05-002754CON St. Joseph`s Hospital, Inc., D/B/A St. Joseph`s Hospital vs. Agency For Health Care Administration Status: Closed Recommended Order on Tuesday, May 13, 2008.

Summary: Petitioner`s satellite hospital will better serve the residents in the remote area of southeastern Hillsborough County so that emergency room access is enhanced and more readily available.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ST. JOSEPH'S HOSPITAL, INC., )

d/b/a ST. JOSEPH'S HOSPITAL, )

)

Petitioner, )

)

vs. ) Case No. 05-2754CON

)

AGENCY FOR HEALTH CARE ADMINISTRATION, )

)

)

Respondent, )

)

and )

)

FLORIDA HEALTH SCIENCES CENTER, )

INC., d/b/a TAMPA GENERAL )

HOSPITAL AND SUN CITY HOSPITAL )

INC., d/b/a SOUTH BAY HOSPITAL )

AND GALENCARE, INC., d/b/a )

BRANDON REGIONAL HOSPITAL, )

)

Intervenors. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative

Hearings, by its designated Administrative Law Judge, J. D.

Parrish, held a final hearing in the above-styled case on

October 29-November 1, November 5-9, and November 13-15, 2007,

in Tallahassee, Florida.

APPEARANCES

For St. Joseph's Hospital, Inc.:

Robert A. Weiss, Esquire

Karen A. Putnal, Esquire

Parker, Hudson, Rainer & Dobbs, LLP

The Perkins House, Suite 200

118 North Gadsden Street

Tallahassee, Florida 32301

For Agency for Health Care Administration:

Karin M. Byrne, Esquire

Agency for Health Care Administration

2727 Mahan Drive

Building 3, Mail Station 3

Tallahassee, Florida 32308

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

Tampa General Hospital:

Elizabeth McArthur, Esquire

Jeffrey L. Frehn, Esquire

Radey Thomas Yon & Clark, P.A.

301 South Bronough Street, Suite 200

Post Office Box 10967

Tallahassee, Florida 32301

For Sun City Hospital, Inc., d/b/a South Bay Hospital and

Galencare, Inc., d/b/a Brandon Regional Hospital:

Stephen A. Ecenia, Esquire

Richard M. Ellis, Esquire

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

215 South Monroe Street, Suite 420

Post Office Box 551

Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

The Petitioner, St. Joseph's Hospital, Inc., d/b/a St.

Joseph's Hospital (Petitioner, Applicant, or St. Joseph's) filed

Certificate of Need (CON) Application No. 9833 with the Agency

for Health Care Administration (Agency or AHCA). The

application seeks authority to establish a 90-bed acute care

satellite hospital in southeastern Hillsborough County, Florida.

St. Joseph's intends to transfer 90 acute care beds from its

existing location in Tampa to the new facility. The issue in

this case is whether the Agency should approve the CON

application.

PRELIMINARY STATEMENT

St. Joseph's filed CON application No. 9833 in the February

2005 batching cycle. The proposed site for the new satellite

hospital is in an area of southeastern Hillsborough County and

is referred to as "St. Joseph's Hospital Big Bend" to be located

in Riverview, Florida 33573, an area of AHCA's District

6/Subdistrict 1. By letter dated June 17, 2005, the Agency

notified the Petitioner of its intent to deny the application.

The State Agency Action Report (SAAR) that outlined AHCA's

reasons and explanations for the denial was issued concurrent

with its letter and St. Joseph's timely contested the decision.

The case was forwarded to the Division of Administrative

Hearings (DOAH).

The parties filed a Joint Response to Initial Order and

agreed, in part, to waive their right to hearing within 60 days

of assignment of the Administrative Law Judge. In accordance

with the dates proposed by counsel for the parties, the case was

scheduled for hearing for August 7 through 11 and 14 through 18,

2006.

On April 5, 2006, a Joint Motion for Continuance of Final

Hearing was filed that sought a continuance in this matter.

Moreover, the joint motion specified that the parties had agreed

to a final hearing for July 9-13, 16-20, and 23-27, 2007.

The parties (on September 11, 2006) filed yet another

request to reschedule the hearing. That motion for continuance

was granted and the case was set for November 2007. All hearing

dates were agreed upon by the parties.

Section 408.039, Florida Statutes (2007), details the

review process by which this case is governed. The Florida

Legislature has directed AHCA to, by rule, provide for CON

applications to be submitted on a timetable or cycle basis.

Applications should be reviewed timely and applications

pertaining to similar types of services or facilities are to be

comparatively considered in relation to each other. In this

case, however, St. Joseph’s is the sole competitor for the

facility sought. The approval of the CON application is opposed

by Florida Health Sciences Center, Inc., d/b/a Tampa General

Hospital (Tampa General); Sun City Hospital Inc., d/b/a South

Bay Hospital (South Bay); and Galencare, Inc., d/b/a Brandon

Regional Hospital (Brandon). These parties are existing

providers within the same AHCA subdistrict and timely filed

petitions to oppose the satellite hospital proposed by St.

Joseph's.

Prior to the hearing, all parties were advised that

evidence to be presented would be held to the planning horizon

and methodology set forth in the application at issue.

Extraneous and other information not encompassed within the

planning horizon set forth in CON application No. 9833 was

deemed irrelevant. Updates to data encompassed within the

planning horizon, was considered and deemed material to the

issue at hand. It is concluded that by inaction and agreement

the parties have waived any interest to seek a timely resolution

of this case. Accordingly, the case proceeded to hearing based

upon the methodology and planning horizon applicable to the 2005

“batching cycle.” Efforts to materially amend the planning

horizon or to extend the applicable timeframe of the batching

cycle were deemed impermissible.

