampa General's rate of growth would decrease, it is unclear whether its present volume would decrease significantly below existing levels. No evidence was presented that Tampa General's cardiac catheterization and open heart programs would decline below the thresholds established by rule if UCH's application were granted. The financial problems facing Tampa General are clearly serious. The hospital has taken drastic steps to attempt to control costs including eliminating staff positions and severely restricting indigent access to health care. Tampa General's problems existed prior to UCH's application for a CON and will likely continue regardless of whether the Petitioner's CON is approved. The long-term solution of Tampa General's financial problems should not be dependent upon whether UCH prevails in this proceeding. If Tampa General is to fulfill its mission as a public hospital, it must be assured of reliable and consistent course of funding for all of its operations. In enacting Chapter 80-510, Laws of Florida, the Legislature intended that the cost of indigent hospital care in Hillsborough County be borne by all of the citizens of the County, and not primarily by paying patients who by circumstance or otherwise, find themselves at Tampa General. Tampa General's reliance on its cardiac programs to finance its long- term debt and offset its indigent care losses is dependent on the existence of two factors: first, Tampa General must maintain what is essentially a monopoly on the services to be guaranteed a supply of paying cardiac patients and second, it must have the ability to pass on to its paying cardiac patients the amount needed to subsidize its other operations. Tampa General, however, no longer maintains a monopoly on cardiac programs in the Hillsborough area as evidenced by the certificate of need awarded to St. Joseph's. Moreover, the Department has stated its intention to authorize another open heart program and three catheterization labs at Tampa Heart Institute. The prospective reimbursement system implemented by the federal government which is expected to be followed by private insurers will further limit Tampa General's ability to generate excess revenues from private-pay coronary patients. The result of the inability of Tampa General to secure a long-term solution to its problems of unreimbursed indigent care is reflected in the institution of a policy limiting indigent admissions to the most serious cases. Due to this new policy limiting admissions at Tampa General to emergencies, Tampa General's and UCH's policies regarding coronary care for indigents are essentially the same. The Petitioner's Compliance with Section 381.494(6)(c), Florida Statutes It was uncontroverted that UCH's proposed cardiac services are consistent with the state health plan. Since the Department has not yet promulgated as a rule the health systems' plan for the District, the parties agree that the question of the Petitioner's compliance with the local plan is not an issue in this case. See Section 381.494(6)(c)(1), Florida Statutes. The proposed cardiac program has been approved by UCH's Board of Directors, and is an appropriate progression considering the size of UCH and the mix of cardiologists and patients at the facility. See Rule 10-5.11(2), Florida Administrative Code. The Petitioner has carried its burden by demonstrating a need for cardiac catheterization and open heart surgical services regardless of whether the service district is defined as a two or five-county area. See Section 381.494 (6)(c)(2), Florida Statutes. Utilizing a two-county area including Hillsborough and Manatee counties, the projected population in 1985 is 890,000. The 1981 use rate was 276.4 cardiac catheterization procedures per 100,000 population. Multiplying the 1981 use rate by the projected population, 2,640 catheterization procedures are projected for 1985. Dividing 2,460 by the threshold number 600, results in a need for 4.1 catheterization labs in Hillsborough and Manatee counties in 1985. Presently, three existing and approved catheterization laboratories exist in Hillsborough and Manatee counties, one at St. Joseph's and two at Tampa General. A need, therefore, exists for an additional catheterization laboratory in the two-county area. 3/ In the five-county area which includes Hillsborough, Manatee, Polk, Hardee and Highlands counties, the projected population for 1985 is 1,330,400. The 1981 use rate was 207 procedures per 100,000 population. A total of 2,693 and 2,754 procedures are projected for 1984 and 1985, respectively. Dividing 2,754 by 600 demonstrates a need in 1985 for five laboratories while four presently exist or are approved in the five-county area, one at St. Joseph's, two at Tampa General and one at Lakeland Memorial. Petitioner has therefore demonstrated a need for an additional cardiac catheterization services in the five-county area. In considering the need for open heart surgery services in the two- county area and utilizing the projected population of 890,000 and a use rate of 160.99, the projected number of open heart procedures in 1985 is 1,433. When 1,433 is divided by 350, a need exists for four open heart surgery programs in Hillsborough and Manatee counties in 1985. Since there are only two existing and approved programs in the two-county area, the Petitioner has demonstrated a need for two additional open heart surgical programs by 1985. In the five-county area, the projected 1985 population is 1,330,400. The 1981 use rate was 122 procedures per 100,000 population. Multiplying the projected population by the use rate results in 1,623 open heart procedures projected in 1985. When 1,623 is divided by 350, a need is established for five open heart surgical programs by 1985. Since only three existing or approved programs are in place, the Petitioner has demonstrated a need for two additional open heart programs in the five-county area by 1985. The Petitioner presently performs a significant number of non-invasive cardiac procedures. It was uncontroverted that UCH provides quality of care to its patients. If the Petitioner's application is approved, it can be assumed that present acceptable quality of care standards will be met in the operation of the program. See Section 381.494(6)(c)(3), Florida Statutes. The proposed project is financially feasible, and UCH has the ability to attract sufficient nurses and support staff to operate both programs. See Section 381.494(6)(c)(8) and (9), Florida Statutes. The Petitioner has argued throughout this proceeding that the initiation of cardiac service at its facility will foster competition thereby reducing health care costs in Hillsborough County. If price competition in fact existed under the present system of health care delivery, lower costs would be expected. However, with rare exception, health care consumers do not select hospitals nor do they pay their own hospital bills. Rather, third-party payers, including the federal government and private insurance companies, are responsible for reimbursing hospitals for patient costs and physicians generally determine which hospital is utilized by a patient. In an understandable effort to control health care costs, the federal government and the state have enacted a complex regulatory scheme for health care providers which limits competition and places the burden on providers of establishing that a need exists in a given area for a proposed service. To a significant extent, this scheme protects the financial interests of existing providers. This process can have an unfortunate side-effect of limiting the choices available to health care consumers and eventually could result in a diminished quality of health care. 4/ While the presence of additional hospitals in an area does not necessarily result in lower health care costs, it does create potential competition for patients through physician referrals. Hospitals have an incentive to provide quality care including state of the art equipment and competent staff, to ensure that they attract their share of patients. As a result, the preferences of physicians and health care consumers should have a greater impact in an area where health care services exist at more than one facility. The difficulty encountered in CON proceedings is attempting to balance the legitimate needs of health care consumers with the state's efforts to control costs by discouraging the duplication of unnecessary services. The Petitioner has demonstrated that its proposal is cost-effective, and should foster innovation and improvement in the delivery of health services in the service area as required by Section 381.494(6)(c)(12), Florida Statutes. The assertion by Tampa General that the expansion of its facility represents a less costly alternative is too speculative to be considered in this proceeding. While TGH is in the process of a $300,000 conversion of a pediatric catheterization lab to an adult lab, this fact was apparently either unknown or not considered by the Department at the time of the final hearing since HRS witnesses stated that Tampa General has only two adult labs.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Health and Rehabilitative Services enter a Final Order granting a CON to Petitioner University Community Hospital to establish a cardiac catheterization laboratory and open heart surgical program in Tampa, Florida. DONE and ENTERED this 5th day of March, 1984, in Tallahassee, Florida. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of March, 1984.
The Issue The issue for determination is whether Respondent committed the offenses set forth in the corrected administrative complaint, and, if so, what action should be taken.
Findings Of Fact At all times material hereto, Kenneth Douglas Glaeser (Respondent) was a licensed physician in the State of Florida, having been issued license number ME 0058606. Respondent's area of specialty is Emergency Medicine. On or about May 30, 1993, at approximately 9:45 p.m., Patient L. H., a 47 year old male, presented to the emergency room (ER) at Parkway Regional Medical Center (PRMC) in Miami, Florida complaining of chest pain. Patient L. H. and his wife were visiting his mother in Miami. At first, Patient L. H. believed he had heartburn, but it would not go away. His mother convinced him to go to the hospital. Patient L. H.'s wife and mother accompanied him to the hospital. His wife parked the vehicle while Patient L. H. and his mother entered the ER. Patient L. H.'s wife completed paperwork for the ER while the ER staff attended to her husband. Patient L. H.'s mother was with him. After completing the paperwork, approximately 10 minutes later, Patient L. H.'s wife joined Patient L. H. and his mother in the examining room. At the time, Respondent was the ER physician on duty at PRMC. Respondent was the only ER physician who attended to Patient L. H. Respondent has no independent recollection of Patient L. H. or what happened during Patient L. H.'s visit to the ER at PRMC. The first goal of an ER physician is to determine if the patient has a life-threatening condition, which, often times than not, involves excluding diagnoses. The second goal of an ER physician is to determine if the patient has a condition which can receive immediate treatment and to provide that immediate treatment whether the condition is life-threatening or not. Respondent obtained Patient L. H.'s history which included the type of pain, description of the pain, location of the pain, associated symptomatology, time frame of the pain (including onset), and past history. Respondent recorded, among other things, that Patient L. H. had chest pressure which radiated bilaterally to his shoulders and a numb left shoulder; that the pain lasted for approximately 10-15 minutes, subsided, and re-occurred 30 minutes later; that Patient L. H. had no shortness of breath, diaphoresis (sweating), nausea or vomiting, or palpitations; and that Patient L. H. had no cardiac history. Respondent's history of Patient L. H. was within that level of care, skill, and treatment which is recognized by a reasonably prudent similar ER physician as being acceptable under similar conditions and circumstances. Respondent performed a physical examination on Patient L. H. The physical examination included taking vital signs and examination of the cardiovascular system, lungs, and pulses of the extremities. Respondent's physical examination was within that level of care, skill, and treatment which is recognized by a reasonably prudent similar ER physician as being acceptable under similar conditions and circumstances. Respondent had laboratory work performed on Patient L. H. Respondent ordered SL (sublingual) nitroglycerine for Patient L. H. But, the nitroglycerine was not administered because Patient L. H. was not complaining of chest pains at the time. The ordering of the nitroglycerine and not administering it until chest pain developed was within that level of care, skill, and treatment which is recognized by a reasonably prudent similar ER physician as being acceptable under similar conditions and circumstances. Respondent ordered diagnostic tests to be performed on Patient L. H. The tests included an electrocardiogram (EKG), a chest x-ray, and cardiac enzymes. Neither Patient L. H.'s wife nor his mother were present during the tests. ER physicians are trained to read EKGs. Generally, a cardiologist is not immediately available to the ER for the reading of EKGs. An ER physician looks for an injury pattern in the EKG, which would evidence an acute cardiac event. Most times, a cardiologist will over-read the EKG a day or two after the EKG is performed on a patient. Respondent's reading of Patient L. H.'s EKG did not show an injury pattern which would evidence an acute cardiac event. Respondent determined that Patient L. H.'s EKG was within normal limits. Even though an abnormality was demonstrated in the EKG, the abnormality could have been a false/positive reading. Respondent's reading of the EKG was within that level of care, skill, and treatment which is recognized by a reasonably prudent similar ER physician as being acceptable under similar conditions and circumstances. A cardiologist over-read Patient L. H.'s EKG after he left PMRC. The cardiologist found a "definite abnormality." Respondent's reading of Patient L. H.'s chest x-ray indicated that it was within normal limits. Respondent's reading of the chest x-ray was within that level of care, skill, and treatment which is recognized by a reasonably prudent similar ER physician as being acceptable under similar conditions and circumstances. Respondent's interpretation of the cardiac enzymes tests (CPK and LDH) indicated that they were within normal limits. If a heart is damaged, often times the enzymes contained in the heart cells will be released, and the cardiac enzymes tests would detect the enzymes. Respondent's interpretation of the cardiac enzymes tests was within that level of care, skill, and treatment which is recognized by a reasonably prudent similar ER physician as being acceptable under similar conditions and circumstances. It is undisputed that based upon Patient L. H.'s history, the physical examination, the tests results, including diagnostic and laboratory results, a recommendation to Patient L. H. by Respondent for admission to PRMC was medically warranted. Admission would allow for monitoring and further evaluation. However, a patient has a right to refuse admission. Respondent discussed his findings with the doctor who was listed as Patient L. H.'s primary physician on the ER record. The primary physician was the private physician, a cardiologist, of Patient L. H.'s mother. The primary physician authorized Respondent to contact the physician on-call. Respondent discussed his findings and his concern with Patient L. H. Respondent recommended to Patient L. H. that he be admitted to PRMC. However, Patient L. H. did not wish to be admitted; he wanted to leave the hospital. Patient L. H. rejected Respondent's recommendation for admission to PRMC. 1/ Patient L. H.'s mother attempted to convince him to agree to admission and remain in the hospital, but he refused. It is undisputed that if a patient refuses admission, the physician should advise the patient of the risks involved and recommend admission. In Patient L. H.'s circumstances, it was medically warranted that Respondent advise Patient L. H. that, if he was not admitted, he could suffer a heart attack and die and recommended admission to Patient L. H. Taking the totality of the circumstances, an inference is drawn and a finding is made that Respondent advised Patient L. H. of the risks involved if he rejected admission and recommended to Patient L. H. that he be admitted. Respondent did not record in the ER record that he advised Patient L. H. of the risks involved in rejecting admission and recommended admission. ER physicians are not medically required to spell-out in the medical record what risks are discussed with a patient and that the patient left against medical advice. It is sufficient that the ER physician explains the risks to the patient. Respondent ordered a GI cocktail (Maalox, Donnatal, and viscous Lidocaine) for Patient L. H. 2/ The GI cocktail was not administered until approximately 12:15 a.m. on May 31, 1993. 3/ The ordering or not of the GI cocktail for or the time in which the GI cocktail was given to Patient L. H. has no effect on the standard of care that Respondent provided to Patient L. H. Respondent diagnosed Patient L. H.'s condition as atypical chest pain. This diagnosis essentially indicates that a number of different things may have been causing Patient L. H. to experience chest pain. Patient L. H. left PRMC on May 31, 1993, at approximately 12:20 a.m. against medial advice even though the ER record indicates that he was discharged. 4/ Before leaving PRMC, Patient L. H. was informed by Respondent to, among other things, follow-up with the primary physician and return to the ER if needed. Neither Patient L. H. nor his wife completed any discharge papers or received discharge instructions. It is not uncommon for a patient to be discharged from a hospital without completing discharge papers or receiving discharge instructions. However, hospitals attempt to prevent such occurrences. When a patient leaves PRMC against medical advice, the patient is requested to complete certain documentation. That documentation was not completed in the case of Patient L. H. However, the absence of the documentation is not considered to evidence that Respondent failed to advise Patient L. H. of the risks involved in rejecting admission and to recommend admission. On May 31, 1993, at approximately 8:45 a.m., Patient L. H. went into cardiac arrest at his mother's home. He was transported to the ER at PRMC by emergency vehicle, where he was pronounced dead. On June 1, 1993, Respondent entered an addendum to the ER notes of May 30 and 31, 1993. The addendum provided, among other things, that Patient L. H. was opposed to admission to PRMC and that, even when Respondent explained the risks to Patient L. H., he continued to oppose admission and wanted to leave. Furthermore, the addendum provided, among other things, that Respondent instructed Patient L. H. to return to the ER if the chest pain returns and to follow-up with the primary physician. An addendum to ER notes by an ER physician is not unusual and is an accepted practice. The Dade County Medical Examiner determined that Patient L. H.'s cause of death was occlusive coronary artery disease. Respondent's medical records justified the course of treatment of Patient L. H. Respondent practiced medicine with that level of care, skill, and treatment which is recognized by a reasonably prudent similar ER physician as being acceptable under similar conditions and circumstances. Respondent is a defendant in a pending civil suit brought by Patient L. H.'s surviving spouse.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board of Medicine dismiss the corrected administrative complaint. DONE AND ENTERED in this 27th day of January 1997 in Tallahassee, Leon County, Florida. ERROL H. POWELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 27th day of January 1997.
