01-002526RP Boca Raton Community Hospital, Inc., And St. Mar vs. Agency For Health Care Administration Status: Closed DOAH Final Order on Thursday, November 15, 2001.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BETHESDA HEALTHCARE SYSTEM, INC., )

)

Petitioner, )

)

vs. ) Case No. 01 - 2665RP

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent, )

)

and )

)

TENET HEALTHSYSTEM HOSPITALS, INC., )

d/b/a DELRAY MEDICAL CENTER; FLORIDA )

HEALTH SCIENCES, INC., d/b/a TAMPA )

GENERAL HOSPITAL; INDIAN RIVER )

MEMORIAL HOSPITAL, INC., d/b/a )

INDIAN RIVER MEMORIAL HOSPITAL; )

MARTIN MEMORIAL MEDICAL CENTER; )

LAWNWOOD MEDICAL CENTE R, INC., d/b/a )

LAWNWOOD REGIONAL MEDICAL CENTER; )

and COLUMBIA/JFK MEDICAL CENTER )

LIMITED PARTNERSHIP, d/b/a JFK )

MEDICAL CENTER, )

)

Intervenors. )

_____ ________________________________)

FINAL ORDER

Pursuant to notice, the Division of Administrative

Hearings, by its designated Administrative Law Judge,

Eleanor M. Hunter, held a final hearing in the above - styled case

on September 10 through 14, 2001 , in Tallahassee, Florida.

APPEARANCES

For Petitioner: W. David Watkins, Esquire

Watkins & Caleen, P.A.

1725 Mahan Drive, Suite 201

Tallahassee, Florida 32317 - 5828

For Respondent: Diane Kiesling, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 39

Fort Knox Building Three, Suite 3431

Tallahassee, Flo rida 32308 - 5403

For Intervenor Tenet Healthsystem Hospital, Inc., d/b/a

Delray Medical Center:

C. Gary Williams, Esquire

Michael J. Glazer, Esquire

Ausley & McMullen

227 South Calhoun Street

Tallahassee, Florida 32301

For Intervenor Florida Health Sciences Center, Inc., d/b/a

Tampa General Hospital:

Elizabeth McArthur, Esquire

Katz, Kutter, Haigler, Alderman,

Bryant & Yon, P.A.

106 East College Avenue, Suite 1200

Tallahassee, Florida 32301

For Intervenor Indian River Memorial Hospita l, Inc., d/b/a

Indian River Memorial Hospital:

R. Terry Rigsby, Esquire

Law Offices of R. Terry Rigsby, P.A.

215 South Monroe Street, Suite 440

Tallahassee, Florida 3 2301

Kenneth F. Hoffman, Esquire

Oertel, Hoffman, Fernandez & Cole, P.A.

301 South Bronough Street, Fifth Floor

Tallahassee, Florida 32301

For Intervenor Martin Memorial Medical Center:

Paul H. Amundsen, Esquire

Julia E. Smith, Esquire

Amundsen, Moore & Torpy

502 East P ark Avenue

Tallahassee, Florida 32301

For Intervenor Lawnwood Medical Center, Inc., d/b/a

Lawnwood Regional Medical Center and Columbia JFK Medical Center

Limited Partnership, d/b/a JFK Medical Center:

Stephen A. Ecenia, Esquire

R. David Prescott, Esquire

Thomas W. Konrad, Esquire

Rutledge, Ecenia, Purnell & Hoffman, P.A.

215 South Monroe Street, Suite 420

Tallahassee, Florida 32302 - 0551

For Intervenor Florida Society of Thoracic and

Cardiovascular Surgeons, Inc.:

Christopher L. Nuland, Esquire

1000 Riverside Avenue, Suite 200

Jacksonville, Florida 32204

STATEMENT OF THE ISSUES

1. Whether proposed rule amendments to Rule 59C -

1.033(7)(c) and (7)(d), Florida Administrative Code, published

in the Notice of Change on June 15, 2001, constitute an invalid

exercise of delegated legislative authority.

2. Whether the proposed rule is invalid due to the absence

of a provision specifying when the amendments will apply to the

review of certificate of need applications to establish open

heart surgery programs.

PRELIMINARY STATEMENT

On June 29, 2001, B oca Raton Community Hospital, Inc.

("Boca Raton"), filed a Petition for Administrative

Determination of Invalidity of Proposed Rules pursuant to

Sections 120.54, 120.56, 120.569, 120.57, and 120.595, Florida

Statutes, challenging the validity of proposed a mendments to the

rule governing open heart surgery programs in Florida, Rule

59C - 1.033, Florida Administrative Code. The case was assigned

Division of Administrative Hearings (DOAH) Case No. 01 - 2526RP.

On July 3, 2001, Punta Gorda HMA, Inc. ("Punta Gord a HMA"),

filed a Petition for Administrative Determination of Invalidity

of Proposed Rule Amendments pursuant to Sections 120.56,

120.569, 120.57, and 120.595, Florida Statutes, also challenging

the validity of proposed rule amendments to Rule 59C - 1.033,

F lorida Administrative Code. The case was assigned DOAH Case

No. 01 - 2620RP. On July 5, 2001, Bethesda Healthcare System,

Inc. ("Bethesda"), filed a Petition for Administrative

Determination of Invalidity of Proposed Rule Amendments pursuant

to Sections 12 0.54, 120.56, 120.569, and 120.57, Florida

Statutes, challenging the validity of proposed Rule 59C -

1.033(7), Florida Administrative Code. The case was assigned

DOAH Case No. 01 - 2665RP. Having responsibility for the rule and

proposed amendments, the Agenc y for Health Care

Administration ("AHCA" or "Agency") was named Respondent in each

case.

On July 10, 2001, Tenet Healthsystem Hospitals, Inc., d/b/a

Delray Medical Center ("Delray") filed a Petition to Intervene.

On July 11, 2001, Indian River Memorial Hospital, Inc., d/b/a

Indian River Memorial Hospital ("IRMH") and Florida Health

Sciences Center, Inc., d/b/a Tampa General Hospital ("Tampa

General") filed petitions to intervene. On July 12, 2001,

Martin Memorial Medical Center, Inc. ("Martin Memorial") filed a

Petition to Intervene. By Orders dated July 20, 2001, the cases

were consolidated and interventions granted.

On August 3, 2001, Columbia/JFK Medical Center Limited

Partnership, d/b/a JFK Medical Center ("JFK"), and Lawnwood

Medical Center, Inc., d/b/a Lawnwood Regional Medical Center

("Lawnwood"), filed petitions to intervene. These were granted

by Order entered on August 27, 2001.

On behalf of the Florida Society Thoracic and

Cardiovascular Surgeons, Inc. ("FSTCS" or "the Society"), a

petition t o intervene was filed on August 17, 2001. It was

granted on September 5, 2001.

On August 20, 2001, HMA filed a Notice of Voluntary

Dismissal of its Petition, and an Order Closing File in DOAH

Case No. 01 - 2620RP was entered on August 27, 2001. On

Septembe r 7, 2001, Boca Raton filed a Notice of Voluntary

Dismissal of its Petition in DOAH Case No. 01 - 2526RP. Based on

the Notice of Voluntary Dismissal, filed on behalf of Boca Raton

Community Hospital, Inc., on September 7, 2001, the file in the

DOAH Case No. 01 - 2526 RP, is closed.

This case proceeded to final hearing on Bethesda's

challenge to the proposed rule amendments in DOAH Case No.

01 - 2665RP. The hearing was held from September 10 through 14,

2001, Tallahassee, Florida.

At the final hearing, Be thesda presented the testimony of

Peggy Miller Cella, an expert in health care planning;

John Davis; Elizabeth Dudek; and Jeffrey N. Gregg. Bethesda's

Exhibits numbered 1 - 30 were received into evidence.

AHCA presented the testimony of John Davis, the Agen cy's

Health Services and Facilities Consultant; Elizabeth Dudek, an

expert in health planning and AHCA Assistant Deputy Secretary;

and Jeffrey N. Gregg, an expert in health care planning and AHCA

Bureau Chief. AHCA's Exhibit numbered 1 was proffered, whil e

AHCA Exhibits numbered 2, 3, 10 - 19, 22, 24, 33, 35, and 38 were

received into evidence.