The Agency, Tampa Bay, South Bay, and Brandon (the

Opponents or Opponent providers if only the hospitals) filed a

Prehearing Statement on October 27, 2007. That statement was

later accepted by St. Joseph's. The Opponents maintain that CON

application No. 9833 failed to meet the applicable criteria and

requirements set by statute and rule. All Opponents argue that

St. Joseph's CON application must be denied.

All parties acknowledge that the statutory criteria

applicable to this proceeding are found in Section 408.035,

Florida Statutes. Additionally, the Agency rules applicable to

this proceeding are set forth in Florida Administrative Code

Rules 59C-1.002, 59C-1.008, 59C-1.010, and 59C-1.030.

The parties have stipulated:

A timely and complete letter of intent was

filed by St. Joseph's in February 2005, and

St. Joseph's timely submitted its CON

application and omissions response. St.

Joseph's application was timely deemed

complete and reviewed by the Agency, leading

to a timely preliminary denial by the

Agency, in compliance with technical

requirements set forth in Section

408.039(2)(a), (c), and (d), Florida

Statutes (2005); and Rules 59C-1.002, 59C-

1.008, and 59C-1.010, Fla. Admin. Code. The

St. Joseph application was complete in

compliance with the technical requirements

of Section 408.037, Florida Statutes, with

the exception of Section 408.037(1)(b) 3,

Florida Statutes (2005).

The methods of energy provision as described

in design narratives in St. Joseph

Hospital's CON application are reasonable.

The petitions in this matter were timely

filed.

At the final hearing, St. Joseph's presented the testimony

of the following witnesses: Issac Mallah, an expert in

healthcare administration; Lee Kirkman, M.D., an expert in

internal medicine, pulmonary medicine, and critical care

medicine; Frederick Taylor, D. O., an expert in family practice;

Mark D. Vaaler, M. D., an expert in critical care medicine and

quality assurance and improvement; Robert Pergolizzi, an expert

in traffic and transportation engineering; John LaRocca, an

expert in land use planning; Rick Knapp, an expert in healthcare

finance; Patricia Teeuwen, an expert in acute care resources

management; David Travis, an expert in emergency pre-hospital

medical services quality, education, delivery, and management;

Joseph E. Smith; and Mark M. Richardson, an expert in healthcare

planning. St. Joseph's also offered the deposition testimony of

Christopher L. Dausch, P. E., land development program director

for Bayside Engineering (SJH Ex. 31); Benjamin Marquez, M. D., a

board certified family practice physician (SJH Ex. 32); Kimberly

Guy, the Chief Operating Officer for St. Joseph's Women's

Hospital (SJH Ex. 33); Christine Tina Long, B. S. N., director

of patient care services for med/surg units and the oncology

unit at St. Joseph's Hospital (SJH Ex. 34); Deborah F. Shultz,

M. D., family practice physician (SJH Ex. 35); James Baron, M.

D., obstetrician/gynecologist (SJH Ex. 36); Bruce S. Houghton,

A. I. A., architect (SJH Ex. 37); Teri Lancaster, Ruskin,

Florida resident (SJH Ex. 38); Rodney L. Cadwell, president of

HELP International (SJH Ex. 39); Joseph Knight, resident of

Riverview and employee of Cadwell Laboratories (SJH Ex. 40);

Tommy Inzina, Executive Vice President and Chief Financial

Officer of BayCare Health System, (SJH Ex. 41); Jeffrey N.

Gregg, Chief of the Bureau of Health Facility Regulation at AHCA

(SJH Ex. 42); Robert M. Betzu, M. D., cardiologist (SJH Ex. 43);

Cathy R. Yoder, C.P.A., Chief Financial Officer at St. Joseph's-

Baptist Healthcare (SJH Ex. 44); and Lawrence Wu, Senior Vice

President of National Economic Research Associates, Inc. (SJH

Ex. 45). The Petitioner's exhibits, marked for identification

as SJH Ex. 1 through 50, were admitted into evidence. Rulings

on the objections to the deposition testimony are included in

Appendix A to this order.

South Bay and Brandon presented testimony from the

following witnesses: Steven Daugherty, an expert in hospital

administration; Michael Fencel, an expert in hospital

administration; Armand Balsano, an expert in healthcare planning

and healthcare finance; and Darryl Weiner, an expert in

healthcare finance and healthcare financial feasibility. South

Bay and Brandon also presented the deposition testimony of Linda

Karen Landfish, M. D., board certified neonatologist and board

certified pediatrician (South Bay/Brandon Ex. 44); Barry C.

Harris, Ph. D., an economist with Economists, Incorporated

(South Bay/Brandon Ex. 45); and Susan Ann Zinkel, an expert in

hospital human resources, staff compensation, recruitment, and

retention (South Bay/Brandon Ex. 46). South Bay and Brandon

Exhibits 1 through 49 were admitted into evidence.

Tampa General presented testimony from the following

witnesses: Ronald A. Hytoff, an expert in hospital

administration; Deana L. Nelson, an expert in patient

care/administration; Ernest J. Peters, an expert in traffic

engineering; Judith Ploszek, an expert in healthcare finance;

and Daniel Sullivan, an expert in healthcare planning and

finance. Tampa General presented the deposition testimony of

Steven L. Durbin, SPHR, Vice President for Human Resources at

Tampa General (Tampa General Ex. 33). Tampa General's Exhibits

1 through 33 were admitted into evidence.

The Agency presented the testimony of Jeffrey N. Gregg, an

expert in healthcare planning and certificate of need review.

The Agency's exhibit, marked for identification as AHCA Ex. 1,

was received in evidence. No depositions were offered by AHCA.

The 15-volume Transcript of the final hearing was filed

with DOAH on December 3, 2007. On December 6, 2007, the parties

filed an Unopposed Motion for Extension of Time to file their

proposed recommended orders. Thereafter, by stipulation and

request of the parties, the time for filing proposed recommended

orders was extended twice. Additionally, the parties' request

to enlarge the page limitation for the proposed recommended

orders was granted. All parties timely filed proposed

recommended orders on March 7, 2007. The proposals have been

fully considered in the preparation of this Recommended Order.