Findings Of Fact THE PARTIES Petitioner, Englewood Community Hospital, Inc., d/b/a Englewood Community Hospital (Englewood), is a 100 bed general acute care hospital located in Englewood, Florida. Englewood is owned and operated by Columbia/HCA Health Care (Columbia), a for-profit corporation. Englewood operates an outpatient cardiac catheterization laboratory in a mobile unit located in the hospital parking lot. Patients and some physicians have been reluctant to use the mobile unit. Venice Hospital, Inc. (Venice) is a not-for-profit, community owned hospital with 342 beds. Venice operates an inpatient cardiac catheterization laboratory for invasive cardiac diagnostic procedures. Venice has unsuccessfully applied twice for a certificate of need (CON) to provide open heart surgery. The Sarasota County Public Hospital Board (Sarasota Hospital Board) is a publicly elected, nine member organization, which is responsible for the operation and oversight of Sarasota Memorial Hospital (Memorial). Memorial is a 952 bed hospital with services including inpatient cardiac catheterization and open heart surgery. Memorial is located in Sarasota, Florida. Englewood, Venice, and Memorial are all located in Sarasota County which is in the Agency for Health Care Administration Planning District 8. There are nine other inpatient cardiac catheterization programs in District 8. The existing inpatient cardiac catheterization programs are distributed as follows: Sarasota County (3); Charlotte County (3); Lee County (4); Collier County (1). Respondent, Agency for Health Care Administration (Agency), is the state agency which administers CON laws in Florida. The Agency published on February 4, 1994, a fixed need pool projection for inpatient cardiac catheterization procedures, showing a need for three additional programs in District 8 for the batch in which Englewood's application was reviewed. This calculation counted an earlier application of Englewood as approved. THE PROJECT Englewood proposes to establish an adult inpatient cardiac catheterization laboratory, placing inside the hospital facility the equipment which is currently located in its mobile cardiac catheterization laboratory. Englewood timely filed the letter of intent, CON application, and response to omissions for CON Number 7663. The Agency originally denied the application because a previous application by Englewood for inpatient cardiac catheterization services had been granted. The previous application proposed to keep the equipment in the mobile unit and build a walkway from the mobile unit to the hospital facility. Englewood withdrew its application for the previous application. The Agency has filed an official notice of changing its position to support Englewood's CON Application Number 7663. NEED FOR THE PROJECT IN RELATION TO THE LOCAL AND STATE HEALTH PLANS The 1993 Florida State Health Plan provides four allocation preferences relevant to the review of the certificate of need applications to establish adult inpatient cardiac catheterization programs. Preference shall be given to an applicant who proposes the establishment of both cardiac catheterization services and open heart surgical services provided that a need for open heart surgery is indicated. Preference shall be given to an applicant proposing to establish a new cardiac catheterization program if the applicant can demonstrate that patients are currently seeking cardiac catheterization services outside the respective county or HRS district. Preference shall be given to hospitals with a history of providing a disproportionate share of charity care and Medicaid patient days in the respective acute care subdistrict. Qualifying hospitals shall meet Medicaid disproportionate share criteria. Preference shall be given to an applicant who agrees to provide services to all patients regardless of their ability to pay. Englewood has projected that charity and indigent care for cardiac catheterizations at less than 1.0 percent of total revenue. Given Englewood's past history, 1.0 percent of total revenue is a gross overstatement. At the final hearing, Englewood stated that it would not agree to condition the CON on Englewood providing charity and indigent care equal to 1.0 percent of the total revenue. The Agency's 1992 Hospital Financial Data showed that Englewood's reported charity and uncompensated care was approximately .09 percent and .06 percent of total revenues for fiscal years 1992 and 1993, respectively. Englewood has agreed to provide adult cardiac catheterization services to anyone in need without ability to pay; thus, Englewood is entitled to a partial preference for providing services to patients regardless of their ability to pay. Englewood has not demonstrated that it should receive a preference for the other three factors. The 1993 District 8 Allocation Factors Report addresses the following preferences relevant to the review of certificate of need applications to establish adult inpatient cardiac catheterization services. Preference shall be given to applicat- ions for new or expanded cardiac catheterization services that clearly indicate the impact of the proposed services on other health providers offering similar services in the same area. Preference shall be given to applicants which agree to provide services to all patients, regardless of their ability to pay. Englewood has agreed to provide services to all patients without ability to pay and is entitled to a partial preference for the second factor in the district plan. AVAILABILITY, QUALITY OF CARE, EFFICIENCY, APPROPRIATENESS, ACCESSIBILITY, EXTENT OF UTILIZATION, AND ADEQUACY OF LIKE EXISTING HEALTH CARE SERVICES IN THE SERVICE DISTRICT. Englewood's proposed inpatient cardiac catheterization program would not adversely affect the quality of care provided by the cardiac catheterization programs at Sarasota Memorial Hospital and Venice Hospital. Memorial has a comprehensive cardiac catheterization program. It operates three dedicated cardiac catheterization laboratories. The Memorial laboratories provide diagnostic catheterizations as well as all available therapeutic catheterization techniques. Prior to performing a diagnostic catheterization, cardiologists are able to determine with a high degree of confidence and reliability whether a patient with cardiovascular disease will require, during a particular hospitalization, therapeutic intervention, e.g. angioplasty or open heart surgery. Cardiologists rely on an array of sophisticated non-invasive diagnostic tests in making such determinations. When a cardiologist determines that a patient is not sufficiently ill to require therapeutic intervention, the patient will customarily receive a diagnostic catheterization on an outpatient basis. During the last several years, there has been a shift in Sarasota County from inpatient catheterization to outpatient catheterization. In fact, the Medicare program requires that Medicare patients receive outpatient catheterization, unless a patient's medical condition requires inpatient care. Normally only patients with unstable medical conditions receive inpatient cardiac catheterization. That group of patients is likely to require therapeutic intervention during the same hospital admission to resolve their medical problems. Between 80 to 90 percent of patients who receive inpatient cardiac catheterization receive therapeutic intervention during the same hospital admission. If an unstable patient presents at a facility which lacks the capability to perform therapeutic intervention, it is in the best medical practice to stabilize the patient and then transfer the patient to a facility which can perform both the diagnostic catheterization and the therapeutic intervention. If the unstable patient requires intervention in the form of angioplasty, it is in the patient's best interest to receive both the diagnostic and therapeutic procedures during a single visit to the cardiac catheterization laboratory. The provision of both procedures in one visit enhances comfort, safety, and efficiency. It is Memorial's practice to provide both types of services in one visit to the catheterization laboratory when possible. Adult inpatient cardiac catheterization programs are available within a maximum automobile travel time of one hour, under average travel conditions, for at least 90 percent of District 8's population. The Sarasota Hospital Board's policy is to provide cardiac catheterization services at Memorial to all residents without regard to their ability to pay. In its most recently completed fiscal year at the time of the final hearing, the Sarasota Hospital Board provided $268,000 of charity care and $720,000 of Medicaid care, related to cardiac catheterization patients. In its application, Englewood stated: "There is no evidence to indicate that the efficiency, appropriateness and adequacy of adult inpatient cardiac catheterizations services in District VIII are less than adequate." Each of the seven hospitals in Sarasota and Charlotte Counties, with the exception of Englewood, operate an adult inpatient cardiac catheterization laboratory. There is excess capacity at the existing cardiac laboratories in Sarasota and Charlotte Counties. A single cardiac catheterization laboratory can safely perform approximately 1500 cases annually. Three of the existing cardiac catheterization laboratories in Sarasota and Charlotte Counties operate a volume between 300-400 cases annually: Fawcett, St. Joseph's, and Doctors'. Fawcett is owned and operated by Columbia. Venice operates the existing laboratory closest to Englewood. Venice's catheterization laboratory has the capacity to perform 1,500 procedures annually. Over the last five years, the number of cases has grown from 500 to approximately 800, where it has leveled off, leaving almost half the laboratory's capacity unused. Venice's catheterization laboratory is available and accessible to Englewood residents. The catheterization laboratory at Venice has been serving Englewood patients and will continue to do so. Venice currently serves a significant share of the market in three of the six zip codes identified by Englewood as its service area. There is adequate capacity at the existing laboratories in Charlotte and Sarasota Counties to treat the existing volume of cardiac catheterization patients, as well as the volume that Englewood proposes to serve. Patients in the Englewood area will not experience serious problems in obtaining inpatient cardiac catheterization services in the absence of Englewood's proposed program. Under these circumstances it is more appropriate and less expensive to the health care system as a whole to fully utilize existing catheterization laboratories. ABILITY OF APPLICANT TO PROVIDE QUALITY CARE AND APPLICANT'S RECORD OF PROVIDING QUALITY OF CARE Englewood has a record of providing appropriate quality of care to its patients. Englewood is fully accredited by the Joint Commission on Accreditation of Health Care Organizations. Englewood submitted a written protocol for transfer of emergency patients to a hospital providing open heart surgery within 30 minutes travel time by emergency vehicle under average travel conditions as part of its application. Englewood's cardiac catheterization program policies and procedures manual is appropriate. The equipment which Englewood proposes for its inpatient cardiac catheterization laboratory was purchased from Southwest Florida Regional Medical Center in Fort Myers, Florida, where it had been used successfully for approximately one year. The equipment is currently being used in Englewood's outpatient cardiac catheterization laboratory. The equipment uses analog imaging, and includes video playback to allow instant review. Digital imaging is newer technology than analog imaging and allows the image of the cardiac areas to be magnified, processed and measured while the physician is performing the catheterization. Regardless whether analog or digital imaging is used the physician will rely on a 35mm film which is made during the catheterization procedure to make the diagnosis. The digital imaging equipment is more expensive than the analog imaging equipment. Although, digital imaging is nice to have, it is not necessary to provide quality cardiac catheterization services. Englewood has plans to move the outpatient cardiac catheterization laboratory from the mobile unit to inside the hospital facilities. As of the date of the final hearing, Englewood had not begun construction of this project to relocate the outpatient laboratory. The cost of renovating space for