Delray presented the testimony of Sharon Gordon - Girvin, an

expert in health care planning. Delray's Exhibits numbered 1

and Composite 2 were received into evidence.

IRMH presented the testimony of James Talano, M.D., a

medical expert in cardiovascular disease and its treatment,

invasive and non - invasive, and in cardiac imaging for open heart

surgery; and Ronald Luke, J.D., Ph.D., an expert in health care

planning. I RMH's Exhibits numbered 1, Composite 2 (excluding

page 16) and 3 were received into evidence.

Martin Memorial presented the testimony of Jay Cushman, an

expert in health care planning. Martin Memorial's Exhibits

1 - 11, 13, and 14 were received into evidence, while Martin

Memorial's Exhibit 12 was proffered.

The FSTCS presented its exhibits numb ered 1 - 5 which were

received into evidence.

The transcript of the final hearing was filed on

September 28, 2001, followed by the parties' proposed final

orders on October 12, 2001.

FINDINGS OF FACT

1. The Agency is responsible for administering the Healt h

Facility and Services Development Act, Sections 408.031 - 408.045,

Florida Statutes. The goals of the Act are containment of

health care costs, improvement of access to health care, and

improvement in the quality of health care delivered in Florida.

2. AHCA initiated the rulemaking process by proposing

amendments to existing Rule 59C - 1.033, Florida Administrative

Code, the rule for determining the need for adult open heart

surgery (OHS) 1 services, which currently provides, in part, that:

(7) Adult Open Heart Surgery Program Need

Determination.

(a) a new adult open heart surgery program

shall not normally be approved in the

district if any of the following conditions

exist:

1. There is an approved adult open heart

surgery program in the district.

2. One or more of the operational adult

open heart surgery programs in the district

that were operational for at least 12 months

as of 3 months prior to the beginning date

of the quarter of the publication of the

fixed need pool performed less than 350

adul t open heart surgery operations during

the 12 months ending 3 months prior to the

beginning date of the quarter of the

publication of the fixed need pool; or

3. One or more of the adult open heart

surgery programs in the district that were

operational fo r less than 12 months during

the 12 months ending 3 months prior to the

beginning date of the quarter of the

publication of the fixed need pool performed

less than an average of 29 adult open heart

surgery operations per month.

(b) Provided that the prov isions of

paragraphs (7)(a) and (7)(c) do not apply,

the agency shall determine the net need for

one additional adult open heart surgery

program in the district based on the

following formula:

NN =((Uc x Px)/350)) -- OP>=0.5

Where:

1. NN = The need for one additional adult

open heart surgery program in the district

projected for the applicable planning

horizon. The additional adult open heart

surgery program may be approved when NN is

0.5 or greater.

2. Uc = Actual use rate, w hich is the

number of adult open heart surgery

operations performed in the district during

the 12 months ending 3 months prior to the

beginning date of the quarter of the

publication of the fixed need pool, divided

by the population age 15 years and over.

For applications submitted between January 1

and June 30, the population estimate used in

calculating Uc shall be for January of the

preceding year; for applications submitted

between July 1 and December 31, the

population estimate used in calculating Uc

shall be for July of the preceding year.

The population estimates shall be the most

recent population estimates of the Executive

Office of the Governor that are available to

the department 3 weeks prior to publication

of the fixed need pool.

3. Px = Pro jected population age 15 and

over in the district for the applicable

planning horizon. The population

projections shall be the most recent

population projections of the Executive

Office of the Governor that are available to

the department 3 weeks prior to publication

of the fixed need pool.

4. OP = the number of operational adult

open heart surgery programs in the district.

(c) Regardless of whether need for a new

adult open heart surgery program is shown in

paragraph (b) above, a new adult open heart

surgery program will not normally be

approved for a district if the approval

would reduce the 12 month total at an

existing adult open heart surgery program in

the district below 350 open heart surgery

operations. In determining whether this

condition app lies, the agency will calculate

(Uc x Px)/(OP). If the result is less

than 350 no additional open heart surgery

program shall normally be approved.

3. Based on the issues raised by the Petitioner, Bethesda,

and the factual evidence presented on th ese issues, AHCA must

demonstrate that its proposed amendments to the existing OHS

rule are valid exercises of delegated legislative authority or,

more specifically, that it (a) followed the statutory

requirements for rule - making, particularly for changing a

proposed rule; (b) considered the statutory issues necessary for

the development of uniform need methodologies; (c) acted

reasonably to eliminate potential problems in earlier drafts of

the proposed rule; (d) used appropriate proxy data to project

the d emand for the service proposed; (e) appropriately included

county considerations for a tertiary service with a two - hour

travel time standard; and (f) was not required to include a

provision advising when CON applications would be subject to the

new provisi ons.

Rule challenges and rule development process

4. The existing rule was challenged by IRMH on June 27,

2000, in DOAH Case No. 00 - 2692RX. Martin Memorial intervened in

that case, also to challenge the rule. Like IRMH, Martin

Memorial was an applicant for a certificate of need (CON), the

state license required to establish certain health care

services, including OHS programs, in Florida. Both are located

in AHCA health planning District 9, as is the Petitioner in this

case, Bethesda. AHCA entered into a settlement agreement with

IRMH and Martin Memorial on September 11, 2000, which was

presented when the final hearing commenced on September 12,

2000.

5. Prior to the rule challenge settlement agreement, staff

at AHCA had been discussing, over a period of time, possible

amendments to the OHS rule to expand access and enhance

competition. Issues raised by AHCA staff included the continued

appropriateness of OHS as a designated tertiary service and the

anti - competitive effect of the 350 minimum volume of OHS cases

required of existing providers prior to approval of a new

provider in the same district. The staff was considering

whether the rule was too restrictive and outdated given the

advancements in technology and the quality of OHS programs.

6. The relationship of volume to outcomes was considered

as various studies and CON applications were received and

reviewed, as was the increasing use of angioplasty also known as

percutaneous coronary angioplasty, referred to as PTCA or

simply, angioplasty, as t he preferred treatment for patients

having heart attacks. Angioplasty can only be performed in

hospitals with backup open heart services. During an

angioplasty procedure, a catheter or tube is inserted to open a

clogged artery using a balloon - like device , sometimes with a

stent left in the artery to keep it open. Discussions of these

issues took place at AHCA over a period of years, during the

administrations of the two previous Agency heads, Douglas Cook

and Reuben King - Shaw.

7. In August 2000, AHCA published notice of a rule

development workshop to consider possible changes to the OHS

rule. Because it could not get the parties to settle DOAH Case

No. 00 - 2692RX at the time, rather than proceed with the workshop

while defendin g the existing rule, AHCA cancelled the workshop.

8. As a result of the September 11, 2000, settlement

agreement, on October 6, 2000, AHCA published a proposed rule

amendment and notice of a workshop, scheduled for October 24,

2000. That version of a pr oposed rule would have changed

Subsection (7)(a) of the OHS Rule to allow approval of

"additional programs" rather than being limited to approval of

one new program at a time in a district.

9. The October proposal would have also eliminated OHS

from the list of tertiary health services in Rule 59C - 1.002(41).

Tertiary health services are defined, in general, in Subsection

408.032(17), Florida Statutes, as follows:

"Tertiary health service" means a health

service which, due to its high level of

intensity, complexity, specialized or

limited applicability, and cost, should be

limited to, and concentrated in, a limited

number of hospitals to ensure the quality,

availability, and cost - effectiveness of such

service. Examples of such services include,

but are no t limited to, organ

transplantation, specialty burn units,

neonatal intensive care units, comprehensive

rehabilitation, and medical or surgical

services which are experimental or

developmental in nature to the extent that

the provision of such services is not yet

contemplated within the commonly accepted

course of diagnosis or treatment for the

condition addressed by a given service. The

agency shall establish by rule a list of all

tertiary health services.

10. With this statutory authority, AHCA adopted Rule 59C -

1.002(41), Florida Administrative Code, to provide a more

specific and complete list of tertiary services:

The types of tertiary services to be

regulated under the Certificate of Need

Program in addition to those listed in

Florida Statutes includ e:

1. Heart transplantation;

2. Kidney transplantation;

3. Liver transplantation;

4. Bone marrow transplantation;

5. Lung transplantation;

6. Pancreas and islet cells

transplantation;

7. Heart/lung transplantation;

8. Adult open heart surgery;

9. Neonatal and pediatric cardiac and

vascular surgery; and

10. Pediatric oncology and hematology.

11. As an additional assurance that tertiary services are

subject to CON regulation, the tertiary category is specifically

listed in the projects su bject to review in Subsection 408.036,

Florida Statutes.

