Opinion ID: 1881155
Heading Depth: 2
Heading Rank: 2

Heading: Expansion CON Application

Text: ¶ 26. St. Dominic argues that there is not substantial evidence to support the expansion CON application. ROH submitted an application requesting an expansion and relocation of its emergency department; an expansion through renovation of its diagnostic imaging department; and construction of a four story medical office building (MOB). Two main sub-issues are raised by St. Dominic those being that (1) the elements of criterion 1(a) were not satisfied, and (2) the evidence used to show the need to expand and renovate was not credible or sufficient. While St. Dominic argues about evidence that allegedly is not included, it does not demonstrate that ROH failed to show that there is no substantial evidence to support the CON, nor that the rulings were arbitrary or capricious. ¶ 27. The general standard of review for CON cases has previously been stated in this memorandum. Pursuant to Miss. Code Ann. §§ 41-7-191 & -201(2)(f), the State Health Officer adopted the Hearing Officer's recommendation and the Staff's analysis to determine that the CON application for the expansion/renovation and MOB of River Oaks was in substantial compliance with the MSDH adopted plans, criteria, and standards. ¶ 28. The Staff's analysis found that the project was in substantial compliance for the expansion and renovation contained in the State Health Plan and the Mississippi Certificate of Need Review Manual. The Staff found that the need requirement was upheld and ultimately recommended approval of the project. In its conclusion and recommendation, the Staff stated: This project is in substantial compliance with the criteria and standards for expansion and renovation as contained in the FY 2003 State Health Plan; the Mississippi Certificate of Need Review Manual, 2000 revisions; and all adopted rules, procedures, and plans of the Mississippi State Department Health. The applicant documented the need for the proposed project, based on growth and utilization of facilities and services in the areas affected by the project. Therefore, the Division of Health Planning and Resource Development recommends approval of the application by River Oaks Hospital, Inc. for the Vision 2003 Facility Expansion/Renovation and Medical Office Building project. ¶ 29. The Staff analysis included specific finding regarding the State Health Plan (SHP) Criterion 1 which is the need requirement. The Staff stated: According to the applicant, this project is necessitated by the rapid growth in the types of services offered at the facility, the increased number of physicians on the hospital's medical staff, and the increase in the demand for ancillary services. Applicant submits that within the past three years, River Oaks has experienced:  49% growth in the utilization of its existing radiology and imaging services;  11% growth in the number of patients treated in the hospital's emergency department;  the addition of 36 new physicians to the hospital's medical staff;  the addition of new acute care services, including diagnostic cardiac catheterization and angiography. The applicant submits that as a result of this growth, current hospital facilities have become inadequate to serve the volumes being experienced. In addition, due to the lack of space, existing programs, such as physical and occupational therapy, are experiencing difficulty in expanding and reaching peak operational efficiencies. The project involves the construction of a new medical office building and an infill connector area, relocation of the Emergency Services Department, renovation and expansion of Radiology and Imaging, and relocation of Physical and Occupational Therapy, Admissions, Main Lobby and Medical Records. Construction of Medical Office Building. This is a prime component of the project which requires construction of approximately 127,000 square feet of new space in a building directly connected with the existing hospital and the Suites. The construction of this facility will allow River Oaks to accommodate physicians desiring to establish an office practice in a facility immediately accessibly to an acute care hospital. The additional space will also allow River Oaks to recruit new physicians to the facility's medical staff, and will free up space for the addition of acute care beds, which the applicant addresses in its application for Vision 2003 Addition of 90 Acute Care Beds, also pending before the Department. Relocation of the Emergency Services Department. As a result of the construction of the new medical office building, applicant states that sufficient space will be available for River Oaks to lease space from the MOB developer for the relocation of its existing emergency services department. Applicant documents in the application that River Oaks has experienced a steady and continued growth in the utilization of its emergency services, increasing the total visits per year from 15,715 in FY 2000 to 17,470 in FY 2002. If this same growth were to continue, River Oaks anticipates serving approximately 20,979 patients by FY 2006. River Oaks Hospital expects to continue participating in the