the cardiac catheterization laboratory and moving the equipment inside is estimated to be $400,000. Two or three people are required to assist the physician perform an inpatient cardiac catheterization. One person circulates, moving outside the sterile area surrounding the procedure table to get medications, log information and generally oversee and monitor the patient's condition. The staff should include cardiovascular technicians, who may be but do not have to be nurses. Englewood proposes the following staffing and salary: FTE'S YEAR 1 HOURLY RATE SALARIES FTE'S YEAR 2 HOURLY RATE SALARIES RNS 3.0 19.92 118,061 5.0 19.68 204,672 Nurse Manager 1.0 0 1.0 0 Cath Lab Tech 2.0 14.43 60,029 2.0 15.01 62,442 Subtotal 6.0 178,090 8.0 267,114 Lab Director 1.0 0 1.0 0 Subtotal 1.0 0 1.0 0 Unit Secretary 0.5 7.96 8,278 1.0 8.28 17,222 Subtotal 0.5 8,278 1.0 TOTAL 7.5 186,368 10.0 284,336 The radiology technician's job is to assist with quality assurance, help maintain and oversee the equipment, and monitor safety. The radiology technician does not have to be present in the laboratory during procedures. Englewood already employs a radiology technician in its radiology department. This technician has had training for cardiac catheterization laboratory duties. Dr. DeGuia currently performs the duties of a medical director and will continue to do so if the inpatient laboratory is established. The nurse manager who is currently employed as the nursing manager for the intensive care, progressive care and outpatient will be utilized in the inpatient laboratory as well. The staff will be cross trained in each position's functions. Englewood will have the assistance of Fawcett Memorial Hospital and Southwest Heart Institute in staffing and training when needed. Englewood's proposed staffing will provide an adequate number of properly trained personnel. The salaries Englewood proposes to pay its staff are reasonable and competitive. UTILIZATION In its application, Englewood projects that the first year of operation of the inpatient laboratory, there will be a total of 236 cardiac catheterizations performed consisting of 132.9 inpatients and 103.1 outpatients. In the second year of operation, Englewood projects the total cardiac catheterizations to be 345 with 194.3 being inpatient and 150.7 being outpatient. Englewood has included six specific zip code in its service area. Based on Englewood's experience with MDC 05 diagnoses1, Englewood's expert witness Scott Hopes opined that Englewood's market share for diagnostic cardiac catheterization services would be as follows: ZIPCODE MARKET SHARE 33947 53.1 percent 33981 43.8 percent 34223 50 percent 34224 65.2 percent 34287 6.4 percent 34293 2.0 percent In order to project inpatient utilization of the Englewood laboratory, it is appropriate to rely upon the historical pool of patients in the Englewood service area who have received inpatient catheterization during a hospital admission, without receiving angioplasty or open heart surgery during that admission. Englewood proposes to serve primarily "low risk" inpatients who are not expected to require intervention during that hospital admission. For the period July 1991 through June 1992, there were 490 inpatient cardiac catheterizations performed on patients residing in Englewood's service area. For the period July 1992 through June 1993, there were 479 inpatient cardiac catheterizations performed on patients in the same service area. In its application, Englewood applied an aggregate market share to the total number of inpatient cardiac catheterizations performed on the residents of the proposed service area. This method distorts the projected number of inpatient procedures which could be performed by Englewood because of the variability of the market shares in each zip code. Based on the method employed in Englewood's application, Englewood would have performed 145 and 160 inpatient cardiac catheterizations in the 1991-1992 and 1992-1993 periods, respectively. When one applies the actual market share by zip code to the actual number of procedures performed on patients from each zip code, a more accurate projection based on historical data can be made as shown in the chart below. ZIP CODE MARKET SHARE 1991-1992 CATHS ENGLEWOOD SHARE 1992-1993 CATHS ENGLEWOOD SHARE 33947 53.1 percent 21 11 18 10 33981 43.8 percent 35 15 29 12 34223 50.0 percent 68 34 72 36 34224 65.2 percent 42 27 34 22 34287 6.4 percent 145 9 146 9 34293 2.0 percent 179 4 180 4 100 93 Englewood performed 50 outpatient cardiac catheterizations in 1994. This low utilization is based on the physical location of the outpatient facility in the hospital parking lot and the lack of marketing. Fifty procedures is not a representative number of the outpatient procedures which Englewood could expect if the laboratory was located inside the hospital and the program was marketed effectively. The application states that in 1992 the percentage of inpatient cardiac catheterization procedures of the total cardiac catheterizations performed in hospitals with an inpatient program in District 8 was 56.33 percent.2 Thus based on Englewood's market share by zip code, the total amount of cardiac catheterizations which Englewood could have expected in 1991-1992 and 1992-1993 would have been 177 and 165, respectively. In its application, Englewood uses three different methodologies to project the number of cardiac catheterizations Englewood could expect during its first and second year of operation. Method 1 (pgs. 28 and 32 of the Response to Omissions) subtracts the amount of catheterizations Englewood would have expected in 1991-1992 from the amount it would have expected in 1992-1993 and increases the projection each year by this amount to project the number of catheterizations for the first two years of operation. Using Method 1 would result in a decrease in the number of cardiac catheterizations each year because the number of cardiac catheterizations declined by 12 procedures from 1991-1992 to 1992-1993. Method 2 (pgs. 30 & 32 of the Response to Omissions) employs an annual increase of 8 percent. This increase is the lowest annual percentage increase of cardiac catheterizations in District 8 from October 1987 to September 1993. Using this method would result in a projection of 208 procedures for 1996 and 224 procedures for 1997. Method 3 (pgs. 31 & 32 of the Response to Omissions) uses a 12.78 percent annual increase based on the average annual percentage increase of cardiac catheterizations in District 8 from October 1987 to September 1993. Using this method would result in a projection of 237 procedures for 1996 and 267 procedures for 1997. Using any of the three methods to project the number of procedures to be performed in the second year, Englewood will not perform a minimum of 300 catheterization procedures by the end of the second year of operation of the inpatient laboratory. The Intermedic Health Center is a large multi-specialty group with a five cardiologist heart group based in Port Charlotte. Intermedic has offices in Englewood. The heart group was to begin regular office schedules in Englewood in February, 1994. The group plans to recruit one or two additional physicians to staff the office. At the time of final hearing the physicians of Intermedic's heart group performed cardiac catheterizations at hospitals other than Petitioner's because some of the cases were inpatient and some of their outpatients were uncomfortable with a portable laboratory. For 1995, Intermedic projected 90 to 100 cases; thereby resulting in some increase in business with Englewood relating to cardiac catheterizations. The population in the Englewood service area consists of a large number of residents who are 65 or older. This segment of the population is more likely to have a high demand for cardiac catheterization than a younger segment of the population. The 65 or older category is a fast growing part of the population in the Englewood service area. IMMEDIATE AND LONG-TERM FINANCIAL FEASIBILITY OF THE PROGRAM Englewood has the financial ability to fund the construction of the project. The pro forma statement contained in the CON application is flawed. Englewood has double counted a profit layer that it is already enjoying from inpatients that it transfers to an inpatient catheterization provider. Englewood does not account for the contribution margin attaching to Englewood's inpatient portion of their care before transfer. In projecting its revenues from outpatient utilization, Englewood has included in its figures outpatient catheterizations it would perform whether or not its application is approved rather than basing their pro forma on the incremental difference attributable to approval of an inpatient program. The projected revenues contained in the pro forma are suspect. First, the proposed procedure charges shown on the outpatient service revenues page of Englewood's application are high. It is unusual to find outpatient procedure charges that are higher than the inpatient procedure charges. In Table 7 in the application, Englewood asserts that patient days for Medicaid and private pay will net the highest revenues per patient day. Typically those two payor sources are at the bottom of the list of revenue producers than the top. Englewood's pro forma understates revenue deductions by assuming Medicaid and private pay reimbursement that is unrealistic and by failing to take into account anticipated growth in managed care. Englewood's financial expert agreed that managed care will see significant growth over the next five years. Because the pro forma overstates net revenue, it understates revenue deductions. Englewood has understated expenses. The marginal cost per case is understated, relocation expenses are understated, and the nurse manager's time is not allocated to the expense side of the pro forma. The State Agency Action Report also calls into question the adequacy of the expenses in Englewood's pro forma.3 Based on the flawed pro forma, Englewood has not demonstrated that the project is financially feasible. OTHER STATUTORY CRITERIA The costs and methods of the proposed construction, including consideration of the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction are reasonable. The proposed design of Englewood's inpatient cardiac catheterization laboratory is reasonable and appropriate. Englewood submitted the list of capital projects required by Section 408.037(2)(a) and (b), Florida Statutes (1993); the audited financial statements required by Section 408.037(3), Florida Statutes (1993); and the resolution required by Section 408.037(4), Florida Statutes (1993). I. STANDING OF VENICE AND MEMORIAL If Englewood were to establish an inpatient cardiac catheterization laboratory, both Venice and Memorial would have patients diverted from their programs to Englewood's. Based on the projections contained in Englewood's application, Venice would lose 82 catheterization procedures in the second year of operation of Englewood's proposed program, resulting in a net profit lose of $234,000. Although Englewood's application projections are inaccurate, the application does contemplate that Venice would lose procedures as a result of the implementation of Englewood's proposed program. In order for Englewood to reach its projected volume of procedures, approximately 40 to 50 procedures would have to be redirected annually from Memorial to Englewood. There is also a strong potential that Memorial would lose angioplasty and open heart surgery cases as well. Southwest Florida Regional Medical Center (SWFRMC), in Fort Myers, is owned by Columbia. It is a tertiary cardiovascular referral center for other Columbia hospitals in Southwest Florida. The development of an inpatient cardiac catheterization laboratory at Englewood would assist in the development of referral patterns from the Englewood area to SWFRMC for angioplasty and open heart surgery. It would be in Columbia's interest to encourage utilization of SWFRMC's cardiovascular services by patients residing in the Southwest Florida area.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying the application of Englewood Community Hospital, Inc., d/b/a Englewood Community Hospital's for Certificate of Need 7663 to establish an adult inpatient cardiac catheterization program. DONE AND ENTERED this 18th day of December, 1995, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of December, 1995.
The Issue Whether the Respondent committed the acts alleged in the administrative complaint contrary to Section 458.331(1)(t), Florida Statutes.