12. The October 2000 version included a proposal to

increase the divisor from 350 to 500 in the formula in

Subsection (7)(b), to represent the average size of existing OHS

programs, but to decrease from 350 to 250, the minimum number

required of an existing provider prior to approval of a new

program in Subsection (7)(a)2. The definition of OHS would have

been amended to add an additional diagnostic group, DRG 109, to

delete DRG 110 and to eliminat e the requirement for the use of

the heart - lung by - pass machine during the surgery. Most

controversial in the October version was a separate county -

specific need methodology for counties which have hospitals but

not OHS programs, in which residents are pr ojected to have 1,200

annual discharges with a principal diagnosis of ischemic heart

disease.

13. On October 24, 2000, AHCA held a workshop on the

proposed amendments. At the workshop, AHCA Consultant,

John Davis, outlined the proposed changes. As a pra ctical

matter, eight Florida counties are not eligible to provide OHS

because they have no hospitals. When Mr. Davis applied the

county - specific need methodology, as if it were in effect for

the planning horizon of January 2003, six Florida counties

demon strated a need for OHS: Hernando, Martin, Highlands,

Okaloosa, Indian River, and St. Johns. Two of these, Martin and

Indian River are in AHCA District 9. AHCA has already approved

an OHS program for Martin County, at Martin Memorial. Mr. Davis

also pre sented a simplified methodology for reaching the same

result.

14. In support of the proposed rule, AHCA received data,

although not adjusted by the severity of cases, showing better

outcomes in hospitals performing from 250 to 350 OHS, as

compared to la rger providers. Although the majority of heart

attack patients are treated with medications, called

thrombolytics, for some it is inappropriate and less effective

than prompt, meaning within the so - called "golden hour,"

interventional therapies. In these instances, angioplasty is

considered the most effective treatment in reducing the loss of

heart muscle and lowering mortality.

15. Opposing the proposed rule at the Oct ober workshop,

Christopher Nuland, on behalf of the FSTCS, testified that OHS

is still a highly complex procedure, that it requires scarce

resources, equipment and personnel, and should, therefore, be

available in only a limited number of facilities. In g eneral,

however, the opponents complained more about process rather than

the substance of the proposal. Having petitioned on October 13,

2000, for a draw - out proceeding instead of the workshop, those

Petitioners noted that AHCA had obligated itself to

pre determined rule amendments based on the settlement agreement,

regardless of information developed in the workshop. The draw -

out Petitioners were the Florida Hospital Association,

Association of Community Hospitals and Health Systems of

Florida, Inc., Delr ay, Lakeland Regional Medical Center, Punta

Gorda HMA, Charlotte Regional Medical Center, JFK, HCA Health

Services of Florida, Inc., d/b/a Regional Medical Center Bayonet

Point; Tampa General and the FSTCS.

16. While agreeing that OHS is complex and cos tly,

supporters of the proposed rule, particularly the

declassification of OHS as a tertiary service, noted that many

cardiologists are now trained to do invasive procedures. In

support of fewer restrictions on the expansion of OHS programs

in Florida, ot her witnesses at the October workshop discussed

delays and difficulties in arranging transfers to OHS providers,

possible complications from deregulated diagnostic cardiac

catheterizations at non - OHS provider hospitals, and hardships of

travel on patients and their families, especially older ones.

17. On December 22, 2000, AHCA published another proposal,

which retained most of the October provisions, continuing the

elimination of OHS from the list of tertiary services, the

addition of DRG 109, the dele tion of DRG 110, the elimination of

the requirement for the use of a heart - lung by - pass machine, and

the authorization for approval of more than one additional OHS

program at a time in the same district. The minimum number of

OHS performed by existing pro viders prior to approval of a new

one continued from the October 2000 version, to be decreased

from 350 to 250, and the divisor in the numerical need formula

continued to be increased from 350 to 500. As in the October

version, the requirement that existi ng providers be able to

maintain an annual volume of 350 OHS cases after approval of a

new program was stricken.

18. The separate need methodology for counties without an

OHS program was simplified, as proposed by Mr. Davis, and was as

follows:

(c) Reg ardless of whether need for

additional a new adult open heart surgery

program s is shown in paragraph (b) above,

need for one a new adult open heart surgery

program is demonstrated for a county that

meets the following criteria:

1. None of the hospitals i n the county has

an existing or approved open heart surgery

program;

2. Residents of the county are projected to

generate at least 1200 annual hospital

discharges with a principal diagnosis of

ischemic heart disease, as defined by ICD - 9 -

CM codes 410.0 th rough 414.9. The projected

number of county residents who will be

discharged with a principal diagnosis of

ischemic heart disease will be determined as

follows:

PIHD = (CIHD/CoCPOP X CoPPOP)

Where:

PIHD = the projected 12 - month total of

discharges with a principal diagnosis of

ischemic heart disease for residents of the

county age 15 and over;

CIHD = the most recent 12 - month total of

discharges with a principal diagnosis of

ischemic heart disease for residents of the

county age 15 and over, as available in the

agency's hospital discharge data base;

CoCPOP = the current estimated population

age 15 and over for the county, included as

a component of CPOP in subparagraph 7(b)2;

CoPPOP = the planning horizon estimated

population age 15 and over for the cou nty,

included as a component of PPOP in

subparagraph 7(b)2;

If the result is 1200 or more, need for one

adult open heart surgery program is

demonstrated for the county will not

normally be approved for a district if the

approval would reduce the 12 month total at

an existing adult open heart surgery program

in the district below 350 open heart surgery

operations. In determining whether this

condition applies, the agency will calculate

(Uc X Px)/(OP 1). If the result is less

than 350 no additional open heart surgery

program shall normally be approved .

(d) County - specific need identified under

paragraph (c) is a need occurring because of

the special circumstances in that county,

and exists independent of, and in addition

to, any district need identified under the

provisions of paragraph (b).

(e) A program approved pursuant to need

identified in paragraph (c) will be included

in the subsequent identification of approved

and operational programs in the district, as

specified in paragraph (a).

19. On January 17, 2001, a public hearing was held to

consider the December amendments. Opponents complained that the

proposals resulted from a private settlement agreement rather

than a public rule development workshop as required by law.

They noted th at declassification of OHS as a tertiary service is

contrary to the recommendations of AHCA's CON advisory study

group and the report of the Florida Commission on Excellence in

Health Care, co - chaired by AHCA Secretary Reuben King - Shaw,

created by the Flor ida Legislature as a part of the Patient

Protection Act of 2000. The risk of inadvertently allowing some

OHS procedures to become outpatient services was also raised,

because of the statute that specifically states that tertiary

services are CON - regulated .

20. The reduction from 350 to 250 in the annual volume

required at existing programs prior to approval of new ones was

criticized for potentially increasing costs due to shortages in

qualified staff, including surgical nurses, perfusionists,

recovery an d intensive care unit nurses, who are needed to staff

the programs.

21. The potential for approval of more than one program at

a time, under normal circumstances, was viewed as an effort to

respond to the needs of two geographically large districts out

of the total of eleven health planning districts in Florida.

That, in itself, one witness argued demonstrated that more than

one approval at a time should be, as it currently is, a not -

normal circumstance.

22. The combination of the district - wide and coun ty -

specific need methodologies was criticized as double counting.

The district formula which relied on the projected number of

OHS, overlapped with the county formula, which used projected

ischemic heart disease discharges, to the extent that the same

pat ient hospitalization could result in first, the diagnosis,

and then the OHS procedure. Approximately, eighteen percent of

diagnosed ischemic heart disease patients in Florida go on to

have OHS. The county - specific methodology was also

characterized as in appropriate health planning based on geo -

political boundaries rather than any realistic access barriers.

23. Although 500, the average size of existing programs

was the proposed divisor in the formula, and 250 was the

threshold number existing providers, the proposal included the

deletion of any provision assuring that existing programs

maintain some minimum annual volume, which is 350 in subsection

7(e) of the current rule. AHCA representatives testified that

the proposal to delete a minimum adverse impa ct was inadvertent.