FINDINGS OF FACT

The Parties

1. AHCA is the state agency charged with the

responsibility of administering the CON program for the state of

Florida. The Agency serves as the state heath planning entity.

See § 408.034, Fla. Stat. (2007). As such, it was charged to

review the CON application at issue in this proceeding. AHCA

has preliminarily denied St. Joseph's CON application No. 9833.

2. The Petitioner is the applicant for the CON in this

case. The Petitioner is a not-for-profit organization licensed

to operate St. Joseph's Hospital, a general acute care facility

located in the urban center of Tampa, Florida. It was

originally founded by a religious order and has grown from

approximately 40 beds to a licensed bed capacity of 883 beds.

St. Joseph's provides quality care in a comprehensive range of

services. Those services include tertiary and Level II trauma

services. St. Joseph's provides services to all patients

regardless of their ability to pay. To meet its perception of

the growing healthcare needs of the greater Hillsborough County

residents, St. Joseph's has proposed to construct a satellite

hospital on a site it purchased in the mid-1980s. According to

St. Joseph's, the satellite hospital, together with its main

campus, would better address the growing community needs for

acute care hospital services. To that end, St. Joseph's filed

CON application No. 9833 and seeks approval of its satellite

facility. It proposes to transfer 90 of its acute care beds

from its current hospital site to the new satellite facility.

The main hospital will offer support services as may be

necessary to the satellite facility.

3. Tampa General is an 877-bed acute care hospital located

on Davis Island in urban Tampa, Florida. Prior to 1997, it was

a public hospital operated by the Hillsborough County Hospital

Authority but has since been operated and managed by a non-

profit corporation, Florida Health Sciences, Inc. Tampa General

provides quality care in a wide range of services that include

tertiary and Level I trauma. Tampa General addresses the

medical needs of its patients without consideration of their

ability to pay. It is a "safety net" provider and is the

largest provider of services to Medicaid and charity patients in

the AHCA District 6/Subdistrict 1. Medicaid has designated

Tampa General a "disproportionate share" provider.

4. Tampa General is also a teaching hospital affiliated

with the University of South Florida's College of Medicine.

Recently, Tampa General has undergone a major construction

project that brings on line a new emergency trauma center as

well as additional acute care beds, a women's center, a

cardiovascular center and a digestive diagnostic and treatment

center. Tampa General opposes the CON request at issue.

5. South Bay and Brandon also oppose St. Joseph's CON

application. South Bay is a 112-bed community acute care

hospital located in Sun City Center, Florida. South Bay has

served the community for about 25 years and offers quality care

but does not provide obstetrical services primarily because its

closest population and patient base is a retirement community

restricted to persons over 55 years of age.

6. In contrast, Brandon is an acute care hospital with 367

beds located to South Bay's north in Brandon, Florida. Brandon

provides quality care with a full range of hospital services

including obstetrics, angioplasty, and open-heart surgery.

Brandon also has neonatal intensive care (NICU) beds to serve

Level II and Level III needs. It is expected that Brandon could

easily add beds to its facility as it has empty "shelled-in"

floors that could readily be converted to add 80 more acute care

beds.

7. Both Brandon and South Bay are owned or controlled by

Hospital Corporation of America (HCA) and are part of its West

Florida Division.

The Proposal

8. St. Joseph's has a wide variety of physicians on its

medical staff. Those physicians currently offer an array of

general acute care services as well as medical and surgical

specialties. St. Joseph's provides Levels II and III NICU, open

heart surgery, interventional radiology, primary stroke

services, oncology, orthopedic, gynecological oncology, and

pediatric surgical. Based upon its size, reputation for quality

care, and ability to offer this wide array of services, St.

Joseph's has enjoyed a well-deserved respect in its community.

9. To expand its ties within AHCA's District 6/Subdistrict

1 healthcare community, St. Joseph's affiliated with South

Florida Baptist Hospital a 147-bed community hospital located in

Plant City, Florida. This location is east of the main St.

Joseph Hospital site.

10. Further, recognizing that the growth of greater

Hillsborough County, Florida, has significantly increased the

population of areas previously limited to agricultural or mining

ventures, St. Joseph's now seeks to construct a community

satellite hospital located in the unincorporated area of

southeastern Hillsborough County known as Riverview. The

Petitioner owns approximately 50 acres of land at the

intersection of Big Bend Road and Simmons Loop Road. This

parcel is approximately one mile east of the I-75 corridor that

runs north-south through the county.

11. In relation to the other parties, the proposed site is

north and east of South Bay, south of Brandon, and east and

south of Tampa General. South Florida Baptist Hospital, not a

party, is located to the north and farther east of the proposed

site.

12. The size of the parcel is adequate to construct the

proposed satellite as well as other ancillary structures that

might compliment the hospital (such as medical offices).

13. If approved, the Petitioner's proposal will provide 66

medical-surgical beds, 14 beds within an intensive care unit,

and 10 labor and delivery beds. All 90 beds will be "state-of-

the-art" private rooms along with a full-service emergency

department. The hospital will be fully digital, use an

electronic medical record and picture archiving system, and

specialists at the main St. Joseph's hospital will be able to

access images and data at the satellite site in real time. A

consultation would be, theoretically, as close as a computer.

14. In reaching its decision to seek the satellite

hospital, St. Joseph's considered input from many sources; among

them: HealthPoint Medical Group (HealthPoint) and BayCare Health

System, Inc. (BayCare). HealthPoint is a physician group owned

by an affiliate of St. Joseph's. HealthPoint has approximately

80 physicians who operate 21 offices throughout Hillsborough

County. All of the HealthPoint physicians are board certified.

At least five of the HealthPoint offices would have quicker

access to the proposed satellite hospital than to the main St.