Findings Of Fact (Stipulated) The Respondent is and was at all times material to the allegations a licensed physician in Florida, holding license number ME 0050839 issued by the state. The Respondent was a board certified internist and board certified cardiologist practicing with Diagnostic Cardiology Associates at St. Vincent's Medical Center (St. Vincent's) at the time of the events which gave rise to these allegations. On or about June 25, 1988, W.V., referred to in the complaint as Patient #1, was admitted to St. Augustine General Hospital in St. Augustine, Florida. W.V. was a 68 year old male with a history of heart problems including four bypasses performed in 1977, a pacemaker implantation in 1979, chronic obstructive pulmonary disease, and prior prostate surgery. W.V. was determined to have had an acute myocardial infarction for which he was treated at St. Augustine General Hospital for five days. As W.V.'s condition improved, he was encouraged to walk at St. Augustine where he complained of chest pain and weakness. A echocardiogram showed segmental wall motion disturbance involving the posterior wall of the heart. A second electrocardiogram was performed which showed ventricular pacemaker rhythm and ST-T wave changes. On this basis, given his history and myocardial infarction, he was referred for a cardiac catheterization to St. Vincent's where his earlier heart surgeries had been performed. The patient was monitored during his hospitalization in St. Augustine, and did not show any signs of arrhythmias. On June 30, 1988, W.V. was transferred to St. Vincent's and received through the Emergency Room, where he was interviewed by the Respondent. After giving the Respondent a brief outline of his problems, W.V. was placed on a general medical floor for the evening, and scheduled for cardiac catheterization the following day. Cardiac catheterization and its risks were explained to W.V., who signed the patient consent forms authorizing the procedure. On the morning of July 1, 1988, after examining the patient and finding no changes, the Respondent performed on W.V. a cardiac catheterization, which verified the recent acute myocardial infarction, the blockage of two of the bypasses, damage to the heart muscle serving the lungs, and high vascular resistance with severe pulmonary hypertension. The patient tolerated the procedure well and showed no signs of arrhythmias during or after the procedure. The test results indicated that he could not benefit from surgery or angioplasty. W.V.'s primary health threat was from congestive heart failure, a condition likened to drowning in one's own fluids. (Tx-129, line 1.) A patient suffering from congestive heart failure will call for assistance from the nursing staff, as one of the expert's phrased it, "he would have been crawling out the door on his hands and knees calling for the nurse." (See Dr. Gilmore, Tx-130, line 8.) Conversely, heart failure alone would not have caused the patient to have chest pains, unless the patient developed elevated pressures to the point where pulmonary hypotension caused chest pain. However, the chest pain in such a case is not caused by clogged arteries or an impending heart attack, but by build up of fluid in the lungs which causes the heart to work harder to pump the blood through the lungs. (Dr. Campbell, Tx- 107, line 16.) The Respondent's post-catheterization order initially directed that W.V. be moved to a monitored bed following the procedure. The purpose of monitoring a patient is to observe, document and ultimately treat cardiac rhythm disturbances. (Dr. Gilmore, Tx-117,line 6.) Approximately 75 percent of post- catheterization patients were placed on telemetric monitoring (monitoring or telemetry hereafter). Monitored beds existed on 3 East (eight monitored beds), 5 East (eight monitored beds), Coronary Care Unit (eight monitored beds), Intensive Care Unit (12 monitored beds), and open heart unit which, although monitored, would not take catheterization patients. Notwithstanding the number of monitored beds, the critical piece of equipment is the monitor because each room on a monitoring unit was set up to receive telemetry. The monitor is a small radio transmitter that relays information from leads attached to the patient to receivers in each room. The monitors are removed by patients upon discharge, thrown into the laundry, and into the trash. They also require repair. As a result, the actual number of monitors varied from the planned number of monitored beds. Upon completion of the catheterization, the catheterization nurse would advise the nurse in charge of placing patients that the cardiac catheterization patient was ready for admission to the hospital, and whether the doctor had ordered a monitored or unmonitored bed. If the doctor had ordered a monitored bed and one was not available, the placement nurse would ask the admitting physician whether the patient being admitted really needed monitoring given the critical number of monitored beds available and the necessity to poll the treating physicians of all the monitored patients to see if any could be taken off monitoring. Inferentially, the Respondent considered the status of his other patients who were being monitored. If the physician deemed the patient's need for monitoring critical, then the placement nurse would poll the physicians of all other monitored patients, and request that they reassess the needs of their patients on monitoring. (See Lipsky Deposition, Page 26) The unit which normally received post-catheterization patients, 5 East, had eight monitored beds and eight unmonitored beds which were used as "stepdown" beds for patients taken off monitoring so that the monitors could be changed, but the patient retained in the same bed. Not only were all the monitored beds occupied on 5 East, the post-catheterization unit, but that unit had almost a full census. (See Lipsky Deposition, Page 20 - Page 26) The hospital's procedures required cardiac catheterization patients to remain in the catheterization laboratory until a monitored bed was available if the doctor stated that the patient was to go to a monitored bed. The catheterization patient would be held in the catheterization laboratory where there was a shortage of nursing care until a bed was found. Contrary to the experts' testimony which presumed the authority of the Respondent to place the patient in a monitored bed, it was the placement nurse who placed the patient once the doctor ordered a monitored bed post-catheterization. No evidence was received regarding her authority to place patients requiring monitoring in the ICU or CICU. Typically, doctors reassessed their patients' need for monitoring during morning rounds, and those that were stable were removed from monitoring so the monitor became available for a more critical patient. (See Libsky deposition, Page 24, line 20) W.V. catheterization was completed at approximately 11:00 a.m., following morning rounds when a maximum number of monitors should have been available; however, no evidence was received when a monitor would have been available. Testimony revealed that the wait could be as long as two hours for a monitored bed. During that time, under hospital protocols, W.V. would have remained in the catheterization lab. Contrary to facts assumed by the Petitioner's experts, the Respondent's options for placing the patient were: to place the patient in an unmonitored bed on the cardiac floor, or to retain the patient in a monitored bed in the holding area where he would be monitored by the cardiac catheterization nurse until the patient placement nurse found a monitored bed. The Respondent did not retain the patient in the cardiac catheterization area because the nurses could not adequately monitor W.V. and perform their other duties. The Respondent did not place W.V. in the Cardiac Care Unit or the regular Intensive Care Unit to obtain monitoring because it was not his function to place the patient. The only way he could have placed W.V. in CICU or ICU would have been to change W.V.'s status to justify the overall intensive care of the patient. However, this would have been unsupportable if questioned given the patient's condition which was stable upon admission six days after the myocardial infarction, and remained stable after the procedure. See Dr. Edwards Depostion, Page 41, line 19 et seq. Staffing levels on 5 East at the time of W.V.'s hospitalization were one nurse to four or five patients. There were five nurses, a charge nurse, and nursing assistant, and 22 beds on the unit. (See Lipsky Deposition, Page 72, line 15.) The Hospital's Standing Order 01-009 provided that "The critical care nurse, in consultation with the charge nurse, may initiate the following (list of nursing interventions) and notify the physician as soon as possible in the event of an acute deterioration [of] patient status and in the absence of a physician." (See Burnsed Deposition, Page 112, line 4) The Hospital Standing Order 01-017 provided "Any changes in the patient's condition will be called to the attention of the attending physician and appropriate consulting physicians. The emergency standing orders may be initiated by the nursing staff, but the physician must be informed of their use." (See Burnsed Deposition, Page 113, line 10) The Respondent placed the patient on 5 East, the cardiac care floor, in an unmonitored bed at approximately 11:50 a.m., as indicated by the notation on the patient's chart "nonmonitored," which indicated a change from the initial orders. (See Cavin Deposition, Page 34, line 7 and Page 35, line 7 et seq.) There was no order that W.V. should not be resuscitated. The Respondent's standing orders called for the patient's vital signs, together with shortness of breath and chest pain, to be monitored every 15 minutes for four hours. This was done until 3:15 p.m., when the monitoring was reduced to every 30 minutes. The Respondent advised the cardiac catheterization nurse, Mary Cavin, who accompanied the patient to the floor, of his findings, to include evidence of a recent myocardial infarction, and the patient's response to the procedure. (See Cavin Deposition, Page 19-20) Ms. Cavin identified her handwriting on the charts describing the Respondent's findings. However, these notes do not mention the recent myocardial infarction. The referenced notes were not sufficiently identified to check in the patient's charts. W.V. was taken to 5 East by Mary Cavin. Ms. Cavin had worked in this area at St. Vincent's for three years. Cardiac catheterization nurses were described by one of the experts as being among the best trained nurses in the profession, who because they work with the medical staff continuously during the procedures, are aware of the physician's findings and the patient's status. They pass this information along to the floor nurses when they transport the patients back to the floor. Ms. Cavin did not remember specifically W.V., but testified in her deposition regarding her normal practice when delivering a patient. She advised the staff on 5 East how the patient did during the catheterization, and what the findings had been. However, as stated above, in Cavin's notes she did not mention the recent myocardial infarction, and it is unclear whether she mentioned this to the staff of 5 East. The record is unclear to whom Ms. Cavin reported W.V.'s condition; however, Ms. Burnsed received a report on W.V. when she came on duty from Carolyn Johnson, the nurse who had cared for W.V. on the preceding shift. Ms. Burnsed was advised by Ms. Johnson that W.V. was stable post-catheterization, that he had previous open heart surgery, and that one of his grafts was blocked, but "had good collateral circulation to that." Further, Johnson advised Burnsed that W.V.'s vital signs were good, and he had no problems. Johnson did not mention the recent myocardial infarction suffered by W.V. Although Ms. Burnsed could not specifically remember her actions, her general course of action was to do a complete assessment upon starting the shift, make sure her patients were all right and having no problems, and orient them about the call light and calling her. Her physical assessment of W.V. revealed an apical heart rate of 72, respiration 18, and blood pressure of 100/70. W.V.'s vital signs were monitored by the staff of 5 East every 15 minutes as ordered by the Respondent until 3:15 p.m., when this was reduced to every 30 minutes. At 5:00 p.m., the Respondent saw W.V., who had no complaints and was stable. Ms. Burnsed found W.V. up going to the bathroom at 5:30 p.m., and got him back into bed explaining that it was important that he stay in bed because of his incision for at least 24 hours. Ms. Burnsed checked W.V.'s incision, and found that it was not bleeding at that time. At 7:00 p.m., Ms. Burnsed administered Lasix to W.V., and W.V. asked for and was provided sleeping medication at 9:00 p.m., at which time, Ms. Burnsed took W.V.'s vital signs which were essentially unchanged and stable. At 9:20 p.m. the patient's charts reflect that he was complaining of mild shortness of breath (SOB), and pains in his chest. Pursuant to the Respondent's orders, Ms. Burnsed administered nitroglycerin, 150 grains times one, after checking his blood pressure to insure it was within limits for the administration of nitroglycerine, and oxygen via nasal cannula, two liters, pursuant to emergency orders. This relieved the patient's symptoms. Ms. Burnsed did not report to the Respondent that W.V. had suffered mild shortness of breath and chest pain because the nitroglycerin and oxygen relieved his symptoms. The decision to notify or not to notify the treating physician was described as a nursing judgment based upon the nurse's assessment of the patient's condition after being medicated and placed upon oxygen. (See Lipsky Deposition, Page 56, line 8 et seq.) Ms. Burnsed did not consider the patient's condition to have deteriorated given his response to the medication, and did not notify the Respondent. Subsequent to administering the nitroglycerin and oxygen, Ms. Burnsed spoke with W.V.'s wife on the telephone. It is intimated in the depositions that Mrs. W.V. called to advise that her husband had called complaining of shortness of breath and chest pains and an inability to get anyone to assist him; however, no evidence was submitted regarding the content of the conversation between Ms. Burnsed and Mrs. W.V. Five to ten minutes after speaking with W.V.'s wife, Ms. Burnsed returned to W.V.'s room, where she found him resting in bed without complaint. W.V. stated that he wanted to go to sleep. Ms. Burnsed did not remember checking his vital signs on this second visit, and it is most probable that she did not because he was trying to go to sleep. Ms. Burnsed checked W.V. at 10:10 p.m., and found he was not breathing, had no pulse, and was unresponsive. The Cardiac Resuscitation Team was called, and responded. Despite their efforts, W.V. was pronounced dead at 10:50 p.m. Although a partial autopsy was performed which confirmed the findings of the catheterization and the diagnosis of a recent myocardial infarction, the cause of death was not precisely determined. It was assumed by the experts that W.V. did not die of congestive heart failure because he would have complained more. Therefore, the experts concluded that his death was relatively sudden, most probably brought on by an arrhythmia or perhaps a stroke. There was a suggestion that the Respondent did not put W.V. on a monitor because he had a pacemaker. While patients with pacemakers are at no less risk of developing arrhythmias than patients without pacemakers, there was no evidence that this was a consideration of Respondent in placing the patient on a cardiac floor following cardiac catheterization. It was general practice to place cardiac catheterization patients who exhibited signs of cardiac pathology on telemetry for 24 hours following the procedure. The initial orders of the Respondent were consistent with this practice. Testimony was received from the Petitioner's experts was that the Respondent's care was substandard because he did not place the patient on monitoring as they would have done by placing the patient in the emergency room, or the intensive care unit, or the cardiac intensive care unit to obtain telemetry