The combined effect of a district - wide need methodology, an

independent but overlapping county need methodology, and the

absence of an adverse impact provision, created concern whether

approvals based on county need determinations coul d reduce

volumes at providers in adjacent counties to unsafe levels.

24. Some health planners predicted that, as a consequence

of adopting the December draft, like the October version, a

number of new OHS programs could be coming into service at one

time , seriously draining already scarce resources. One witness,

citing an article in the Journal of the American Medical

Association, testified that higher volume OHS providers, those

over 500 cases, do have better outcomes, and that the

relationship persists for angioplasties, including those

performed on patients having heart attacks.

25. Florida has 63 or 64 OHS programs. Of those, 25 to 30

percent have annual OHS volumes below 350 surgeries a year. The

demand for OHS is increasing slowly and leveling off. AHCA was

warned, at the January public hearing by, among others,

Eric Peterson, Professor of Cardiology, Duke University Medical

Center (by videotaped presentation); and Brian Hummel, M.D., a

Cardiothoracic Surgeon in Fort Myers, President of the Flo rida

Society of Thoracic and Cardiovascular Surgeons, that

simultaneously easing too many provisions of the OHS rule was a

risk to the quality of the programs and the safety of patients.

26. Among other specific comments made at the January

public heari ng related to the December proposal were the

following:

This change would authorize a county -

specific methodology to support approving a

program on the theory that that county needs

better access to open heart surgery program.

Yet there is no inquiry un der the proposed

provision into how accessible adjacent

programs are or, indeed, how low the volumes

of adjacent programs are. Most blatantly,

the county provision requires double

counting and double need projections. (AHCA

Ex. 7, p. 14, by Elizabeth McA rthur).

The proposed rule creates an exemption for

counties that are currently without open

heart surgery programs. One can only

surmise that the purpose of this exemption

is to improve access, and certainly

improving access is an appropriate goal and

it is possible that there are few situations

around the state where access to open heart

surgery is a concern, but the proposed rule

is completely inadequate and a thoroughly

inappropriate way to identify which

situations those are . . . (AHCA Ex. 7, p.

26, by Carol Gormley).

With the county exemption provision, the

Agency has stumbled on an entirely new

method for estimating need. In fact, the

only good thing about this provision is that

it demonstrates that the Agency actually can

look at some alternative ways to estimate

need, and the use of data about incidence of

ischemic heart disease might be one of

those. Certainly it should be explored if

there is ever a valid planning process that

addresses open heart surgery. However, the

proposed rules cobble t ogether the county -

based epidemiology with the district - wide

demand based formula, and I believe that

this method is not applicable for evaluating

access to care.

It is not applicable because the provision

only considers the population's rate of

ischemi c heart disease and does not even

attempt to assess the extent to which county

residents with ischemic disease are, in

fact, already receiving open heart surgery.

Therefore, a determination that county

residents generate at least 1,200 ischemic

heart dise ase discharges annually does

nothing to indicate whether or not they

experience any barriers to obtaining that

needed service.

* * *

Another problem with county exemption

permission [sic: provision] is that the

addition of this assessment, quote

"re gardless of the results of the district

need formula," end quote, constitute double

counting of a need in districts where

counties without programs are located.

(AHCA Ex. 7, p. 27 - 30, by C arol Gormley).

* * *

As further evidence of the benefits of

limiting open heart surgery to a few high

volume programs, the Society would like to

place into record the following articles.

The first one you've heard on several

occasions is the Dudley article, "Selective

referra l to high volume hospitals."

The second, from Farley and Osminkowski, is,

"Volume - outcome relationships and in -

hospital mortality: Effective changes in

volume over time," from Medicare in January

of 1992.

There's another article from Grumbach, et

al., " Regionalization of cardiac surgery in

the United States and Canada," again from

JAMA.

Another article from Hannon, et al.,

"Coronary artery bypass surgery: The

relationship between in - hospital mortality

rate and surgical volume after controlling

for clin ical risk factors," Medical Care.

Hughes, et al., "The effects of surgeon

volume and hospital volume on quality care

in hospitals," again from Medical Care;

finally, Riley and Nubriz, "Outcomes of

surgeries among Medicare aged: Surgical

volume and morta lity."

Each of these scholarly articles comes to

the same inevitable conclusion: outcomes

improve as the volume of cardiac surgeries

in any given program and hospital increases,

therefore increasing the number of hospitals

in which these services are pro vided

inevitably will lead to an increase in

morbidity. (AHCA Ex. 7, p. 83 - 84, by

Christopher Nuland).

* * *

27. On or before the January public hearing, AHCA also

received the following written comments:

Martin Memorial supports the exception

pro vision for Counties that do not have an

open heart surgery program and have a

substantial number of residents experiencing

cardiovascular disease. This provision

ensures an even dispersion of programs, and

that adequately sized communities are not

denied open heart surgery. (Martin Memorial

Ex. 6, Letter of 10/24/2000, from Richard M.

Harman, Chief Executive Officer, Martin

Memorial, to Elizabeth Dudek)

* * *

Adding new open heart surgery programs to

counties that currently lack programs will

increase geographic access to coronary

angioplasty services as well as open heart

surgery. Primary angioplasty is now the

treatment of choice for a significant

percentage of patients presenting in the

emergency department with acute myocardial

infarction (patients who would otherwise be

treated with thrombolytic drugs to dissolve

blood clots in occluded coronary arteries).

Thus, the provision of the proposed

regulations t hat addresses the need for open

heart surgery at a county level will also

increase access to life - saving invasive

cardiology services. The effect of the

proposed rule changes is to slightly broaden

the circumstances in which the Agency would

see presumed need for new programs.

Initially, the increase in the number of

programs presumed to be needed would be only

five. These potential new approvals would

be in counties which currently have no

programs. This is consistent with the

reasoning that supports r emoving open heart

surgery from the list of tertiary

procedures. All else equal, distributing

new programs to counties where they already

exist is reasonable in light of the goal of

improving geographic accessibility of

advanced cardiology services.

As with the other draft proposed rule

changes, there is no certainty that any

programs will be approved on the basis of

the county - specific need formula in (7)(c).

These proposed programs would still have to

meet the statutory and rule criteria. As

discusse d above, a number applications for

programs have been ultimately denied even

when presumed need was shown by the need

formula. We recommend adoption of this

additional formula for demonstrating need.

(IRMH Ex. 1, p. 25, Comments of Ronald Luke,

J.D., Ph. D., 10/24/2000)

28. In what could be interpreted as an admission that the

process resulting in the development of the earlier drafts was

flawed, Jeff Gregg, Chief of the AHCA CON Bureau, concluded the

January public hearing by saying,

. . . in terms of the analysis that the

Agency did about the proposed rule, I would

simply have to tell you that CON staff was

not involved in that analysis, and that's

CON staff including myself. So I cannot

elaborate on what went into it. But having

said that, I do want to assure you that CON

staff will be involved in further analysis

and we will do our best to consider all the

points that have been made and present them

as clearly and concisely as we can in

assisting the Agency to formulate its

response to this hearing. (AHCA Ex. 7,

p. 86).

29. The December draft was also challenged by a number of

P etitioners in DOAH Case No. 01 - 0372RP, filed on January 26,

2001, and ten other consolidated cases. In response to the

criticism that the adverse impact provision should not have been

deleted and because that omission was unintended, AHCA published

another proposed amendment to the OHS rule, on May 4, 2001,

reinstating a minimum adverse impact volume, this time set at

250 OHS operations, down from 350 in the existing rule.

30. On May 31, 2001, AHCA and the other parties to DOAH

Case No. 01 - 0372RP and the consolidated cases entered into

another settlement agreement, which provided:

that in an effort to avoid further

administrative proceedings, without

conceding the correc tness of any position

taken by any party, and in response to

materials received in to the record on or

before the public hearing, the Agency for

Health Care Administration agrees to publish

and support . . . The Notice of Change . . .

(Bethesda Ex. 34, p. 2 - 3).

In upholding that agreement, AHCA superseded or revised all

prior drafts and published a notice of change on June 15, 2001.