Joseph's Hospital site. The HealthPoint physicians support the

proposal so that their patients will have access to, and the

option of choosing, a St. Joseph facility in the southeastern

part of the county.

15. BayCare is an organization governed by a cooperative

agreement among nonprofit hospitals. Its purpose is to assist

its member hospitals to centralize and coordinate hospital

functions such as purchasing, staffing, managed care

contracting, billing, and information technology. By

cooperatively working together, its members are able to enjoy a

cost efficiency that individually they did not enjoy. The

"synergy" of their effort results in enhanced quality of care,

efficient practices, and a financial savings to their

operations. The proposed St. Joseph's satellite would also

share in this economy of efforts. Understandably, BayCare

supports the proposal.

Review Criteria

16. Every new hospital project in Florida must be reviewed

pursuant to the statutory criteria set forth in Section 408.035,

Florida Statutes (2007). Accordingly, the ten subparts of that

provision must be weighed to determine whether or not a proposal

meets the requisite criteria.

17. Section 408.035(1), Florida Statutes (2007) requires

that the need for the health care facilities and health services

being proposed be considered. In the context of this case,

"need" will not be addressed in terms of its historical meaning.

The Agency no longer calculates "need" pursuant to a need

methodology. Therefore, looking to Florida Administrative Code

Rule 59C-1.008, requires consideration of the following

pertinent provisions:

...If an agency need methodology does not

exist for the proposed project:

1. The agency will provide to the

applicant, if one exists, any policy upon

which to determine need for the proposed

beds or service. The applicant is not

precluded from using other methodologies to

compare and contrast with the agency policy.

2. If no agency policy exists, the

applicant will be responsible for

demonstrating need through a needs

assessment methodology which must include,

at a minimum, consideration of the following

topics, except where they are inconsistent

with the applicable statutory or rule

criteria:

a. Population demographics and dynamics;

b. Availability, utilization and quality of

like services in the district, subdistrict

or both;

c. Medical treatment trends; and,

d. Market conditions.

3. The existence of unmet need will not be

based solely on the absence of a health

service, health care facility, or beds in

the district, subdistrict, region or

proposed service area.

18. According to St. Joseph's, "need" is evidenced by a

large and growing population in the proposed service area (PSA),

sustained population growth that exceeds the District and state

average, highly occupied and seasonally over capacity acute care

beds at the existing providers, highly occupied and sustained

increases in demand for hospital services, a scarcity of

emergency medical service resources within the PSA compounded by

budget cuts, increases in traffic congestion and travel times to

the existing hospitals, the lack of a nonprofit community

hospital near the proposed site, and the lack of local

obstetrical services.

19. In this case the Petitioner has identified the PSA as

a 10 zip code area with 7 being designated the "primary" area of

service (PSA) and 3 zip codes to the north being identified as

the "secondary" area of service (SSA). The population of this

PSA is projected to reach 322,913 by the year 2011 (from its

current 274,696).

20. All parties used Claritas data to estimate population,

the PSA growth, and various projections. Claritas is a

conservative estimator in the sense that it relies on the most

recent U. S. census reports that may or may not track the most

recent growth indicators such as building starts or new home

sales. Nevertheless, if accurate, the estimated 17.5 percent

population growth expected in the new satellite hospital's PSA

exceeds the rate of growth estimated for AHCA District 6 as well

as the projected State of Florida growth rate. From the 7

primary zip codes within the PSA alone the area immediately

adjacent to the subject site is estimated to grow by 14,900

residents between 2006 and 2011.

21. Over the last 20 years the PSA has developed from

rural farming and mining expanses with scattered housing and

trailer parks to an area characterized by modern shopping

centers, apartment complexes, housing subdivisions, churches,

libraries, and new schools. Physicians in the area now see as

many as 60 patients per day and during the winter peak months

may admit up to 20 patients per week to hospitals.

avel times from the southern portion of the PSA to

St. Joseph's Hospital, Tampa General, or Brandon, can easily

exceed 30 minutesavel times to the same providers during

"rush" or high traffic times can be longer.

23. All of the opponent providers have high occupancy

rates and experience seasonal over capacity. During the winter

months visitors from the north and seasonal residents add

significant numbers to the population in Hillsborough County.

These "snow birds" drive the utilization of all District

6/Subdistrict 1 hospitals up. Further, increased population

tends to slow and congest traffic adding to travel times within

AHCA District 6/Subdistrict 1.

24. Both Brandon and Tampa General have recently added

beds to address the concerns of increased utilization.

Additionally, Tampa General has expanded its emergency

department to provide more beds. South Bay has elected to not

increase its bed size or emergency department. South Bay has

experienced difficulty staffing its emergency department. When

faced with capacity problems, South Bay "diverts" admissions to

other hospitals.

25. When the emergency rooms of the Opponent providers are

unable to accommodate additional patients, the county emergency

transport is diverted to other facilities so that patients have

access to emergency services. During the winter season and peak

flu periods this diversion is more likely to occur. Another

hospital in the southeastern portion of the county, within St.

Joseph's satellite PSA, would alleviate some of the crowding.

26. More specifically, South Bay's annual occupancy rate

in 2006 was 80.1 percent. For the first seven months of 2007,

South Bay's average occupancy rate was 88.4 percent. These

rates indicate that South Bay is operating at a high occupancy.

Operating at or near capacity is not recommended for any

hospital facility. Long term operation at or near occupancy

proves to be detrimental to hospital efficiencies.

27. Similarly, Brandon operates at 70 percent of its bed

capacity. Even though it has recently added beds it intends to

add more beds to address continuing increases in admissions.

Brandon's emergency room is also experiencing overcrowded

conditions. When Brandon's emergency room diverts patients

their best option may be to leave District 6/Subdistrict 1 for

care.

28. Tampa General is a large complex and its emergency

department has been expanded to attempt to address an obvious

need for more services. It is unknown whether the new emergency

department will adequately cure the high rates of diversion

Tampa General experienced in 2007. New beds were added and an

improved emergency department was designed and constructed with

the expectation that Tampa General's patients would be better

served.