monitoring, or retain the patient in the cardiac catheterization area pending the availability of a monitored bed. Their assumptions regarding the doctor's authority were inconsistent with the procedure for placing patients at St. Vincent's which was the function of the placement nurse. The Petitioner's experts also testified that placing a patient on telemetry notified the nursing staff that the patient required special attention. The Respondent's witnesses were more credible in stating that placing a patient on telemetry was not the way to indicate to nursing staff that the patient required special attention. The testimony of Respondent's witnesses that intensive care personnel were not as well trained as personnel on the cardiac floor to deal with cardiac emergencies is not credible. Both groups of personnel, if not equally versed in cardiac care, are sufficiently skilled in steps to be taken in the event of a cardiac emergency that there would be no appreciable difference in the care provided. Placing the patient in the regular intensive care unit or the cardiac intensive care unit would have required changing the patient's medical status be changed, and there was no change in the patient's condition which would have warranted the change. The patient was extremely ill upon admission, and his prognosis was very poor. W.V. was going to die because of his cardiac condition and chronic pulmonary congestion unless he had a stroke. His condition was irreversible in the opinions of the various experts; however, he would have been released the day following the catherization and treated medically for his problems. The Petitioner's experts opined that the Respondent's decision not to place W.V. in a monitored bed was substandard care because they felt that there was an ethical duty to monitor the patient in the absence of orders directing that efforts not be made to resuscitate notwithstanding the dismal chances for success. Their opinion assumed the Respondent could direct the placement of the patient in a monitored bed on a specific unit within a relatively short period of time because of all the monitored beds in the hospital. The Respondent's experts opined that the decision not to monitor W.V. was within the acceptable standards of medical care by physicians under similar circumstances, i.e., retain the patient in the catherization laboratory where nursing care would have been inadequate pending availability of a monitored bed for up to two hours. Their opinion considered the circumstances at St. Vincent's, and is deemed more credible.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED: That the charges against the Respondent be dismissed. DONE and ENTERED this 2nd day of June, 1995, in Tallahassee, 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 2nd day of June, 1995. APPENDIX The parties filed proposed findings of fact which were read and considered. The following states which of those findings were adopted, and which were rejected and why: Petitioner's Recommended Order Findings Paragraph 1-3 Paragraph 1-3. Paragraph 4 Paragraph 5. Paragraph 5 Paragraph 3. Paragraph 6 Paragraph 6. Paragraph 7 While true, this finding is unnecessary to a consideration of the issues. Paragraph 8 Paragraph 7. Paragraph 9 Paragraph 9. Paragraph 10 Paragraph 32. Paragraph 11 Subsumed in Paragraph 37. Paragraph 12 Subsumed in Paragraph 38,39. Paragraph 13 Rejected as contrary to more credible evidence. Paragraph 14 If arrythmias were undetected, they would have been irrelevant to consideration of the patient's condition. Paragraph 15 Subsumed in Paragraph 9. Paragraph 16 Paragraph 46. Paragraph 17 Subsumed in Paragraph 9. Paragraph 18 Contrary to more credible evidence; See Parag 48. Paragraph 19 Rejected at Paragraph 43. Paragraph 20 Rejected at Paragraph 40. Paragraph 21 Rejected as contrary to more credible evidence; See Paragraph 12. Paragraph 22 Accurately states the expert's credentials, but is not relevant to consideration of the issues. Paragraph 23 Rejected as contrary to more credible evidence; See Paragraphs 42 and 47. Paragraph 24 Subsumed in Paragraphs 9,12,47-49. Paragraph 25 Rejected at Paragraph 16. Paragraph 26 See comments to Paragraph 22. Paragraph 27 See comments to Paragraph 23. Paragraph 28 While the may have been a national standard of care, there was not a national set of circumstances which impact the issue of whether the Respondent adhered to the appropriate standard of care. Paragraph 29 Subsumed in Paragraph 47. Paragraph 30 Subsumed in Paragraph 24. Paragraph 31 Subsumed in Paragraph 9. Respondent's Recommended Order Findings Paragraph 1 Paragraph 4,5. Paragraph 2,3 Paragraph 6. Paragraph 4 Paragraph 6,4. Paragraph 5 Paragraph 9. Paragraph 6 Rejected as contrary to most credible evidence; See Paragraphs 12-14. Paragraph 7-10 Subsumed in Paragraphs 17-19. Paragraph 11 Accurate; however, the patient was stable upon admission. Paragraph 12 Subsumed in Paragraph 46. Paragraph 13 Paragraph 46. Paragraph 14 Paragraph 24. Paragraph 15 Subsumed in Paragraph 25-28. Paragraph 16 Paragraph 24. Paragraph 17 Paragraph 31. Paragraph 18 Subsumed in Paragraph 33. Paragraph 19 Paragraph 37. Paragraph 20 Subsumed in Paragraph 46. Paragraph 21 Paragraph 38,48. COPIES FURNISHED: Hugh R. Brown, Esq. Agency for Health Care Administration 1940 N. Monroe St. Tallahassee, FL 32399-0792 Michael J. Obringer, Esq. Osborne, McNatt, Shaw, et al One Enterprise Center 225 Water St., Ste. 400 Jacksonville, FL 32202-5147 Marm Harris, M.D. Executive Director Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792 Jack McRay, Esq. Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792
The Issue The issue in this case is whether the methodology for grouping hospitals adopted by the HCCB pursuant to Sections 4D- 1.03, 4D-1.12(1) and 4D-1.12(2), F.A.C., constitutes an invalid exercise of delegated legislative authority as being arbitrary or capricious? Mercy has also raised one issue as to whether the grouping methodology is violative of constitutional guarantees of administrative equal protection and due process. This issue, however, is beyond the jurisdiction of the Division of Administrative Hearings.
Findings Of Fact Introduction. The HCCB and Its Hospital Grouping Function. The HCCB was formed pursuant to Part II of Chapter 395, Florida Statutes (1979). The HCCB was created pursuant to the specific authority of Section 395.503, Florida Statutes (1979), in order to further the accomplishment of legislative intent contained in Section 395.5025, Florida Statutes (1984 Suppl.): It is the intent of the Legislature to assure that adequate health care is affordable and accessible to all the citizens of this state. To further the accomplishment of this goal, the Hospital Cost Containment Board is created to advise the Legislature regarding health care costs; inflationary trends in health care costs; the impact of health care costs on the state budget; the impact of hospital charges and third-party reimbursement mechanisms on health care costs; and the education of consumers and providers of health care services in order to encourage price competition in the health care marketplace. The Legislature finds and declares that rising hospital costs and cost shifting are of vital concern to the people of this state because of the danger that hospital services are becoming unaffordable and thus inaccessible to residents of the state. It is further declared that hospital costs should be contained through improved competition between hospitals and improved competition between insurers, through financial incentives which foster efficiency instead of inefficiency, and through sincere initiatives on behalf of providers, insurers, and consumers to contain costs. As a safety net, it is the intent of the Legislature to establish a program of prospective budget review and approval in the event that competition-oriented methods do not adequately contain costs and the access of Floridians to adequate hospital care becomes jeopardized because of unaffordable costs. As a part of its responsibilities the HCCB is required, "after consulting with appropriate professional and governmental advisory bodies and holding public hearings, and considering existing and proposed systems of accounting and reporting utilized by hospitals," to specify a uniform system of financial reporting for hospitals. Section 395.507(1), Florida Statutes Suppl.) to: In order to allow "meaningful comparisons" of data reported by hospitals under the uniform system of financial reporting, the HCCB is required by Section 395.507(2), Florida Statutes (1984 Suppl.) to group hospitals according to characteristics, including, but not limited to, a measure of the nature and range of services provided, teaching hospital status, number of medical specialties represented on the hospital staff, percentage of Medicare inpatient days, average daily census, geographical differences, and, when available, case mix. In providing for grouping of hospital, the HCCB is required to establish ten general hospital groups and additional speciality groups "as needed." Section 395.507(2), Florida Statutes (1984 Suppl.). No hospital group can contain fewer than five hospitals, however. Id. Grouping is to be provided by rule. Id. Pursuant to Section 395.509(1), Florida Statutes (1984 Suppl.), every Florida hospital is required to file its budget with the HCCB for "approval." The budget is required to be filed on forms adopted by the HCCB and based on the uniform system of financial reporting. Section 395.507(6), Florida Statutes (1984 Suppl.). To determine whether a hospital's budget is to be approved, all hospitals in Florida are to be placed in groups. A hospital's budget is then compared to the budgets of the hospitals assigned to its group. Hospital groups for this purpose are established pursuant to Section 395.509(4)(a), Florida Statutes (1984 Suppl.). The provisions of Section 395.509(4)(a), Florida Statutes (1984 Suppl.), are identical to Section 395.507(2), Florida Statutes (1984 Suppl.). In determining whether a hospital's budget is to be approved, Section 305.509(2), Florida Statutes (1984 Suppl.), establishes two initial "screens" which a hospital must meet based upon the hospital's gross revenue per adjusted admission. The term "gross revenue" is defined as: the sum of daily hospital service charges, ambulatory service charges, ancillary service charges, and other operating revenue. Gross revenues do not include contributions, donations, legacies, or bequests made to a hospital without restriction by the donors. Section 395.502(11), Florida Statutes (1984 Suppl.). "Adjusted admission" is defined by Section 395.502(1), Florida Statutes (1984 Suppl.), as: the sum of acute admissions and intensive care admissions divided by the ratio of inpatient revenues generated from acute, intensive, ambulatory, and ancillary patient services to gross revenues. Gross revenues per adjusted admission (hereinafter referred to as "GRAA") is therefore the total hospital ambulatory and ancillary service charges and other operating revenue for all acute and intensive care admissions divided by the ratio of inpatient revenues from acute, intensive, ambulatory and ancillary patient services to gross revenue; or, stated more simply , inpatient revenue per admission. The "screens" which must be met in order for a hospital's budget to be approved upon initial determination are: (1) the hospital's GRAA must not be in the upper 20th percentile of the hospitals within its group; and (2) the rate of increase in a hospital's GRAA as contained in its current budget compared to the hospital's GRAA as reported in its most recently approved budget must not exceed a "maximum allowable rate of increase" if the hospital's GRAA is in the 50th to 79th percentile of the hospitals in its group. If a hospital's GRAA is in the 49th percentile or less of the hospitals in its group, its budget is automatically approved. In determining whether a hospital's GRAA fails the screens, Section 395.509(2), Florida Statutes (1984 Suppl.), provides: Percentile values for gross operating revenue per adjusted admission shall be determined monthly by the board for each group established pursuant to s. 395.507(2) by ranking projected gross operating revenues per adjusted admission contained in the most recently approved or submitted budgets for the hospitals in each group, including any hospital that is contesting its grouping assignment. In determining the applicability of paragraph (a) or paragraph (b), the board shall consider the basis of the projections by the hospital, including consideration of the following factors: any increase in patient admissions caused by the creation of preferred provider organizations or health maintenance organiza- tions, population increases, changes in the hospital case mix or in services offered, changes in technology, or other similar factors. If a hospital's GRAA fails either of the screens (its GRAA is in the upper 20th percentile of its group or its GRAA rate of increase is excessive and its GRAA is in the 50th to 79th percentile of its group) that hospital's budget must be reviewed by the HCCB "to determine whether the rate of increase contained in the budget is just, reasonable, and not excessive." Section 395.509(5), Florida Statutes (1984 Suppl.). Pursuant to Section 395.509(6), Florida Statutes (1984 Suppl.), the HCCB is authorized, if it first determines under Section 395.509(5), Florida Statutes (1984 Suppl.), that the hospital's rate of increase is not just, reasonable and not excessive, to amend or disapprove any hospital's budget which does not meet the two screens of Section 395.509(2), Florida Statutes (1984 Suppl.), to establish a rate of increase which is "just, reasonable, and not excessive." The HCCB's authority under Section 395.509(6), Florida Statutes (1984 Suppl.), applies only if the HCCB first complies with the following pertinent provisions of Section 395.509(5), Florida Statutes (1984 Suppl.): The board shall disapprove any budget, or part thereof, as excess that contains a rate of increase which is not necessary to maintain the existing level of services of the hospital or, if the hospital increases its existing level of services, any amount not necessary to accomplish that increase. In making such deterioration . . . the board shall consider the following criteria: The efficiency, sufficiency, and adequacy of the services and facilities provided by the hospital. The cost of providing services and the value of the services to the public. The ability of the hospital to improve services and facilities. The ability of the hospital to reduce the cost of services. The ability of the hospital to earn a reasonable rate of return. The accuracy of previous budget submissions by the hospital compared to the actual experience of the hospital the The number of patient days reimbursed by Medicare or Medicaid. The number of patient days attributable to the medically indigent. The research and educational services provided by the hospital if it is a teaching hospital. The projected expenditures or revenues for or from construction of facilities or new services which are subject to regulation under s. 381.494 may not be included in the budget of a hospital until the construction or services are approved or authorized by the state health planning agency. The cost of opening a new hospital, for first 3 years. The Challenged Rules. In carrying out its duty to establish a uniform system of financial reporting, the HCCB adopted Section 4D- 1.03, F.A.C., which provides: The Board, pursuant to Section 395.505, Florida Statutes, hereby adopts and establishes a uniform system for hospitals to file the prior year audited actual data report, the interim report of financial and statistical information. This system is described and the forms, instructions, and definitions therefor are contained in the Board's publication entitled Hospital Uniform Reporting System Manual. The Chart of Accounts adopted pursuant to Section 395.507(1), Florida Statutes, and this Chapter 4D-1, and as hereafter modified, shall be utilized by each hospital for submitting the prior year audited actual data report, the interim report and the budget report. In order to determine whether a hospital's budget should be automatically approved under Section 395.509(2), Florida Statutes (1984 Suppl.), the HCCB adopted Section 4D-1.12, F.A.C. Sections 4D-1.12(1) and (2), F.A.C., provide: The staff shall review the budget report based upon the hospital's ranking for gross revenue per adjusted admission within its group and upon its rate of change in gross revenue per adjusted admission in the proposed budget as required in Section 395.507(6), Florida Statutes, and the most recently Board approved budget. As part of the budget report review process, groupings of hospitals shall be established according to the characteristics and methodology as outlined in Chapter V, Section B, Hospital Unit Uniform Reporting System Manual and as outlined in Section 395.507(2), Florida Statutes. Percentile values for gross revenue per adjusted admission shall be determined monthly for each group by ranking projected gross revenue per adjusted admission contained in the most recently approved or submitted budgets for the hospitals in each group, including any hospital that is contesting its grouping assignment. 