In this final version, AHCA limited normal approval of a new OHS

program to one at a time, used 500 as the numeric need fo rmula

divisor, increased the required prior - to - approval OHS minimum

volume at mature existing providers from 250 in the October

version to 300 (down from 350 in the existing rule) and for non -

mature programs from a monthly average of 21 in the October

draf t to 25 (down from 29 in the existing rule), retained the

classification of OHS as a tertiary service, and altered the

separate, independent county need methodology to make it a

county preference.

31. The June 15th version, containing Subsections 7(c) and

7(d), which are challenged in this case is as follows:

(7) Adult Open Heart Surgery Program Need

Determination.

(a) An additional open heart surgery

programs shall not normally be approved in

the district if any of the following

conditions exist:

1. There is an approved adult open heart

surgery program in the district;

2. One or more of the operational adult

open heart surgery programs in the district

that were operational for at least 12 months

as of 3 months prior to the beginning date

of the quar ter of the publication of the

fixed need pool performed less than 300

adult open heart surgery operations during

the 12 months ending 3 months prior to the

beginning date of the quarter of the

publication of the fixed need pool;

3. One or more of the ad ult open heart

surgery programs in the district that were

operational for less than 12 months during

the 12 months ending 3 months prior to the

beginning date of the quarter of the

publication of the fixed need pool performed

less than an average of 25 adu lt open heart

surgery operations per month.

* * *

(b) Provided that the provisions of

paragraphs (7)(a) do not apply, the agency

shall determine the net need for an

additional adult open heart surgery programs

in the district based on the following

formula:

NN=[(POH/500) - OP] > 0.5

where:

1. NN = the need for an additional adult

open heart surgery programs in the district

projected for the applicable planning

horizon. The additional adult open heart

surgery program may be approved when NN is

0.5 or greater.

2. POH = the projected number of adult open

heart surgery operations that will be

performed in the district in the 12 - month

period beginning with the planning horizon.

To determine POH, the agency will calculat e

COH/CPOP x PPOP, where:

a. COH = the current number of adult open

heart surgery operations, defined as the

number of adult open heart surgery

operations performed in the district during

the 12 months ending 3 months prior to the

beginning date of the q uarter of the

publication of the fixed need pool.

b. CPOP = the current district population

age 15 years and over.

c. PPOP = the projected district population

age 15 years and over. For applications

submitted between January 1 and June 30, the

populat ion estimate used for CPOP shall be

for January of the preceding year; for

applications submitted between July 1 and

December 31, the population estimate used

for CPOP shall be for July of the preceding

year. The population estimates used for COP

and PPOP shall be the most recent population

estimates of the Executive Office of the

Governor that are available to the agency 3

weeks prior to publication of the fixed need

pool.

3. OP = the number of operational adult

open heart surgery programs in the dist rict.

(c) In the event there is a demonstrated

numeric need for an additional adult open

heart surgery program pursuant to paragraph

(7)(b), preference shall be given to any

applicant from a county that meets the

following criteria:

1. None of the hosp itals in the county has

an existing or approved open heart surgery

program; and

2. Residents of the county are projected to

generate at least 1200 annual hospital

discharges with a principal diagnosis of

ischemic heart disease, as defined by ICD - 9 -

CM codes 410.0

(d) In the event no numeric need for an

additional adult open heart su rgery program

is shown in paragraphs (7)(a) or (7)(b)

above, the need for enhanced access to

health care for the residents of a service

district is demonstrated for an applicant in

a county that meets the criteria of

paragraph (7)(c)1. and 2. above.

(e) An additional adult open heart surgery

program will not normally be approved for

the district if the approval would reduce

the 12 month total at an existing adult open

heart surgery program in the district below

300 open heart surgery operations.

32. Bet hesda objects to Subsections 7(c) and 7(d) as

invalid. It challenges the rule promulgation process as a sham,

having resulted from settlement negotiations rather than from

statutorily mandated considerations and processes. That charge

was, in effect, con ceded by AHCA, as related to the October

draft. That version carried over into the December draft,

essentially unchanged, but did gain support at the October

workshop.

33. The October and December versions are not at issue in

this proceeding. The prop osed rule amendments at issue in this

proceeding must have been supported by information provided to

AHCA before or during the January public hearing.

34. The proposal at issue differs substantially from the

terms of the September settlement agreement, but is precisely

what was attached to the May 31, 2001, settlement agreement.

For example, the settlement agreement of September 11, 2000,

included a proposal to reduce the prior minimum volume of cases

at existing OHS providers from 350 to 250, but in Ma y and June,

that number was set at 300. AHCA, in the September settlement

agreement, was to eliminate any limitation on the number of

additional programs approved at a time, but the May and June

version retains the one - at - a - time provision of the existing

rule. AHCA agreed to determine county numeric need independent

of and in addition to district numeric need, in September, but

that provision is, in the May 31st and June 15th version, a

preference. In September 2000, AHCA agreed to delete adult OHS

from the list of tertiary services in Rule 59C - 1.002(41), but it

is a tertiary service in the May and June version.

35. Bethesda is correct that the records of the October

workshop and January public hearing contained criticisms of the

county need methodology but no specific proposal to modify it

into a preference. The first draft of that concept is the

May 31, 2001, settlement agreement. ( See Findings of Fact 26

and 27).

Statutory rule - making issues

36. Subsection 408.034(3), Florida Statutes, provides

tha t:

The Agency shall establish, by rule uniform,

need methodologies for health care services

and health facilities. In developing

uniform need methodologies, the agency

shall, at a minimum, consider the

demographic characteristics of the

population, the he alth status of the

population, service use patterns, standards

and trends, geographic accessibility, and

market economics.

37. As required by statute, AHCA considered the

demographics and health status of the population and examined,

as a part of the rul e adopting process, age - specific

calculations of ischemic heart disease. AHCA relied on

statistical evidence of the relationship of ischemic heart

disease and OHS. In 1999, for example, there were 33,027 OHS in

Florida, and 25,257 of those patients had a primary diagnosis of

ischemic heart disease.

38. Consideration of service use patterns, and standards

and trends related to OHS led AHCA to increase the divisor in

the numeric need formula to maintain the average size of 500

surgeries for existing provid ers.

39. The availability of more reliable data than that

collected when the existing rule was promulgated allowed AHCA to

propose reliance on residential use rates. The trend towards

the use of angioplasty, as a preferred treatment for heart

attack pa tients, and the need for timely geographical access to

care are major factors for AHCA's proposal to consider a county

services within the normal need analysis or as a not normal

indication of a need for enhanced access when a county has a

critical mass of heart disease patients. Geographical

accessibility is also addressed in the travel time standard in

the existing rule, which the proposal would not change.

40. AHCA received testimony on the issue of market

economics and health status, related to care for indigent and

minority patients in not - for - profit, county - funded hospitals,

and related to reimbursement formulas. The record demonstrates

that AHCA was provided with evidence on the effect of scare

resources on the costs of operating OHS programs.

Co unty - specific need methodology in earlier drafts as

compared to the county preference in 7(c) and the need for

enhanced access in 7(d)

41. Bethesda alleges that the county preference in the

June version is essentially another need methodology, like the

county - specific need methodology in the earlier versions of the

proposed rule. Bethesda also contends that a preference for a

hospital because it is in a county which does not have an open

heart program over a reasonably accessible facility in an

adjoinin g county in the same district is irrational health

planning which could lead to a maldistribution of programs.

42. The county - specific need methodology was first

included in the September settlement agreement, and the

preference in 7(c) and need for acces s in 7(d), originated after

the January 17, 2001, public hearing. During the public

hearing, counsel for the Florida Hospital Association complained

that the county - specific need methodology precluded any inquiry

into accessibility and volumes at adjoinin g programs. Another

representative of the Florida Hospital Association surmised that

the goal of the county exemption was improved access but

explained that it was an inappropriate means to identify access

concerns. For example, while Hernando County wou ld qualify for

need with the separate methodology, most of its residents,

97 percent receive OHS services at a hospital in another

district which is only 13 miles from the population center.

( See Finding of Fact 26).

43. The preference under normal circumstances in

Subsection 7(c) and finding of need for enhanced access in

Subsection 7(d), must be supported by evidence that county

boundaries, in general, do create valid access issues. On or

before the January worksho p, information provided to AHCA

indicated that some special inquiry into access issues related

to CON applications for programs in counties without OHS

programs is warranted. See Finding of Fact 27).