29. Based upon Tampa General's expansion and its projected

growth, Tampa General could experience an occupancy rate over 75

percent by 2011. If so, Tampa General could easily return to

the utilization problems previously experienced.

30. There are no obstetrical services offered south of

Brandon in AHCA District 6/Subdistrict 1. The proposed

St. Joseph's satellite hospital would offer obstetrics and has

designated a 10-bed unit to accommodate those patients.

31. There are no nonprofit hospitals south of Brandon in

AHCA District 6/Subdistrict 1. The proposed St. Joseph's

satellite hospital would offer patients in the PSA with the

option of using such a hospital.

32. Section 408.035(2), Florida Statutes (2007), requires

the consideration of the availability, quality of care,

accessibility, and extent of utilization of existing health care

facilities and health services in the service district of the

applicant.

33. As previously stated, all of the parties provide

quality care to their patients. Although delays in emergency

departments may inconvenience patients, the quality of the

medical care they receive is excellent.

34. Similarly, hospital services are available and can be

accessed in AHCA District 6/Subdistrict 1. The parties provide

a full range of healthcare service options that address the

medical and surgical needs of the residents of AHCA District 6

Subdistrict 1. An additional hospital would afford patients

with another choice of provider in the southeastern portion of

the county. The St. Joseph satellite hospital would afford such

patients with a hospital option within 30 minutes of the areas

within the PSA. This access would promote shorter wait times

and less crowded facilities.

35. Section 408.035(3), Florida Statutes (2007), mandates

review of CON applications in light of the ability of the

applicant to provide quality of care and the applicant's record

of providing quality of care.

36. As previously stated St. Joseph's has a well-deserved

reputation for providing quality care within a wide range of

hospital services to its patients. It is reasonable to expect

the satellite hospital would continue in the provision of such

care. The management team and affiliations established by

St. Joseph's will continue to pursue quality care to all its

patients regardless of their ability to pay.

37. Section 408.035(4), Florida Statutes (2007), considers

the availability of resources for project accomplishment and

operation. Resources that must be considered include healthcare

personnel, management personnel, and funds for capital and

operating expenditures.

38. St. Joseph's has the resources to accomplish and

operate the satellite hospital proposed. St. Joseph's has a

successful history of recruiting and retaining healthcare

personnel and management personnel. The estimates set forth in

its CON application for these persons were reasonable and

conservative. Salaries and benefits for healthcare personnel

and management personnel should be within the estimated

provisions set forth in the application.

39. Although there is a nationwide shortage of nursing

personnel and physicians in certain specialties, St. Joseph's

has demonstrated it has a track record of staffing its facility

to meet appropriate standards and provide quality care. There

is no reason to presume it will not be similarly successful at

the satellite facility.

40. St. Joseph's has also demonstrated it has the

financial ability to construct and operate the proposed

satellite hospital. The occupancy rates projected for the new

hospital will produce a revenue adequate to make the hospital

financially feasible. Further, if patients who reside closer to

the satellite facility use it instead of the main St. Joseph

Hospital, a lower census at the main hospital will not adversely

impact the financial strength of the organization. There will

be adequate growth in the healthcare market for this PSA to

support the new facility as well as the existing providers.

41. It must be noted, however, that construction costs for

the satellite hospital will exceed the amounts disclosed by the

CON application. Some of the increases in cost are significant.

For example, the estimate for the earthwork necessary for site

preparation has risen from $417,440 to $1,159,296.

Additionally, most of the unit prices for construction have gone

up dramatically in the past couple of years. Hurricanes and the

resulting increased standards for building codes have also

driven construction costs higher. More stringent storm water

provisions have resulted in higher construction costs. For this

project it is estimated the storm water expense will be $500,000

instead of the original $287,000 proposed by the CON

application. In total these increases are remarkable. They may

also signal why development in AHCA's District 6/Subdistrict 1

has slowed since the CON application was filed. Regardless, St.

Joseph's should have the financial strength to construct and

operate the project.

42. Section 408.035(5), Florida Statutes (2007), specifies

that the Agency must evaluate the extent to which the proposed

services will enhance access to health care for residents of the

service district. In the findings reached in this regard, the

criteria set forth in Administrative Code Rule 59C-1.030(2) have

been fully considered. Those provisions are:

(2) Health Care Access Criteria.

(a) The need that the population served or

to be served has for the health or hospice

services proposed to be offered or changed,

and the extent to which all residents of the

district, and in particular low income

persons, racial and ethnic minorities,

women, handicapped persons, other

underserved groups and the elderly, are

likely to have access to those services.

(b) The extent to which that need will be

met adequately under a proposed reduction,

elimination or relocation of a service,

under a proposed substantial change in

admissions policies or practices, or by

alternative arrangements, and the effect of

the proposed change on the ability of

members of medically underserved groups

which have traditionally experienced

difficulties in obtaining equal access to

health services to obtain needed health

care.

(c) The contribution of the proposed

service in meeting the health needs of

members of such medically underserved

groups, particularly those needs identified

in the applicable local health plan and

State health plan as deserving of priority.

(d) In determining the extent to which a

proposed service will be accessible, the

following will be considered:

1. The extent to which medically

underserved individuals currently use the

applicant’s services, as a proportion of the

medically underserved population in the

applicant’s proposed service area(s), and

the extent to which medically underserved

individuals are expected to use the proposed

services, if approved;

2. The performance of the applicant in

meeting any applicable Federal regulations

requiring uncompensated care, community

service, or access by minorities and

handicapped persons to programs receiving

Federal financial assistance, including the

existence of any civil rights access

complaints against the applicant;

3. The extent to which Medicare, Medicaid

and medically indigent patients are served

by the applicant; and

4. The extent to which the applicant

offers a range of means by which a person

will have access to its services.