12. Sections 4D-1.03 and 4D-1.12(1) and (2), F.A.C., are the rules challenged by Mercy. These rules, as quoted herein, were effective as of November 5, 1984. The rules were originally adopted effective June 30, 1980. The rules were amended to their present wording in response to "major" legislation enacted in 1984 which amended Part II, Chapter 395, Florida Statutes (1983), and granted authority to the HCCB for the first time to approve, disapprove or amend hospital budgets under certain circumstances. Chapter 79-106, Laws of Florida. The challenged rules essentially provide that the HCCB, when grouping of hospitals for purposes of the uniform system of financial reporting and for purposes of reviewing and comparing budgets to determine if they should be automatically approved under Section 395.509(2), Florida Statutes (1984 Suppl.), will apply the grouping methodology outlined in Chapter V, Section B of the Hospital Uniform Reporting System Manual (hereinafter referred to as the "Manual"). Section 4D-1.18, F.A.C., also adopted effective November 5, 1984, incorporates by reference the Manual within each rule in Chapter 4D-1, F.A.C., which references the Manual. This rule has not been challenged in this proceeding. The Hospital Grouping Methodology and Its Development. Generally, Chapter V, Section B of the Manual, sets out the objective of the grouping methodology, the procedure for forming groups, a list of the variables considered in forming groups and the weight to be accorded each variable. The goals of the grouping methodology, as provided in the Manual, are to "facilitate comparison of hospitals with similar patient mix and market conditions" and to "develop groups of sufficient size . . . to assure statistically valid comparisons." Based upon the procedure for forming groups contained in the Manual, hospitals are grouped into nine, non-teaching, short-term hospital groups, one Major teaching hospital group and a number of specialty hospital groups. It is the method of grouping hospitals into nine short-term hospital groups which is at issue in this proceeding. Assignment of hospitals to the nine short-term hospital groups is accomplished through the use of the "McQueen's K-means clustering algorithm included in the cluster analysis t computer program package CLAN developed by T.D. Klastorin and Robert Ledingham (June, 1980 version)." A clustering analysis is a method of grouping a set of objects (in this case, hospitals) into relatively homogeneous groups. The goal of a clustering algorithm is to minimize the differences between the members of the group. The objects are grouped based upon a set of variables which are considered significant for purposes of comparing the objects. In order to account for the significance of each variable, the variables are weighted. The variables have a numerical score and after weighing, the weighted sum of the variables for each object is compared and the objects are grouped based upon their variable scores. There are a number of clustering algorithms which can be used to group hospitals. The HCCB chose to use the "McQueen's K-means" clustering algorithm. The use of McQueens K-means clustering algorithm has not bean challenged in this proceeding. Nor does the evidence establish that the selection of McQueen's K-means clustering algorithm is arbitrary and capricious. The clustering algorithm is performed by computer. The computer program utilized by the HCCB to perform the algorithm is called "CLAN" and was developed by T.D. Klastorin and Robert Ledingham. The evidence at the hearing supports a finding that the selection of this computer program is reasonable. Once hospitals are grouped, they are notified of their group designation and allowed to request reconsideration of their group assignment. The request must made within thirty days after notification. Following the creation of the HCCB in 1979, Price Waterhouse & Company was engaged by the HCCB as a consultant to assist in still establishing an appropriate hospital grouping methodology. The HCCB also created an advisory committee to assist the HCCB and Price Waterhouse & Company in developing the grouping methodology. This committee, designated as the Technical Advisory Committee (hereinafter referred to as the "TAC") was comprised of individuals from the hospital industry and academia and certified public accountants. The TAC worked with Price Waterhouse & Company in developing the grouping methodology and the uniform reporting system. Because of time constraints, the TAC's involvement with evaluating the methodology was limited. The HCCB ultimately decided to pattern the grouping methodology it adopted after the grouping methodology then being used by the State of Washington, as recommended by Price Waterhouse & Company. The Washington system was not adopted exactly; a number of changes to Washington's methodology were made to the grouping methodology adopted by the HCCB. Mercy has proposed several findings of fact beginning on page 35 and ending on page 38 of its proposed order concerning the "Differences in Washington Hospital Characteristics and Grouping Methodology Model." Those proposed findings of fact can be and are hereby disposed of by the following finding of fact: because of differences in the hospital industries of the States of Florida and Washington and other differences between the two States, Florida's grouping methodology cannot be justified solely on the basis that Washington's grouping methodology was used as a starting point in developing Florida's grouping methodology. Those differences, however, do not support a finding of fact that Florida's grouping methodology is arbitrary and capricious since the Washington system was not adopted without substantial modifications, including a reduction of Washington's eighteen variables initially to fourteen and ultimately to seven, and the use of unequal weighting of the variables. The TAC reviewed and discussed the grouping methodology initially approved by the HCCB prior to its approval. Some of Mercy's witnesses, who were members of the TAC, indicated during their testimony that the TAC never decided anything because no "vote" was ever taken of TAC members and that the TAC did not advise the HCCB but instead advised the staff of the HCCB. Their testimony in this regard has been given little weight. The fact that no formal "vote" was taken of TAC members does not mean that the TAC did not take a position on matters it discussed. The consensus of the TAC could be, and was, gleaned from its discussions. The staff of the HCCB in fact reported decisions of the TAC to the HCCB verbally and by minutes of TAC meetings. Although the accuracy of staff's reports was sometimes questioned, no question was raised about whether TAC had taken positions. The fact that the HCCB staff reported TAC actions to the HCCB also disputes the testimony to the effect that TAC did not advise the HCCB but instead advised the staff of the HCCB. While it may be true that TAC did not deal directly with the HCCB, its analysis was reported, to the HCCB. The HCCB ultimately adopted rules effective June 30, 1980, which incorporated by reference to the Manual, the general outline of the grouping methodology adopted by the HCCB. The TAC ceased to exist following adoption of the HCCB's initial rules. Two new advisory committees were formed: a Technical Advisory Panel (hereinafter referred to as "TAP") on grouping and a TAP for financial analysis. The grouping TAP was made up of individuals from the hospital industry. The grouping TAP met in November and December of 1980 and reviewed the results of test runs of the grouping methodology initially adopted by the HCCB. The results of the initial run were described as "bizarre." This run used equal weighting of the variables. Equal weighting was abandoned and three to four more test runs were made and reviewed by the grouping TAP. After each run the variable weights were adjusted until the results appeared to be "reasonable." The HCCB also established a committee consisting of members of the HCCB designated as the Research and Development Committee (hereinafter referred to as the "R & D Committee"). The R & D Committee reviewed the results of test runs and also found the final groups reasonable. The HCCB met in January, 1981, and adopted the grouping methodology with the adjusted variable weights arrived at as a result of the test runs for use in establishing hospital groups for use in 1981. The grouping methodology was reviewed every year after its initial adoption in 1980. The methodology was reviewed by the HCCB, HCCB's staff, the TAP's and the R & D Committee each year. Throughout the period from 1980 to the present, criticisms of the grouping methodology have been made. Some of these criticisms were agreed with and others were rejected by the HCCB or its staff. Following review of the grouping methodology by the TAP's and the R & D Committee in 1981, the original fourteen variables were reduced to eight. In January, 1982, the weight of one of the variables was changed and one variable was replaced by another variable. In December, 1982, a variable was deleted; seven variables remained. In 1983, clustering analysis was limited in its application to the formation of short-term acute care general hospital groups. In 1984, following the significant amendment of Chapter 395, Florida Statutes (1983), the HCCB adopted the present challenged rules. The rules were effective November 5, 1984. The only change in the grouping methodology approved by the HCCB was the substitution of the Florida price level index variable for percent of population over age 65. The weight assigned to the Florida price level index was the same as the weight that had been assigned to the percent of population over age 65. The changes made to the grouping methodology in 1984 were first suggested by the staff of the HCCB to the grouping TAP in June of 1984. The grouping TAP met on July 11, 1984 and considered and discussed the proposed changes. A number of problem areas were discussed. Although no test run results were presented at this TAP meeting, they were provided to TAP members before the HCCB adopted the grouping methodology changes. Concerns about the geographic or exogenous variables expressed at the grouping TAP meeting suggested a belief that too much or too little emphasis was being placed on geographic considerations. Mercy has proposed a number of findings of fact beginning on page 33 and ending on page 35 of its proposed order concerning the significance of the changes made by the Legislature in 1984 to Part II of Chapter 395, Florida Statutes (1983). Those proposed findings of fact essentially deal with the fact that the powers of the HCCB after the 1984 amendments may have a more significant impact on hospitals and that, therefore, the grouping methodology is of greater interest to hospitals. Mercy's proposed findings of fact are not, however, relevant in determining whether the challenged rules are arbitrary and capricious. The fact that the effect of the grouping methodology on a hospital may now be different does not mean that the use of the grouping methodology, as modified after the 1984 legislative changes to the law, which was developed when the purpose of grouping was different, is not an appropriate methodology. The evidence does not support such a conclusion. Therefore, to the extent that Mercy's proposed findings of fact under Section II, A, of its proposed order have not already been made, they are rejected as unnecessary. Mercy and the HCCB have proposed findings of fact as to whether Mercy has ever questioned the HCCB's grouping methodology since it was first adopted prior to instituting this proceeding. Those proposed findings of fact are not deemed relevant in determining whether the grouping methodology is arbitrary and capricious. If the grouping methodology is in fact arbitrary and capricious, the fact that Mercy did not challenge the methodology when it was first adopted will not make it any less arbitrary and capricious today. Mercy's Challenge. A. Introduction. Mercy is a not-for-profit, general acute care hospital with 550 licensed beds located in Dade County, Florida. Mercy has raised a number of points in this proceeding and its proposed order in challenging the rules in question. All of those points, according to Mercy, prove that the rules are an invalid exercise of delegated legislative authority. In determining whether the facts support such a conclusion, the following standard must be kept in mind: [I]n a 120.54 hearing, the hearing officer must look to the legislative authority for the rule and determine whether or not the proposed rule is encompassed within the grant. The burden is upon one who attacks the proposed rule to show that the agency, if it adopts the rule, would exceed its authority; that the requirements of the rule are not appropriate to the ends specified in the legislative act; that the requirements contained in the rule are not reasonably related to the purpose of the enabling legislation or that the proposed rule or the requirements thereof are arbitrary or capricious. A capricious action is one which is taken without thought or reason or irrationally. An arbitrary decision is one not supported by facts or logic or despotic. Administrative discretion must be reasoned and based upon competent substantial evidence. Competent substantial evidence has been described as such evidence as a reasonable person would accept as adequate to support a conclusion. Agrico Chemical Company v. State, Department of Environmental Regulation, 365 So.2d 759, 763 (Fla. 1st DCA 1978), cert. denied, 376 So.2d 74 (1979). Additionally, the following must be kept in mind: The well recognized general rule is that agencies are to be accorded wide discretion in the exercise of their lawful rulemaking authority, clearly conferred or fairly implied and consistent with the agencies' general statutory duties. . . . An agency's construction of the statute it administers is entitled to great weight and is not to be overturned unless clearly erroneous. . . . Where, as here, the agency's interpretation of a statute has been promulgated in rulemaking proceedings, the validity of such rule must be upheld if it is reasonably related to the purposes of the legislation interpreted and it is not arbitrary and capricious. The burden is upon petitioner in a rule challenge to show by a preponderance of the evidence that the rule or its requirements are arbitrary and capricious. . . . Moreover, the agency's interpretation of a statute need not be the sole possible interpretation or even the most desirable one; it need only be within the range of possible interpretations. Department of Professional Regulation v. Durrani, 455 So. 2d 515, 517 (Fla. 1st DCA 1984). The witnesses who testified in this proceeding who were accepted as experts were qualified in a number of different areas. Those witnesses qualified as experts in statistical analysis or related areas and health care finance rendered opinions as to the appropriateness of the HCCB's grouping methodology. The method of grouping hospitals adopted by the HCCB is a statistical method. Therefore, the determination of whether the HCCB's methodology is arbitrary