44. AHCA found correctly that counties matter for se veral

reasons. First is the fact that emergency services are funded

and organized by counties, in general, and operated by municipal

and county agencies. Approximately 60 percent of heart attack

patient discharges in Florida are admitted through emergenc y

rooms. Emergency heart attack patients who live in counties

with OHS programs are twice as likely to be taken to a hospital

with OHS as those who live in counties without an OHS provider.

Second, whether a patient is taken to an OHS provider affects

th e care received. The probability of having an angioplasty

performed is almost 50 percent greater for residents of counties

with OHS programs as compared to those in counties without an

OHS program. Third, some health care reimbursement plans and

health care districts are operated within counties, limiting

financial access to out - of - county hospitals.

45. AHCA has always considered whether or not a county has

an OHS program as a part of access issues. The issue of greater

access to OHS was the basis for AHCA's initial consideration of

the possibility of easing the OHS rule. With the May and June

draft, it has codified and specified when that policy will

apply. AHCA's deputy secretary noted that geographic access in

the absence of numeric need was the b asis for approvals of OHS

CONs for Marion County, and for hospitals located in Naples and

Brandon. In each instance, the applicants argued a need for

enhanced access.

46. AHCA has experience in applying preferences as a part

of balancing and weighing cri teria from statutes, rules and

local health plans, particularly to distinguish among multiple

applicants. In the totality of the review process, other

factors which Bethesda's expert testified should be considered,

including financial, racial and other po tential access barriers,

are not precluded.

47. Preferences related to specific locations within

health planning areas are included in CON rules governing the

need for nursing home beds and hospices. Bethesda noted that

these are not tertiary services, suggesting that a county

location preference is inappropriate for tertiary services, but

similar preferences for OHS exist in some of the local health

plans. In AHCA District 1, the CON allocation factors for OHS

and cardiac catheterization services incl ude a preference for

applicants proposing to locate in a county which does not have

an existing OHS program. In District 4, the preference favors

an applicant located in a concentrated population area in which

existing programs have the highest area use r ates. District 5

is similar to District 4, supporting OHS projects in areas of

concentrated population with the highest use rates. The

District 8, like District 1, preference goes to the applicant

located in a county without an OHS program. There is no

evidence that the existing preferences have been difficult to

apply within the context of other CON criteria for the review of

OHS applications. In effect, the proposed amendments establish

an uniform state - wide county preference which is more concrete

in terms of the requirements for a potential patient base.

48. Bethesda has questioned the rationale for standards

which are, in effect, different in Subsection 7(c) as compared

to Subsection 7(d). The lower requirement, according to

Bethesda, 1200 ischemi c heart diagnoses, in 7(d), applies when

there is no numeric need. But, the 500 divisor and 300 minimum

at existing providers, when combined with 1200 ischemic heart

diagnoses is a heavier burden to meet in 7(c), although under

normal circumstances. Beth esda did not adequately explain

reasons for this objection to the proposed rule. In addition,

it is not inconsistent logically for AHCA to require applicants

to demonstrate lower numeric need in situations in which AHCA

has determined that these will be, in general, a greater need

for enhanced access.

49. Bethesda also raised a concern for the eventual

maldistribution of programs as a result of the county

preference. In 1999, Palm Beach county residents received 2700

OHS, or an average of 900 cases for e ach of the three programs.

The total for District 9 was 3800 cases in 1999. When 500 St.

Lucie County resident cases, in which Lawnwood is an OHS

provider, are combined with 2700 Palm Beach resident cases, that

leaves only 650 resident cases from Okeecho bee, Indian River and

Martin Counties. If programs are approved in all three, then

the total will be inadequate for each to reach 300 cases, while,

presumably, the demand in Palm Beach could be increasing

disproportionately and not be met adequately. Dis proportionate

need, the appropriate dispersion of programs, and the benefits

of enhanced competition are among the factors which AHCA can

consider along with county need when choosing among competing

applicants.

1200 ischemic heart disease discharges

50. The proposed amendments require a projection that

residents will reach a threshold of 1200 cases of ischemic heart

disease discharges as a condition for the entitlement to the

numeric need preference or to demonstrate a not normal need for

enhanced access . In general, ischemic heart disease, which is

also known as coronary heart disease, is characterized by

blocked arteries which, in turn, limit blood to heart muscles

causing first the onset of angina from acute coronary syndrome,

progressing on to acute myocardial infarction, or a heart

attack.

51. The use of heart disease as a proxy for OHS

utilization is consistent with AHCA's use of live births in

pediatric open heart surgery and pediatric cardiac

catheterization rules, deaths in the hospice rule, a nd related

diagnoses in organ transplantation rules rather than actual

utilization. It was supported by information received during or

before the January workshop ( See Finding of Fact 26 and 27).

52. Bethesda's criticism of the use of a proxy per se is

also not well - founded because any single statistical approach

could be misleading. For example, historic use rates can

understate future use with a growing service or an artificially

imposed access limit. Using heart disease data in a preference

or a need for enhanced access as opposed to a need formula or

conclusive finding allows more flexibility in determining need

in conjunction with other significant factors.

53. One of Bethesda's expert hea lth planners was also

critical of the use of 1200 ischemic heart disease diagnoses as

inadequate for projecting OHS cases, and for not equating to

approximately 300 annual OHS cases, the minimum required of

existing providers in Subsection 7(a) and the min imum adverse

impact allowed in Subsection 7(e).

54. Based on actual historical Florida data, 1200 ischemic

heart disease diagnoses on average resulted in 207 OHS in 1997,

203 in 1998, and 203 in 1999. Ischemic heart disease has

approximately an 18 to 20 percent conversion rate to OHS, and

results in a total of 76 to 80 percent of all OHS cases. OHS

cases from other diagnoses added statistically another 54 OHS in

1997, 59 in 1998, and 61 in 1999, to those from ischemic heart

disease, giving, in each year a total less than 300.

55. Bethesda presented evidence of wide variations in the

ischemic heart disease to OHS conversion ratios from county - to -

county. For example, only 14 percent of Bradford County

ischemic heart diseases converted to OHS, and only 1 1 percent of

the 700 cases in Columbia County converted to OHS. In Columbia

County, the average state conversion rate of 20 percent yields

140 cases but, in reality, there were only 78 OHS cases from

Columbia County in 1999. Bethesda's expert concluded t hat

conversion ratio discrepancies resulting in the approval of a

program that cannot achieve 300 OHS, as required in Subsection

7(a)2. and 7 (e), of the proposed rule, could bar the approval

of new programs when needed in the district and would not be of

minimum required quality.

56. Bethesda also proved that the accuracy of projected

OHS cases can also be affected by patterns of patient migration

for health care, particularly if in - and out - migration do not

offset each other. In counties with OHS progra ms, the average

out - migration for acute care is 10.7 percent, varying widely

from 3.8 percent in Alachua County to 70 percent in Seminole

County. In counties without an OHS provider, average out -

migration for acute care is 44 percent, but ranges from 17.6

percent in Indian River County to 98 percent in Baker County.

An average of 18 percent of the residents of Florida counties

with OHS programs have their surgeries performed elsewhere.

57. Like out - migration, in - migration for acute care, for

ischemic hea rt disease care, and for OHS varies from county to

county in Florida. Counties without OHS programs have acute

care in - migration from lows of 5.3 percent for Flagler County up

to highs of 40 percent for Columbia County. In counties with

OHS, in - migration for acute care is as low as 8 percent for

Brevard and Polk, and as high as 60 percent for Alachua County.

Similarly, in - migration, as determined by ischemic heart disease

discharges averages 19.4 percent in counties without OHS

programs and approximately 25 percent in those with OHS.

In - migration for OHS, averages 35.7 percent for the state, but

that is derived from a range from 9.2 percent in Pinellas County

to 74 percent in Alachua and Leon Counties.

58. Bethesda demonstrated, patterns of migratio n for

health care vary throughout Florida, but there are trends due to

the presence of OHS programs. Average net in - migration to

counties with OHS is 29 percent, and is positive in sixteen of

the twenty - four counties with OHS programs.