(e) In any case where it is determined that

an approved project does not satisfy the

criteria specified in paragraphs (a) through

(d), the agency may, if it approves the

application, impose the condition that the

applicant must take affirmative steps to

meet those criteria.

(f) In evaluating the accessibility of a

proposed project, the accessibility of the

current facility as a whole must be taken

into consideration. If the proposed project

is disapproved because it fails to meet the

need and access criteria specified herein,

the Department will so state in its written

findings.

43. AHCA does not require a CON applicant to demonstrate

that the existing acute care providers within the PSA are

failing in order to approve a satellite hospital. Also, AHCA

does not have a travel time standard with respect to the

provision of acute care hospital services. In other words,

there is no set geographical distance or travel time that

dictates when a satellite hospital would be appropriate or

inappropriate. In fact, AHCA has approved satellite hospitals

when residents of the PSA live within 20 minutes of an existing

hospital. As a practical matter this means that travel time or

distance do not dictate whether a satellite should be approved

based upon access. With regard to access to emergency services,

however, AHCA does consider patient convenience.

44. In this case the proposed satellite hospital will

provide a convenience to residents of southeastern Hillsborough

County in terms of access to an additional emergency department.

Further, physicians serving the growing population will have the

convenience of admitting patients closer to their residences.

Medical and surgical opportunities at closer locations is also a

convenience to the families of patients because they do not have

to travel farther distances to visit the patient. Patients and

the families of patients seeking obstetrical services will also

have the convenience of the satellite hospital.

45. Patients who would not benefit from the convenience of

the proposed satellite hospital would be those requiring

tertiary health services. Florida Administrative Code Rule 59C-

1.002(41) defines such services as:

(41) Tertiary health service means a health

service which, due to its high level of

intensity, complexity, specialized or

limited applicability, and cost, should be

limited to, and concentrated in, a limited

number of hospitals to ensure the quality,

availability, and cost effectiveness of such

service. Examples of such service include,

but are not limited to, organ

transplantation, specialty burn units,

neonatal intensive care units, comprehensive

rehabilitation, and medical or surgical

services which are experimental or

developmental in nature to the extent that

the provision of such services is not yet

contemplated within the commonly accepted

course of diagnosis or treatment for the

condition addressed by a given service.

46. In terms of tertiary health services, residents of

AHCA District 6/Subdistrict 1 will continue to use the existing

providers who offer those services. The approval of the St.

Joseph satellite will not adversely affect the tertiary

providers in AHCA District 6/Subdistrict 1 in terms of their

ability to continue to provide those services. The new

satellite will not compete for those services.

47. Tampa General has a unique opportunity to provide

tertiary services and will continue to be a strong candidate for

any patient in the PSA requiring such services. As a teaching

hospital and major NICU and trauma center, Tampa General offers

specialties that will not be available at the satellite

hospital. If non-tertiary patients elect to use the satellite

hospital, Tampa General should not be adversely affected. Tampa

General has performed well financially of late and its revenues

have exceeded its past projections. With the added conveniences

of its expanded and improved facilities it will continue to play

a significant roll in the delivery of quality health care to the

residents of the greater Tampa area.

48. Section 408.035(6), Florida Statutes (2007) provides

that the financial feasibility of the proposal both in the

immediate and long-term be assessed in order to approve a CON

application.

49. In this case, as previously indicated, the

utilizations expected for the new satellite hospital should

adequately assure the financial feasibility of the project both

in the immediate and long-term time frames. Population growth,

a growing older population, and technologies that improve the

delivery of healthcare will contribute to make the project

successful.

50. The satellite hospital will afford PSA residents a

meaningful option in choosing healthcare and will not give any

one provider an unreasonable or dominant position in the market.

51. Section 408.035(7), Florida Statutes (2007) specifies

that the extent to which the proposal will foster competition

that promotes quality and cost-effectiveness must be addressed.

52. AHCA's District 6/Subdistrict 1 enjoys a varied range

of healthcare providers. From the teaching hospital at Tampa

General to the community hospital at South Bay, all demonstrate

strong financial stability and utilization. A new satellite

hospital will promote continued quality and cost-effectiveness.

As a member of the BayCare group the satellite will benefit from

the economies of its group and provide the residents of its PSA

with quality care. Physicians will have another option for

admissions and convenience.

53. Section 408.035(8), Florida Statutes (2007), notes

that the costs and methods of the proposed construction,

including the costs and methods of energy provision and the

availability of alternative, less costly, or more effective

methods of construction should be reviewed.

54. The methodology used to compute the construction costs

associated with this project were reasonable and accurate at the

time prepared. The costs, however, are not accurate in that

most have gone up appreciably since the filing of the CON

application. No more effective method of construction has been

proposed but the financial soundness of the proposal should

cover the increased costs associated with the construction of

the project. The delays in resolving this case have worked to

disadvantage the Applicant in this regard. Unforeseeable acts

of nature, limitations of building supplies, and increases

inherent with the passage of time will make this project more

costly than St. Joseph's envisioned when it filed the CON

application. Further, it would be imprudent to disregard the

common knowledge that oil prices have escalated while interest

rates have dropped. These factors may also impact the project's

cost.

55. Section 408.035(9), Florida Statutes (2007), provides

that the applicant's past and proposed provision of health care

services to Medicaid patients and the medically indigent should

be weighed in consideration of the proposal.

56. St. Joseph's has a track record of providing health

care services to Medicaid patients and the medically indigent

without consideration of any patient's ability to pay. The

satellite hospital would be expected to continue this tradition.

Moreover, as a provision of its CON application, St. Joseph's

has represented it will provide 12.5 percent of its patient days

to Medicaid/Medicaid HMO/Charity/Indigent patients.

57 Section 408.035(10), Florida Statutes, relates to

nursing home beds and is not at issue in this proceeding.