and capricious depends largely upon whether the methodology is statistically sound. Mercy and the HCCB therefore presented the testimony of witnesses qualified in the area of statistics: Rick Zimmerman, Ph.D., an expert in statistical analysis and social science statistics (for Mercy), and Duane Meeter, Ph.D., an expert in economics and applied statistical analysis and Frank Fox, Jr., Ph.D., an expert in applied statistics (for the HCCB). All three witnesses were knowledgeable and credible. Dr. Zimmerman testified that the HCCB's grouping methodology was "clearly inappropriate." Dr. Zimmerman's opinion was based upon a three step analysis in which he determined: (1) whether the variables selected by the HCCB are appropriate; (2) whether the weights assigned to the variables by the HCCB are appropriate; and, (3) the effect changing the variables and/or weights would have on hospital groups. The results of Dr. Zimmerman's analysis, which formed the basis for his opinion that the HCCB's grouping methodology is not appropriate, are discussed, infra. Mercy has proposed a number of findings of fact in its proposed order concerning the credibility of Dr. Meeter's and Dr. Fox's testimony. Some of those proposed findings of fact have been considered in determining the weight given to their testimony. Both Dr. Meeter and Dr. Fox were, however, knowledgeable and credible. In addition to the opinion of its statistical expert, Mercy presented the testimony of three witnesses who were accepted as experts in health care finance: Messrs. Lawrence R. Murray, Jerry A. Mashburn and Anthony Krayer. All three are certified public accountants. All testified that it was his opinion that the HCCB's grouping methodology was arbitrary. The bases for their opinions are discussed, infra. Selection of "Seed" Hospitals. In order to use a clustering algorithm, a starting point is needed; the first object (hospital) to be placed in each group must be selected. The first objects selected are called "seed" objects. Mercy has attached the HCCB's method of selecting the nine "seed" hospitals in initially performing the McQueen's K-means clustering algorithm. Mercy has proposed the following findings of fact with regard to this point: While none of the parties challenged the use of McQueen's and the CLAN program, no support was offered during the hearing for the method by which the HCCB had selected the nine seed hospitals as initial clustering points. The HCCB's own statistician criticized the HCCB's selection method. The Rankis-Zimmerman report indicates that the final groupings based upon the HCCB's seed hospitals were vastly different than groupings based upon the utilization of seed hospitals selected on a statistical basis. Both the HCCB's and Mercy's statisticians proposed statistically sound methods for selecting seed hospitals, which had not been employed by the HCCB in the Grouping Methodology. [Citations omitted] These proposed findings of fact are not relevant to this proceeding. The burden is on Mercy to show that the selection of "seed" hospitals was arbitrary and capricious; the HCCB is not required to show "support" for its method of selecting the seed hospitals. Additionally, whether there are other methods of selecting seed hospitals is not the test. The HCCB's interpretation of the statute need not be the sole interpretation or even the most desirable one; it only needs to be within the range of possible interpretations. Durrani, supra. Therefore, even if the Rankis-Zimmerman report does indicate that the final groupings of hospitals of the HCCB were vastly different than groupings based upon other methods of selecting seed hospitals, it does not automatically follow that the HCCB's method of selecting seed hospitals was not "within the range of possible interpretations. The weight of the evidence does not prove that the HCCB's method of selecting seed hospitals was arbitrary and capricious. Selection of the Variables. In delegating legislative authority to the HCCB to establish a grouping methodology, the Legislature provided that the following relevant characteristics are to be taken into account: A measure of the nature and range of services provided; Number of medical specialties represented on the hospital staff; Percentage of Medicare inpatient days; Average daily census; Geographic differences; and Case mix, "when available." In response to the Legislature's mandate, the HCCB has adopted seven variables or characteristics. The variables selected by the HCCB include five hospital- specific (endogenous) variables and two geographic (exogenous variables). The variables are as follows: Endogenous Variables: Average occupied beds. Available services. Physician mix. Number of residents. Percent Medicare days. Exogenous Variables: Florida price level index. Personal income. The following findings of fact are made with regard to each of the specific characteristics required to be taken into account by the Legislature and the variables adopted by the HCCB: 1. A measure of the nature and range of services provided. The HCCB has provided in the Manual that "available services" or a service index will be considered. The specific services considered are listed on Table B, Chapter V, of the Manual. Table B also weights or provides a score for each of the various services listed. Each hospital gets the specified score if it has a particular service available. The available services listed are based upon a survey of hospital administrators and chief financial officers in New York, New York, made in the 1970's. Problems with the list of available services have been pointed out to the HCCB and its staff. The primary problem is that the volume of services provided is not taken into account. The problems with the service index, however, relate to the fact that the service index is a proxy for case mix. To date, there is no alternative available which would be a better proxy for case mix. The Legislature contemplated this fact by providing that a measure of the services provided by a hospital will be considered and that case mix will be taken into account "when available." Therefore, while there are "problems" with the service index, consideration of available services is mandated by the Legislature and there are no acceptable alternatives available use for by the HCCB. 2. Number of medical specialties represented on the hospital staff. 52. The HCCB has provided that a physician specialties mix be considered in grouping hospitals. This physician specialties mix is based upon a list of twenty- six specialties for which a hospital gets a single credit for each specialty available regardless of the number of physician specialists available in each specialty or the volume of patients admitted by a physician. 52. Like the service index, the physician specialties mix is a proxy for ease mix and has problems associated with its use. Also like the service index, consideration of this factor is mandated and there are no acceptable alternatives available for use by the HCCB. 3. Percentage of Medicare inpatient days. 53. The HCCB has provided that "percentage Medicare days be considered in grouping hospitals. Consideration of this variable has not been shown to be arbitrary and capricious. 4. Average daily census. 53. The HCCB has provided that "average occupied beds" is to be considered in grouping hospitals. It does not appear that this variable's use was proper, as discussed, infra. 5. Geographic differences. The HCCB has provided that geographic differences be considered in grouping hospitals by providing for the inclusion of the Florida price level index, by county, and median income, by county, as variables to be considered. The only thing that the evidence established with regard to these variables was that they are not "very good" predictors, that "if" they are intended as a measure of input prices they are "poor substitutes," and that there may be "better" measures of the cost of doing business. The evidence does not, however, show that the use of these variables is arbitrary and capricious. Mercy has proposed a number of findings of fact concerning geographic influences in part II, H of its proposed order. The proposed findings of fact begin on page 29 and end on page 33. Most of these proposed findings of fact are not made in this Final Order because they are not deemed relevant or material and are unnecessary to the resolution of this proceeding. The proposed findings of fact contained in part II, H of Mercy's proposed order purportedly show that the HCCB has inadequately accounted for geographic influences. The evidence does establish that the financial characteristics of Florida hospitals and GRAA are affected by the geographic location of a hospital. This is especially true in Florida because of the impact on parts of the State from tourism, language barriers, the number of elderly residents, the available labor markets, and competition. It is also true that the combined weights of the two geographic variables the HCCB has selected for consideration in the grouping methodology--the Florida price level index and median income--is only one-seventh of the combined weights of all the HCCB's variables. It is also true that the grouping methodology results in hospitals from different areas of the State being grouped together, i.e., Mercy's hospital group includes twenty- three hospitals, four of which are located in Dade County and three of which are located in Escambia County. It does not necessarily follow, however, that the HCCB has been arbitrary and capricious in designating only two variables to take into account geographic differences between hospitals. The evidence also does not support a conclusion that it was not proper for the HCCB to limit the weight of the geographic variables to one-seventh of the total weight of the variables. Nor does the evidence demonstrate that the inclusion of hospitals from different areas of the State in the same group is not a proper result just because geographic influences are important. The fact that a large percentage of Dade County and south Florida hospitals do not qualify for automatic approval of their budgets under Section 395.509(2), Florida Statutes (1984 Suppl.), because they are in the upper 20th and the upper 50th to 79th percentiles does not necessarily prove that geographic influences have not been adequately accounted for either, as suggested be Mercy on page 30 of its proposed order. The evidence simply does not support such a conclusion. Nor does it necessarily follow that because Dade County hospitals are "efficient" in the minds of some of Mercy's witnesses and yet are unable to achieve automatic approval of their budgets that the grouping methodology does not adequately account for geographic influences, as suggested by Mercy on pages 30 and 31 of its proposed order. First, the Legislature has provided that factors other than geographic differences are to be considered, which the HCCB has provided for. It may therefore be that some Dade County hospitals do not achieve automatic approval of their budgets because of the other variables. The fact that not all Dade County hospitals fail to achieve automatic approval of their budgets supports such a conclusion. Also, even though a hospital's budget is not automatically approved it does not necessarily mean that it is considered inefficient. If that were the case, its budget would probably be subject automatically to amendment or disapproval. That is not the case. If a hospital's budget is not automatically approved its budget is subject to further review under Section 395.509(5), Florida Statutes (1984 Suppl.). It may still be determined that the hospital is "efficient" based upon this review. The Legislature, in enacting Part II of Chapter 395, Florida Statutes, did indicate that it intended to promote competition and efficiency among hospitals in order to contain hospital costs. Section 395.5025, Florida Statutes (1984 Suppl.). The grouping methodology and, in particular, the comparison of hospitals' GRAA under Section 395.509(2), Florida Statutes (1984 Suppl.), does not alone achieve that intent. Therefore the opinion of several of Mercy's witnesses that Dade County hospitals and in particular, Mercy, are efficient does not support a conclusion that the methodology is arbitrary and capricious or that geographic influences are not adequately considered. On pages 31 and 32 of its proposed order, Mercy suggests that Dade County hospitals only compete with other Dade County hospitals and therefore grouping hospitals from all sections of the State is illogical. In support of this suggestion, Mercy proposes findings of fact to the effect that the HCCB has recognized that consumers are interested in comparing hospital charges on a regional basis and has provided information about hospital cost on a county-by- county basis in the past. Mercy's proposed findings of fact are not accepted for essentially the same reasons that its proposed findings of fact with regard to the efficiency of hospitals were rejected. These proposed findings of fact do not support a finding that the HCCB's grouping methodology is arbitrary and capricious or that geographic differences have not been adequately taken into account. Mercy's has also proposed findings of fact with regard to geographic differences to the effect that after the Legislature specifically required that "geographic differences" be considered in an amendment to Chapter 395, Florida Statutes (1981), in 1982, the HCCB has not added any additional geographic factors to be considered. Although no additional geographic variables have been added, geographic variables have been reviewed and have been changed since 1982. More importantly, these proposed findings of fact do not prove that the existing variables are not adequate. 6. Case Mix. 66. Case mix is to be taken into account "when available." The evidence does not establish that case mix is available at this time. 7. Other variables. The HCCB is not limited to a consideration of the factors which the Legislature specifically provided are to be considered. Sections 395.507(2) and 395.509(4)(a), Florida Statutes (1984 Suppl.). The only other variable the HCCB has provided for consideration is "number of residents." No evidence of significance concerning this variable was presented at the hearing. There was testimony at the hearing that there are other variables which would be appropriate for consideration in grouping hospitals. The evidence does not, however, establish that failure to consider other variables means that the grouping methodology adopted by the HCCB is arbitrary and capricious. Dr. Zimmerman opined that he had determined that the variables selected by the HCCB were not appropriate. Dr. Zimmerman based his opinion upon the fact that he had conducted a "multiple regression analysis." According to Dr. Zimmerman, a "multiple regression analysis is a statistical procedure used to evaluate the relationship of a given set of independent, predictor variables (the HCCB's seven variables) to a single dependent variable (GRAA)." Based upon his application of multiple regression analysis, Dr. Zimmerman concluded that three of the variables used in the HCCB's grouping methodology are not statistically significant predictors of GRAA: available services, average occupied beds and median income. Two of these variables (available services and average occupied beds) are required by Sections 395.507(2) and 395.509(4)(a), Florida Statutes (1984 Suppl.), to be taken into account in the grouping methodology. These Sections also require that geographic factors, which median income is, be taken into account. This does not, however, mean that median income must be included as a variable by the HCCB. Dr. Meeter testified that the statistical significance of the HCCB's variables can be determined by the use of "log transformation." Based upon Dr. Meeter's use of log transformation, median income and available services are statistically significant variables; average occupied beds is not statistically significant. Although the HCCB was required to include "average daily census" as a factor in grouping hospitals, the HCCB was not required to use "average occupied beds." Based upon Dr. Zimmerman's and Dr. Meeter's testimony, the use of average occupied beds