59. All of these d ifferences can be considered within the

regulatory scheme proposed by AHCA. The issue of whether 1200

residential ischemic heart disease diagnoses is, in fact, the

critical mass of prospective OHS patients needed or is deceptive

due to migration patterns, due to access to alternative

providers or any other review criteria listed in rule or

statutes can be considered on a case - by - case basis with the

proposed amendments.

60. Bethesda's specific concern is that Indian River with

well over 1200 ischemic hear t disease discharges could be

approved even though that represented only 255 OHS cases, and

that if Indian River is approved under the county preference

provision, then Bethesda would not be approved under normal

circumstances until Indian River achieved a nd was projected to

maintain 300 OHS cases a year. That Bethesda may be delayed in

meeting the requirements for normal need is likely, but that

appears to be a function of its location as compared to existing

providers as much as it is the result of the c ounty preference.

Bethesda is not precluded, however, under either the existing or

proposed rules from demonstrating not normal circumstances in

District 9 for the issuance of an OHS CON to Bethesda.

61. Bethesda's assumption that 300 is the minimum volu me

required for adequate quality is not supported by studies from

various professional societies. The American College of

Cardiology, the American Heart Association, and the Society of

Thoracic Surgeons set minimums of 200 to 250 annual hospital

cases as the volumes necessary to maintain the skills of the

staff. The American College of Surgeons, in 1996, published

their opinion that 100 to 125 cases per hospital is sufficient

for quality, while at least 200 cases a year are needed for the

economic efficie ncy of a program.

62. AHCA has never used the required and protected volumes

as the volume which must also be projected for a new programs.

In the current OHS rule, the volume required is 350 a year for

existing programs but that has not been required of applicants.

In the recent approval of an OHS CON for Brandon Regional

Hospital, the applicant projected reaching 287 cases in the

third year of operation.

County preference, tertiary classification

and travel time

63. Bethesda argued that the tertiary classification,

suggesting a regional approach, is inconsistent with having a

county access provision. Bethesda correctly noted that the

county provision first appeared in a draft which included the

elimination of OH S from the list of tertiary services. But AHCA

proposes to establish the county preference and to maintain OHS

on the list of tertiary services under Rule 59C - 1.002(41), and

to maintain the two - hour drive time standard in Rule 59C -

1.033(4)(a).

64. Substa ntial information, mostly from medical doctors

and studies linking morbidity to low volume, supports the view

that OHS continues to be a complex service. Obviously, those

services in the tertiary classification range in complexity and

availability from OH S at the lower level to organ

transplantation at the upper level.

65. The tertiary classification is justified to assure

AHCA's continued closer scrutiny of OHS CON applications. It is

also consistent with the increase in the need formula divisor to

500, which together serve as restrains on the approval of

additional programs.

66. AHCA reasonably concluded, based on case law and

precedents with local health plan that it is not inconsistent to

apply county preferences to OHS while it is classified a

ter tiary service.

67. The two - hour travel time standard, is as follows:

Adult open heart surgery shall be available

within a maximum automobile travel time of 2

hours under average travel conditions for at

least 90 percent of the district's

population.

68. The counties most likely qualify for the preference,

based on meeting or exceeding 1200 residential ischemic heart

disease diagnoses, are Citrus, Martin, Hernando, St. Johns,

Highlands, Indian River, and Okaloosa. The population centers

in each of these counties are well within two hours of an

existing provider. Citrus County, in which there is an approved

but not yet operational OHS program, is about an hour's drive

from Marion County. Hernando is approximately 25 minutes from

the Pasco County provider . The population center of St. Johns

County is approximately 40 minutes away from Duval County OHS

providers. Okaloosa County is approximately a one - hour drive

away from Escambia County OHS providers.

69. In District 9, Indian River is approximately a 3 0 -

minute drive from the Lawnwood OHS program. Martin Memorial, is

an approved provider, is approximately 20 miles or 35 minutes

from Lawnwood and 30 miles or 40 minutes from Palm Beach

Gardens, another existing OHS provider.

70. In the next three to five years, it is foreseeable

that Okeechobee County in northwestern District 9 could qualify

for the county preference. Adjacent to Okeechobee, Highlands

County's population can drive either an hour and thirty minutes

to a Charlotte County OHS program o r an hour and twenty minutes

to a Polk County facility.

71. The evidence related to travel times, according to one

of Bethesda's experts, demonstrates that the county preference

is not needed to assure access which is already provided for

each and every l ikely qualifying county. But the population

centers in the entire state of Florida are all within the two -

hour travel standard, and there has been no suggestion that

Florida cease approval of new OHS programs.

72. Bethesda's contention that no need exis ts for enhanced

access if the travel time standard is met, and its claim that

the rule is internally inconsistent with a county preference and

two - hour drive time are rejected. Two hours is, as the rule

clearly states, a "maximum" not a bar, and has never been

interpreted by AHCA as a bar, to more proximate locations. Any

other interpretation is an impossibility considering the

numerous counties across the state with multiple programs,

including Dade, Broward, Palm Beach, Hillsborough, Pinellas,

Orange, V olusia, Duval, and Escambia, among others.

73. AHCA can appropriately and consistently establish

reasonable guidelines for choosing among applicants to enhance

access within the maximum travel standard.

74. There is no language in the proposed rule ind icating

when it will take effect. Although the issue was raised in

Bethesda's petition, it failed to provide evidence or legal

arguments at hearing or subsequently to support its objection to

the omission.

75. AHCA's deputy secretary testified that the a gency

reviews applications using need methodology rules in effect when

the applications are filed. Before new rules are applied,

applicants are given the opportunity to reapply to address new

provisions in a rule.

CONCLUSIONS OF LAW

76. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of these

proceedings. Sections 120.56, 120.569, and 120.57(1), Florida

Statutes.

77. As the parties stipulated, the hospitals which

participated in t he proceeding as Petitioners or Intervenors are

substantially affected by the proposed amendments, having

applied for CONs to establish OHS programs or having existing

OHS programs.

78. The FSTCS demonstrated its standing to intervene with

documents supp orting the contentions in its petition that (1) a

substantial number of its members are the surgeons ultimately

responsible for the care of OHS patients in facilities regulated

by the state; and (2) that a profileration of programs and lower

volumes can ad versely affect the quality of care.

79. At this point in the proceedings, the issue is limited

to whether AHCA has acted in excess of its delegated legislative

authority to change its proposed rule without reinitiating the

rulemaking process. Changes i n a proposed rule which are

material changes made as a result of off - the - record private

negotiations, not supported by the record are invalid. That

approach to rulemaking defeats the purposes for requiring notice

and an opportunity for public comment befo re a rule is adopted.

Department of Health and Rehabilitative Services v. Florida

Medical Center , 578 So. 2d 351 (Fla. 1st DCA 1991).

80. Bethesda has met the initial burden of going forward

to present evidence in support of its objections to the propose d

rule amendments to Rule 59C - 1.033 7(c) and 7(d), Florida

Administrative Code, with the exception of any reasons why

Subsections 7(c) and 7(d) must have the same numerical effect.

81. Bethesda has not met the burden of going forward with

facts or legal a rguments to support its objection to the absence

of a provision in the rule specifying when it be applied to CON

applications. As a matter of law, this state follows the

general rule that a change in statutes and agency rules during

the pendency of an app lication is operative to that application.

Lavernia. V. Department of Professional Regulation , 616 So. 2d

53 (Fla. 1st DCA 1993), rev . denied , 624 So. 2d 267 (Fla. 1993).

Agency for Health Care Administration v. Mount Sinai Medical

Center , 690 So. 2d 689 (Fla. 1st DCA 1997).

82. Section 120.52(8), Florida Statutes, provides, in

part, that:

"Invalid exercise of delegated legislative

authority" means action which goes beyond

the powers, functions, and duties delegated

by the Legislature. A proposed or e xisting

rule is an invalid exercise of delegated

legislative authority if any one of the

following applies:

(a) The agency has materially failed to

follow the applicable rulemaking procedures

or requirements set forth in this chapter;

(b) The agency ha s exceeded its grant of

rulemaking authority, citation to which is

required by 120.54(3)(a)1.;

(c) The rule enlarges, modifies, or

contravenes the specific provisions of law

implemented, citation to which is required

by Section 120.54(3)(a)1.;

(d) The rule is vague, fails to establish

adequate standards for agency decisions, or

vests unbridled discretion in the agency;

(e) The rule is arbitrary or capricious;

(f) The rule is not supported by competent

substantial evidence; . . .