The Opposition

58. The SAAR set forth the Agency's rationale for the

proposed denial of the CON application. The SAAR acknowledged

that the proposal had received 633 letters of support (80 from

physicians, 365 from St. Joseph employees, and 191 from members

of the community); that funding for the project would be

available; that the short-term position, long-term position,

capital requirements, and staffing for the proposal were

adequate; that the project was financially feasible if the

Applicant meets its projected occupancy levels; that the project

would have a marginally positive effect on competition to

promote quality and cost-effectiveness; and that the

construction schedule "seems to be reasonable" for the project.

59. Notably in opposition to the CON application, the SAAR

represented that:

It is not clear that projected population

growth for this area will outpace the

ability of subdistrict facilities to add

beds to accommodate population growth. The

subdistrict's most recent average

utilization rate was 63.40 percent, and an

additional facility has already been

approved for this applicant in this county

for the purpose of handling forecasted

growth. Growth projected for females aged

15-44 is not significantly higher for the

county than for the district or state, and

it is not demonstrated that need exists for

obstetric services in the subdistrict.

60. The foregoing analysis did not credit the projected

population growth for the PSA applicable to this proposal

heavily. The population growth expected for the PSA will

support the utilization necessary for the proposed project.

Applying the Agency's assessment, all existing hospital

providers could add beds to meet "need" for a Subdistrict and

thereby eliminate the approval of any satellite community

facility that would address local concerns. Also, South Bay has

conceded it will not add beds at its location.

61. Additionally, the SAAR stated:

While both South Bay Hospital and Brandon

Regional Hospital have occupancy rates such

that the introduction of a competing

facility would not likely inhibit their

abilities to maintain operations, the same

cannot be stated for Tampa General Hospital,

the only designated Disproportionate Share

Hospital in this subdistrict. Any impact on

Tampa General Hospital as a result of the

proposed project would likely be negative,

limiting Tampa General's ability to offset

its Medicaid and charity care services.

The applicant facility does not currently

have a significant presence in the proposed

market, and would have to gain market share

in this PSA in order to meet its projected

occupancy levels. Much of the market share

gained by the applicant with the proposed

facility would likely be at the expense of

existing facilities in this area, most

notably Tampa General due to its lower

occupancy level and higher Medicaid and

charity care provisions.

62. In reaching its decision, the Agency has elected to

protect Tampa General from any negative impact that the proposed

satellite hospital might inflict.

63. Tampa General has invested $300 million in

improvements. It is a stand-alone, single venue hospital that

has not joined any group or integrated system. It relies on its

utilization levels, management skill and economies of practice

to remain solvent. Tampa General considers itself a unique

provider that should be protected from the financial risks

inherent in increased competition. It is the largest provider

of services to indigent patients in AHCA District 6/Subdistrict.

64. Brandon opposes the proposed satellite hospital in

part because it, too, has expanded its facility and does not

believe additional beds are needed in AHCA District

6/Subdistrict 1. Nevertheless when a related facility sought to

establish a satellite near the St. Joseph's site, Brandon

supported the project. Brandon provides excellent quality of

care and has a strong physician supported system. It will not

be adversely affected in the long run by the addition of a

satellite hospital in St. Joseph's PSA.

65. Similarly, South Bay opposes the project. South Bay

will not expand and does not provide obstetric services. It has

had difficulty staffing its facility and believes the addition

of another competitor will exacerbate the problem.

Nevertheless, South Bay has a strong utilization level, a track

record of financial strength, and will not likely be adversely

impacted by the St. Joseph satellite.

66. The opponents maintain that enhanced access for

residents of the PSA does not justify the establishment of a new

satellite hospital since the residents there already have good

access to acute care services.

CONCLUSIONS OF LAW

67. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of these

proceedings. §§ 120.569 and 120.57(1), Fla. Stat. (2007).

68. St. Joseph's has the burden to prove by a

preponderance of the evidence that its CON application should be

approved. See , e.g. , Boca Raton Artificial Kidney Center, Inc.

v. Dept. of Health and Rehabilitative Servs. , 475 So. 2d 260,

263 (Fla. 1st DCA 1985); § 120.57(1)(j), Fla. Stat. (2007).

69. The Agency's preliminary decision on CON Application

No. 9833 and its findings in the SAAR are not entitled to a

presumption of correctness in this de novo proceeding. See

generally Dept. of Transportation v. J.W.C. Co., Inc. , 396 So.

2d 778, 787 (Fla. 1st DCA 1981). The Agency's construction and

interpretation of its rules and the statutes that it is charged

to implement, however, are entitled to deference. See , e.g. ,

State Contracting & Engineering Corp., v. Dept. of

Transportation , 709 So. 2d 607, 610 (Fla. 1st DCA 1998); §

120.57(1)(l), Fla. Stat. (2007).

70. The decision of whether to approve a CON application

must be based on a balanced consideration of all statutory and

rule criteria. Department of Health and Rehabilitative Services

v. Johnson & Johnson Home Healthcare, Inc. , 477 So. 2d 261 (Fla.

1st DCA 1984); Balsam v. Department of Health and Rehabilitative

Services , 486 So. 2d 1341 (Fla. 1st DCA 1988). The weight to be

given to each criterion is not fixed, but depends on the facts

and circumstances of each case. Collier Medical Center, Inc. v.

Department of Health and Rehabilitative Services , 462 So. 2d 83

(Fla. 1st DCA 1985).

71. All parties in this cause have the requisite standing

to participate in this proceeding pursuant to Section

408.039(5)(c), Florida Statutes (2007).

72. In this case the Applicant has presented a need

methodology that argues the satellite facility should be

approved. The opponents disagree (for the most part) based upon

their perception that the area growth has slowed, that the

utilizations projected are not reasonable, and that the existing

providers will be adversely affected by the new satellite

hospital.