as a variable was not proper. Whether the use of available services and median income as variables was proper depends upon whether log transformation is a proper method of determining the statistical significance of variables. Although the evidence on this question was in conflict, it appears that the use of log transformation was proper. The inclusion of available services and median income is therefore not arbitrary and capricious. A second problem with the variables used by the HCCB suggested by Dr. Zimmerman involves the correlation between the seven predictor variables or "multicollinearity." The existence of multicollinearity can invalidate a clustering program. Dr. Zimmerman determined that the correlation between the physician mix, available services and average occupied beds variables and between the Florida price level index and median income variables is large enough that there is a "potential" problem. Dr. Zimmerman's determination that there is a "potential" problem was made through two techniques. He first used "paired correlation." Based upon paired correlation, Dr. Zimmerman used a "rule of thumb" that a paired correlation of 0.7 or higher should be looked at closer. Finding a paired correlation between physician mix, available services and average occupied beds of .74 and between the Florida price level index and median income of .71, Dr. Zimmerman then calculated "R squared" to determine if a potential problem did in fact exist. Dr. Zimmerman indicated that the calculation of R squared is the most highly recommended method of determining if multicollinearity is a problem but agreed there are other methods of making such a determination. Dr. Meeter indicated that Dr. Zimmerman's rule of thumb that based upon paired correlations of 0.7 or higher indicates the problem should be looked at more closely is too strict. Other than Dr. Zimmerman's "experience" (which according to Dr. Zimmerman, consisted of a class he took), Dr. Zimmerman did not cite any authority which supported his rule of thumb. The only other source Dr. Zimmerman referred to--the "SPSS" manual--only indicates that the .82-1.0 range indicates that extreme collinearity exists. Another problem raised by Dr. Meeter with Dr. Zimmerman's conclusions as to multicollinearity, involves the use of "variance inflation factors" (hereinafter referred to as VIF is another technique used by statisticians to determine if multicollinearity is a problem. Dr. Zimmerman did not look at VIF. VIF can be determined by transforming R squared: VIF 1/1- R2. A VIF in excess of 5 or 10 is an indication that multicollinearity exists. One source quoted by Dr. Meeter even indicates that a much higher VIF is necessary to conclude that multicollinerity exists. Transforming Dr. Zimmerman's R squared calculations indicates that VIF is in excess of 5 in only one instance. As discussed more fully, infra, Dr. Zimmerman used a number of alternative methods of grouping hospitals which he designated as "Schemes." Based upon Dr. Zimmerman's "Scheme 3," Dr. Zimmerman found an R squared value of .819. The VIF for an R squared value of .819 is in excess of 5. Scheme 3, however, is not an application of the HCCB's grouping methodology; it is a grouping methodology in which the variables are assigned different weights. As indicated by Dr. Meeter, the weights used in grouping can effect the correlation of the variables. Therefore, the fact that Scheme 3 indicates a possible multicollinearity problem does not prove that multicollinearity is in fact a problem with the HCCB's grouping methodology. Based upon the foregoing it is found that multicollinearity does not exist sufficiently to conclude that the variables used by the HCCB are arbitrary and capricious. Dr. Zimmerman only testified that there was a "potential" problem. Additionally, although multicollinearity may invalidate a clustering program, the evidence does not prove that the HCCB's clustering program is in fact invalid because of any existing "potential" problem. In light of the foregoing findings of fact, it is clear that the HCCB's variables are appropriate with the exception of average occupied beds. The fact that this one variable is not statistically significant, however, does not by itself support a finding that the grouping methodology is inappropriate. The Lack of Testing of the Grouping Methodology. A third point raised by Mercy is entitled "Lack of Testing" in its proposed order and includes several proposed findings of fact on pages 17 and 18 of Mercy's proposed order. Mercy has essentially proposed findings of fact that: (1) it had been recommended to the HCCB when it originally adopted its grouping methodology in 1980 that a statistician be hired to test the grouping methodology; (2) that the failure to do so had been criticized in the past; that it had been recommended that the HCCB obtain assistance of individuals knowledgeable in Florida hospital characteristics to evaluate the grouping process but had failed to do so; (4) that the HCCB had not, until just prior to the hearing of this case, hired a statistician; (5) that the HCCB has not used multiple regression analysis or within-cluster co- variance weighting; and, (6) that the State of Washington's State Hospital Commission has employed a statistician to test its methodology and has effectively been advised by individuals knowledgeable with Washington's hospital characteristics. These proposed findings of fact do not establish that the grouping methodology adopted by the HCCB is arbitrary and capricious even if they were all correct findings of fact. All that these proposed findings of fact show is that the HCCB may not have gone about the adoption of its grouping methodology in the most appropriate manner. Any such shortcomings, based upon 20/20 hindsight, in the manner in which the methodology was adopted do not prove that the grouping methodology itself is not appropriate. Additionally, the evidence does not support all of these proposed findings. In particular, as was discussed, supra, the HCCB did in fact look to individuals knowledgeable in Florida hospital characteristics to evaluate its grouping methodology. The Weight of the Variables. The most significant and troublesome challenge made by Mercy to the HCCB's grouping methodology involves the weights assigned to the variables considered in grouping hospitals. The weights assigned by the HCCB to the seven HCCB variables are: Variable Weight Endogenous: Average occupied beds. 1.0 Available services. 2.0 Physician mix. 0.5 Number of residents. 0.5 Percent Medicare days. 2.0 Exogenous: Florida price level index. 0.5 Personal income. 0.5 The determination of whether the weights selected by the HCCB are arbitrary and capricious depends largely upon the evidence presented at the hearing by those witnesses knowledgeable in the field of statistics. Three witnesses were qualified as experts in statistically related fields. All three were well qualified in their fields and were credible and persuasive. According to Dr. Zimmerman, "the weights used currently by the HCCB are clearly inappropriate." In Mercy exhibit 17, Dr. Zimmerman reaches the following conclusion with regard to the HCCB's variable weights: These weights clearly do not reflect the relationship of the various variables to GRAA and thus appear as arbitrary and inappropriate for use in clustering hospitals on the basis of cost-related variables. Dr. Zimmerman's opinion is based upon the use of "multiple regression analysis," which, according to Mercy exhibit 17, "assesses the relationship of each of the predictor variables to the dependent measure (GRAA)." The evidence, however, does not support a finding of fact that multiple regression analysis is the only statistically valid method of establishing weights to be used in clustering analysis. In fact, there are a number of statistically valid methods of establishing variable weights. One of those acceptable methods is the "subjective" method which was used by the HCCB. Doctors Meeter and Fox substantiated this finding of fact. The use of the subjective method involves the participation of individuals knowledgable in the Florida hospital industry in reviewing and commenting on the weights used. The evidence clearly supports a finding that individuals with such knowledge participated in the process of developing the HCCB's grouping methodology including the selection of variable weights. Even one of Mercy's witnesses provided testimony which supports this conclusion: Mr. Kenneth G. McGee testified that "[i] t was just a trial and error process of changing weights until we ended up with something that people considered more reasonable than what had been produced in the past." Mercy has questioned Dr. Meeter's testimony with regard to the use of the subjective method of weighting variables based upon a number of proposed findings of fact. First, Mercy has proposed findings of fact to the effect that Dr. Meeter indicated that the subjective method is "bad" if not carefully applied. What Dr. Meeter actually said was that any method should be applied carefully. Secondly, Mercy has proposed a finding of fact that in a book relied upon by Dr. Meeter in rendering his opinion about the subjective method--John Hardigan's 1975 book, Clustering Algorithms--the author describes the subjective method as an "unsatisfactory" one. What Dr. Meeter's testimony proves is that Hardigan's comment was a tongue- in-cheek comment that there are several appropriate methods of weighting variables all of which are unsatisfactory, including regression analysis (used by Dr. Zimmerman) and the subjective method (use by the HCCB). Dr. Meeter also relied upon other statistical literature in rendering his opinion as to the use of the subjective method in determining variable weights. Finally, Mercy has suggested that Dr. Meeter did not undertake any independent "statistical" analysis which would support his opinions. Based upon the nature of Dr. Meeter's testimony, it does not appear that such a statistical analysis is a prerequisite to concluding that the use of the subjective method is an acceptable method of determining variable weights. Mercy has proposed a finding that the subjective method of weighting is inappropriate based upon Dr. Zimmerman's testimony. Dr. Zimmerman was asked the following questions and gave the following responses concerning the subjective method: Q Now, in your understanding of how the Board arrived at its weights, is it your opinion that that is totally inappropriate methodology for clustering? Yes or no or maybe? A I am looking to counsel for counsel here. MR. PARKER: Do you understand the questions? THE WITNESS: I do understand the question. And let me give you my full answer as I best understand it. The weights -- and I think what I have commented on at great length -- the weights used by the Hospital Cost Containment Board are clearly on statistical grounds inappropriate. There's no question about that. BY MR. COLLETTE: Now, on these clustering grounds, you testified as to your familiarity with clustering grounds, on clustering grounds, are they totally inappropriate? A If the question is -- I wouldn't say that. Hearing that there is no objection, I will continue. I would rule out the use of a purely subjective weighting scheme as a final solution for cluster analysis. I think it might be one that would be considered at a very early step, but never used, as kind of a preliminary idea. However, I would clearly rule out the use of a purely subjective weighting scheme as something to be proud of and actually put into application. So, if that means yes to your question, I guess yes in that specific way. Dr. Zimmerman's responses are not totally clear with regard to whether the subjective method is, in his opinion, an acceptable method of determining variable weights. Nor would his response, if totally clear, overcome the weight of the evidence in support of a conclusion that the HCCB's method of determining variable weights is not arbitrary and capricious. Alternative Methods of Grouping Hospitals. Mercy has proposed a number of findings of fact under a section of its proposed order entitled "Alternative Variables and Weights Indicated by Statistical Analyses." Pages 22 to 29 of Mercy's proposed order. Some of the proposed findings included therein have been dealt with in other portions of this Final Order, including those findings of fact dealing with the use of multiple regression analysis and multicollinearity. In Dr. Zimmerman's report (Mercy exhibit 17) and during his testimony a number of alternative methods of grouping hospitals were tested and evaluated. Dr. Zimmerman concluded that a number of these alternative methods would be preferable to the methodology adopted by the HCCB. Dr. Zimmerman tested twelve different methods (referred to as "Schemes" by Dr. Zimmerman): the HCCB's, the State of Washington's and ten other methods which used some or all of the seven variables designated by the HCCB. Scheme 3 used all seven variables selected by the HCCB but with different weights. Dr. Zimmerman rejected this scheme because of multicollinearity. In Scheme 4, Dr. Zimmerman used only the four variables which he found to be statistically significant: physician specialties mix, number of residents, percent Medicare days and the Florida price level index. Dr. Zimmerman recognized that this Scheme was not acceptable because of the statutory mandate as to the types of factors which must be taken into account. In order to recognize the requirement of Sections 395.507(2) and 395.509(4)(a), Florida Statutes (1984 Suppl.), that certain variables be taken into account and to alleviate the purported multicollinearity problem, Dr. Zimmerman combined the variables he considered highly correlated into two "scales." "Scale 1" combined physician specialties mix, available services and average occupied beds and "Scale 2" combined the Florida price level index and median income. The weights assigned to these scale were based upon the weights Dr. Zimmerman felt were more appropriate as discussed, supra. Dr. Zimmerman then used multiple regression analysis and a variety of combinations of variables and Scales in Schemes 6-12. Of these Schemes, Dr. Zimmerman testified that Schemes 6 and 10 were preferable, if Scheme 4 could not be used. Scheme 6 involved the use of all of the variables: percent Medicare days, number of residents and Scales 1 and 2. Scheme 10 involved the use of all of the variables except median income: percent Medicare days, number of residents, the Florida price level index and Scale 1. Dr. Zimmerman compared the results of using the HCCB's grouping methodology to the results from using Schemes 3,4,6 and 10. The results showed that more Dade County hospitals had GRAA's, in comparison to the hospitals in the resulting groups under Schemes 3,4,6 and 10, which would result in automatic approval of their budgets than under the HCCB's methodology. Mercy's position within its group also improved as a result of using Schemes 3,4,6 and 10. These proposed findings of and Mercy's proposed findings of fact concerning alternatives considered by Dr. Meeter do not prove that the HCCB's grouping methodology is arbitrary and capricious. As found, supra, six of the seven variables selected by the HCCB are reasonable. The weights assigned to those variables have also been found to be reasonable and Mercy's suggested findings of fact with regard to multicollinearity have been rejected. Mercy has failed to prove that the HCCB's grouping methodology is arbitrary and capricious. Therefore, any alternative methods or Schemes and the results of using such methods cannot and do not overcome such findings. Conclusions. Based upon the foregoing, it is clear that the bases for the opinions that the HCCB's grouping methodology is inappropriate are not supported by a preponderance of the evidence. Dr. Zimmerman's opinion, which was based upon a number of conclusions, was only supported by the fact that one of the variables selected by the HCCB is not proper. The evidence, however, does not support a finding that this fact alone means that the grouping methodology adopted by the HCCB is inappropriate. The facts do not support a conclusion that the grouping methodology adopted by the HCCB is arbitrary and capricious.