In Agrico Chemical Co. v. State, Dept. of Environmental

Protection , 365 So. 2d 759 (Fla. 1st DCA 1978), cert . denied 376

So. 2d 74 (Fla. 1979), a capricious action was described as one

taken without thought or reason, and an arbitrary decision as

one not supported by fact or logic. The court described

competent substantial evidence as that which a reasonable person

would accept as support for a conclusion.

83. The law on changing proposed rules, in Subsection

120.54(3)(d)1., is as follows:

(d) Modification or withdrawal of proposed

rules. --

1. After the final public hearing on the

proposed rule, or after the time for

requesting a hearing has expired, if the

rule has not been changed from the rule as

prev iously filed with the committee, or

contains only technical changes, the

adopting agency shall file a notice to that

effect with the committee at least 7 days

prior to filing the rule for adoption. Any

change, other than a technical change that

does not a ffect the substance of the rule,

must be supported by the record of public

hearings held on the rule, must be in

response to written material received on or

before the date of the final public hearing,

or must be in response to a proposed

objection by the committee.

The statute limits changes to proposed rules to avoid unexpected

changes in intent but it allows some agency flexibility to

incorporate ideas derived from public input. See Dept. of

Health and Rehabilitative Services v. Florida Medical Cente r ,

578 So. 2d 351 (Fla. 1st DCA 1991), and the cases cited therein.

84. AHCA met the burden of proving that it considered the

factors required in Subsection 408.034(3), Florida Statutes.

85. AHCA met the burden of proving that the use of 1200

ischemic h eart disease discharges among residents as a proxy for

a critical mass of OHS patients is supported by the facts and

rational. That portion of the proposal is supported by

competent substantial evidence, is not vague, arbitrary or

capricious, and is withi n AHCA's rulemaking authority.

86. AHCA met the burden of proving that a county - specific

considerations are logical and rational, even though OHS is a

tertiary service with a two - hour travel time standard. AHCA

received competent, substantial evidence to support some kind of

county - specific provision. The approach is not irrational,

vague, arbitrary or capricious.

87. The more difficult issue is whether AHCA's change from

the county - specific need methodology originally proposed, to a

preference and a county need for enhanced access has adequate

support in the record or, should have been the subject of new

rulemaking proceedings.

88. The criticisms of the methodology: (1) that the need

determination should include an inquiry into how accessible

adjace nt programs are and what their volumes are; (2) that it

was inappropriate to identify access concerns; (3) that the

method did not evaluate access to care; (4) that it did not

indicate whether or not there were real barriers; and (5) that

the problem was t he "regardless of district need" language have

to be considered along with the record in support of the

original proposal for some kind of county level inquiry.

89. In Florida Automobile Underwriters Association, Inc.

v. Department of Insurance , 1995 WL 1 052833, DOAH Case No. 94 -

5604RP (F.O. 1/23/95), public hearing complaints that a word was

misleading and a form too long, which led the agency to add a

modifier for the word and to shortened the form, were sufficient

record support for changing a proposed rule.

90. A proposed CON rule based on a policy of avoiding "the

unnecessary duplication of services" could not, however, be

changed into a policy of "fostering competition among

providers," without the agency's beginning the rulemaking

process anew. In particular, the Notice of Change expressed the

intent "to allocate the projected growth in the number of

cardiac catheterization admissions to new providers regardless

of the ability of existing providers to absorb the projected

need." DHRS v. Florida Med ical Center , supra .

91. In Adam Smith Enterprises, Inc. v. State, Department

of Environmental Regulation , 553 So. 2d 1260 (Fla. 1st DCA

1989), an agency used five years in a formula as a "compromise"

after initially proposing to use ten years based on res earch

showing that from ten to fifteen years was the appropriate time

for cleanup of groundwater contaminants. Five years was not

supported by any facts or reason.

92. In this case, there is no change in the direction of

the agency's proposals as there w as in the Florida Medical

Center case. AHCA set out to and still proposes to expand

access to OHS programs, to reexamine whether rules should be

relaxed, and to consider whether counties have OHS programs in

the review process. This case is, therefore, f actually more

akin to the Florida Automobile Underwriters case. Most of the

criticisms of the earlier drafts focused on keeping county

considerations more on a par with other access factors, which

AHCA accomplished with the shift from a need methodology t o a

preference and an access finding.

93. The preference in Subsection 7(c) and the

determination of a need for enhanced access in Subsection 7(d)

proposal are logical and reasonable, not arbitrary or

capricious. The fact that the language first appear ed in the

May settlement agreement between AHCA, IRMH, and Martin Memorial

was obviously intended, in part, to benefit IRMH and Martin

Memorial at the expense of Bethesda and any other Palm Beach

County providers. That, in and of itself, does not negate t he

fact that the language is also a reasonable, logical response to

public comments and, therefore, supported by competent,

substantial record evidence.

94. By a preponderance of the evidence, AHCA has

demonstrated that the proposed amendments to Rule 59C -

1.033(7)(c) and (7)(d) are not invalid exercises of delegated

legislative authority.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

ORDERED that:

1. The proposed amendments to Rule 59C - 1.033(7)(c) and

(7)(d) are not invalid . Bethesda's Petition for an

Administrative Determination of Invalidating of an Agency Rule

is dismissed.

2. The file of the Division of Administrative Hearings in

Case No. 01 - 2526RP is closed.

DONE AND ORDERED this 15th day of November, 2001, in

Tallaha ssee, Leon County, Florida.

___________________________________

ELEANOR M. HUNTER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administr ative Hearings

this 15th day of November, 2001.

ENDNOTE

1/ At all times in this Order references to open heart surgery

mean adult open heart surgery.

COPIES FURNISHED:

Diane Grubbs, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building Three, Suite 3431

Tallahassee, Florida 32308 - 5403

William Roberts, Acting General Counsel

Agency for Health Care Administration

2727 Mahan Drive

Fort Knox Building Three, Suite 343 1

Tallahassee, Florida 32308 - 5403

W. David Watkins, Esquire

Watkins & Caleen, P.A.

1725 Mahan Drive, Suite 201

Tallahassee, Florida 32317

Diane K. Kiesling, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 39

Fort Knox Building Three, Suite 3231A

Tallahassee, Florida 32308 - 5403

C. Gary Williams, Esquire

Michael J. Glazer, Esquire

Ausley & McMullen

227 South Calhoun Street

Tallahassee, Florida 32302

Elizabeth McArthur, Esquire

Katz, Kutter, Haigler, Alderman,

Bryant & Yon, P.A.

106 East College Avenue, Suite 1200

Tallahassee, Florida 32301

R. Terry Rigsby, Esquire

Law Offices of R. Terry Rigsby, P.A.

215 South Monroe Street, Suite 440

Tallahassee, Florida 32301

Kenneth F. Hoffman, Esquire

Oertel, Hoffman, Fernandez & Cole, P.A.

301 South Bronough Street, Fifth Floor

Tallahassee, Florida 32301

Paul H. Amundsen, Esquire

Julia E. Smith, Esquire

Amundsen, Moore & Torpy

502 East P ark Avenue

Tallahassee, Florida 32301

Stephen A. Ecenia, Esquire

R. David Prescott, Esquire

Thomas W. Konrad, Esquire

Rutledge, Ecenia, Purnell & Hoffman, P.A.

215 South Monroe Street, Suite 420

Post Office Box 551

Tallahassee, Florida 32302 - 0551

Carroll Webb, Executive Director

Administrative Procedures Committee

12 0 Holland Building

Tallahassee, Florida 32399 - 1300

Liz Cloud, Chief

Bureau of Administrative Code

The Elliott Building

Tallahassee, Florida 32399 - 0250

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is

entitled to judicial review pursuant to Section 120.68, Florida

Statutes. Review proceedings are governed by the Florida rules

of Appellate Procedure. Such proceedings are commenced by

filing one copy of a notice of appeal with the C lerk of the

Division of Administrative Hearings and a second copy,

accompanied by filing fees prescribed by law, with the District

Court of Appeal, First District, or with the District Court of

Appeal in the Appellate District where the party resides. The

notice of appeal must be filed within 30 days of rendition of

the order to be reviewed.