73. As to the Applicant's methodology, St. Joseph's has

demonstrated a new satellite hospital at the Big Bend location

will enhance emergency department access. Further, the new

satellite will provide patients with a meaningful option for

hospital services in the southeastern portion of Hillsborough

County. The satellite will offer enhanced access to obstetrical

services to residents of the PSA. And finally, it will offer

reduced travel times for patients and their families using the

facility. These conveniences of access have been established.

74. As to the Agency's concern that the satellite will

siphon patients from Tampa General, a fragile Disproportionate

Share provider that must be protected, the projected growth in

population in the PSA as well as the county as a whole should

adequately generate sufficient patient days to alleviate such

fears. Moreover, since St. Joseph's intends to transfer beds

from its main site, the overall number of beds in AHCA District

6/Subdistrict 1 will remain unchanged. If freezing the number

of hospital beds were an option, the Legislature could do so.

It has not. St. Joseph can easily resolve the issue by agreeing

to not add the beds back to its main campus for a designated

period of time. Such a stipulation would allow the new

satellite facility to realize the utilization levels projected.

If St. Joseph's is correct in its assessment, all of the

providers in AHCA District 6/Subdistrict 1 will continue to grow

their admissions and/or patient days based upon population

growth and increased utilization.

75. Improving access to acute care hospital services

including emergency services in non-urban areas experiencing

growth (similar to the PSA herein) is the trend in medical

treatment. The addition of the subject satellite will provide

such services to a growing area of southeastern Hillsborough

County.

76. Patients requiring tertiary services will not be

benefited by the new satellite but those who require emergency

services will have a second option that will lessen emergency

department wait time. On balance St. Joseph's has established

need for its proposed satellite hospital based upon its

methodology, Florida Administrative Code Rule 59C-1.008(2)(e),

as well as the criteria found in Section 408.035, Florida

Statutes (2007). To the extent that the Agency remains

concerned that the project will unduly adversely affect

competition, such concern should be cured by condition.

Otherwise, St. Joseph's CON application generally meets the CON

statutory and rule criteria. With conditions for the provision

of Medicaid/Indigent care at 12.5 percent and a time limit

before beds are added back to the main St. Joseph's facility,

the Applicant's request for a satellite facility should be

approved.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that a Final Order be entered by the Agency for

Health Care Administration that approves CON Application No.

9833 with the conditions noted.

DONE AND ENTERED this 13th day of May, 2008, in

Tallahassee, Leon County, Florida.

J. D. PARRISH

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 13th day of May, 2008.

COPIES FURNISHED :

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Station 3

Tallahassee, Florida 32308

Craig H. Smith, General Counsel

Agency for Health Care Administration

Fort Knox Building, Suite 3431

Tallahassee, Florida 32308

Holly Benson, Secretary

Agency for Health Care Administration

Fort Knox Building, Suite 3116

2727 Mahan Drive

Tallahassee, Florida 32308

Stephen A. Ecenia, Esquire

Richard M. Ellis, Esquire

Rutledge, Ecenia, Purnell &

Hoffman, P. A.

215 South Monroe Street, Suite 420

Post Office Box 551

Tallahassee, Florida 32304-0551

Robert A. Weiss, Esquire

Karen A. Putnal, Esquire

Parker, Hudson, Rainer &

Dobbs, LLP

The Perkins House, Suite 200

118 North Gadsden Street

Tallahassee, Florida 32301

Elizabeth McArthur, Esquire

Jeffrey L. Frehn, Esquire

Radey, Thomas, Yon & Clark, P.A.

301 South Bronough Street, Suite 200

Post Office Box 10967

Tallahassee, Florida 32301

Karin M. Byrne, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Building 3

Mail Station 3

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.

APPENDIX A

Rulings on the objections raised by Tampa General :

1. Objection to Christopher Dausch, SJH Ex. #31: Overruled.

2. Objection to Christine Long, SJH Ex. #34:

Motion to Strike Ex. 4 to the Deposition: Granted.

Motion to Strike Ex. 3 to the Deposition: Granted.

Motion to Strike Deponent's Opinions: Denied. Tampa

General's objection has been duly considered in the weight that

should reasonably be given the opinions expressed by the

Deponent.

3. Objection to Rodney Cadwell, SJH Ex. #39: Overruled.

4. Objection to Robert Betzu, M.D., SJH Ex. #43: Overruled.

5. Rulings on other objections raised by Tampa General (in

joining those raised by South Bay and Brandon) are addressed

below.

Rulings on the Objections to Depositions raised by South Bay and

Brandon:

1. Objection to Rodney Cadwell, SJH Ex. #39: Overruled.

2. Objection to Christopher Dausch, SJH Ex. 31: Overruled.

3. Objection to Bruce Houghton, SJH Ex. #37: Overruled.

4. Objection to Christine Long, SJH Ex. #34: Overruled. See

note above.

5. Objection to Kimberly Guy, SJH Ex. #33: Overruled.

6. Objection to Teri Lancaster, SJH Ex. #38: Overruled.

7. Objection to Joseph Knight, SJH Ex. #39: Overruled.

8. Objections to Jeffrey Gregg, SJH Ex. #42: Overruled.

9. Objection to Benjamin Marquez, M. D., SJH Ex. #32:

Overruled.

10. Objections to Robert Betzu, M. D., SJH Ex. #43: Overruled.

11. Objection to Tommy Inzina, SJH Ex. #41: Overruled.

12. Objections to Deborah Shultz, M. D., SJH Ex. #35:

Overruled.

At hearing the parties stipulated that depositions would be

offered in lieu of live testimony. Objections that could have

been readily raised at deposition, have been deemed waived and

if submitted, overruled. Secondly, hearsay not supported by

direct evidence in the proceeding has not been relied upon to

reach a finding of fact in this cause. Additionally, data

beyond the planning horizon has not been accepted.

Neither St. Joseph's nor the Agency filed objections to the

depositions offered in this cause.