Mississippi State Trauma Network as a Level IV provider. Renovation and Expansion of Radiology and Imaging. Applicant submits that following the relocation of the emergency services department, it will have sufficient space available for the renovation and expansion of the radiology and imaging department. The utilization of the services offered by this department has increased by 49 percent since FY 2000. If this growth continues, River Oaks expects to perform in excess of 99,173 imaging services by FY 2006. Relocation of Physical and Occupational Therapy, Admissions, Main Lobby and Medical Records. After relocating the above referenced services, applicant expects that there will be space available to consolidate and expand other services such as radiology and imaging into a more central and efficient area of the facility. The applicant states that this project encompasses the hospital's long range plan to expand its ability to offer needed services to its service area. ¶ 30. An analysis based upon the Certificate of Need Review Manual was also performed. The Staff's experts' analysis of the General Review (GR) Criteria provided: GR Criterion 3  Availability of Alternatives Applicant believes that the project, as proposed, is the most efficient and cost effective method of meeting the needs of the health care community served by River Oaks Hospital. Applicant states that the hospital thoroughly considered a number of alternatives, including (1) the construction of a freestanding medical office building and imaging center, (2) renovation of existing facilities without construction of a new medical office building, and (3) maintain the status quo. The alternative to construct a freestanding MOB was rejected because additional space was needed for physicians, such as OB/Gyns, who need immediate access to acute care patients and services; and a freestanding imaging center would be less accessible to acute care patients or could potentially result in the duplication of equipment. The alternative to renovate existing facilities without construction of a new MOB was rejected due to the physical space constraints faced by departments in the current configurations. Applicant states that only through the relocation of the emergency department is sufficient space gained to expand the imaging department to appropriately meet current utilization requirements. In addition, the construction of the MOB will make available needed space for expanded acute care services. (Applicant also has pending before the Department an application for the addition of 90 acute care beds and renovation). Applicant rejected the alternative to maintain the status quo due to the rapid growth in the provision of services at the hospital.    GR Criterion 5  Need for Service River Oaks submits that the proposed services will be accessible to all residents of the area including low income persons, racial and ethnic minorities, elderly, women, handicapped persons, or any other underserved groups. The proposed project is designed and intended to accommodate current and projected utilization of services for patients of the River Oaks Hospital service area. No adverse impact is anticipated on any other facilities or services. The application included five letters of support for the project. Written comments were received from St. Dominic-Jackson Memorial Hospital indicating that River Oaks did not provide adequate information in its application to demonstrate that there exists any need for the expansion. It also questions the need for another MOB when the applicant currently has a MOB under construction (said MOB was CON approved in 2000). However, according to River Oaks, phase one of the already approved MOB is currently under construction and is specifically designed for physicians who desire office space on a hospital campus, without requiring immediate and direct access to an inpatient facility. In addition, applicant states that this building has smaller contiguous office configurations designed for smaller practices. Applicant submits that the MOB requested in this application will have more contiguous space available for larger practices, which could not be accommodated in the smaller building currently under construction. In contrast, to the types of practices desiring space in a freestanding building, many physician specialities, such as obstetrics and gynecology, vascular surgery and neurology, prefer medical office space located directly adjacent to the acute care patients, labor and delivery suites, and surgical operating rooms. St. Dominic also questions the applicant's use of the diagnostic cardiac catheterization service as justification for the project. The diagnostic cardiac catheterization service is a joint venture between River Oaks Hospital, Woman's Hospital and Rankin Medical Center, and is housed at River Oaks Hospital.    GR Criterion 8Relationship to Existing Health Care System The applicant submits that the CON proposal involves an enhancement to the existing facilities and delivery of services River Oaks Hospital already provides to the community. Therefore, the proposed project is expected to have no adverse impact on existing facilities. Applicant believes that the project is vital for the delivery of these health care services to patients of the River Oaks Hospital.    ¶ 31. St. Dominic opposed the application and requested a public hearing pursuant to Miss.Code Ann. § 41-7-197(2). Following the hearing, the Hearing Officer recommended approval of the CON, which the State Health Officer adopted. In the Hearing Officer's finding of facts and conclusion of law and recommendation, the Hearing Officer found that the four goals underlying the General Certificate of Need Policies were met in accordance with the State Health Plan. The State Health Plan provides that CON applications are to be judged against four General Certificate of Need Policies: to prevent unnecessary duplication of health resources, to provide cost containment, to improve the health of Mississippi residents, and to increase accessibility, acceptability, continuity and quality of health services. Of these, the primary purposes are cost containment and the prevention of unnecessary duplication of health resources, and these two purposes shall be given primary emphasis in the Certificate of Need process. I find that both Applications meet the four general goals of the State Health Plan. Also, a review of the sixteen general requirement criteria was performed. ¶ 32. After this CON application for the expansion/renovation and MOB was granted, St. Dominic appealed the decision to the Chancery Court of Hinds County. Chancellor Wise reviewed the case and affirmed the State Health Officer's final order granting the CON application approving the expansion, renovation and MOB in the River Oaks Facility Expansion Application. The chancery court found that the overwhelming weight of the evidence presented demonstrated a need for the project. ¶ 33. The chancery court set forth the applicable standard for hospital expansion projects and MOB's. The Mississippi State Health Plan Need Criterion 1(a) for hospital expansion projects provides: The applicant shall document the need for the proposed project. Documentation may consist of, but is not limited to, citing of licensure or regulatory code deficiencies, institutional long term plans (duly adopted by the governing board), recommendations made by consulting firms, and deficiencies cited by accreditation agencies (JCAHO, CAP, etc). In addition, for projects which involve construction, renovation, or expansion of emergency department facilities, the applicant shall include a statement indicating whether the Hospital will participate in the statewide trauma system and describe the level of participation, if any. ¶ 34. The chancery court found that there was substantial evidence of need of expansion for the three areas, those being the Emergency Department; the Diagnostic Imaging Department, and the MOB. The chancery court provided lengthy detailed facts to substantiate the need for these three expansions in its opinion. Further, the chancery court found that there was substantial evidence to support the MSDH's finding that the project complied with the State Health Plan. As part of the reasoning to affirm the CON, the chancery court also relied upon Jackson HMA, Inc. v. Miss. State Dep't of Health, 822 So.2d 968 (Miss.2002). Jackson HMA, Inc., dealt with St. Dominic's CON to a $35 million MOB. In Jackson HMA, Inc., this Court held: As previously indicated, it is not the responsibility of this Court to determine whether St. Dominic has proven a need for a $35 million MOB. Instead, it is the responsibility of this Court to determine whether MSDH's decision that St. Dominic has proven a need for the $35 million MOB is reversible under Mississippi law. The 1999 State Health Plan provides that the four primary goals underlying Mississippi's Certificate of Need laws are: (1) to improve the health of Mississippi residents, (2) to increase the accessibility, acceptability, continuity and quality of health services, (3) to prevent unnecessary duplication of health resources, and (4) to provide some cost containment. MSDH's order approving the CON addressed all of these above-stated goals. MSDH determined that St. Dominic demonstrated that a new MOB would allow for ease of traffic and parking congestion at the current location. Furthermore, MSDH found it to be cost effective to plan to build a facility larger than what was required to satisfy the immediate known need for additional space. This was supported by evidence that St. Dominic is landlocked and following construction of the proposed MOB, no additional space will be available that allows for direct access to the existing facilities. Testimony was also presented that constructing a smaller facility to meet current demands and subsequently adding to it to meet future demands for space runs contrary to the goal of cost containment. Inasmuch as the proposed project is based on long-range need projections, MSDH determined that the projected cost is justified. Since MSDH weighed and considered all factors under the 1999 State Health Plan and the CON Review Manual general criteria, MSDH's decision was not arbitrary or capricious, and it was supported by substantial evidence. Thus, this argument is without merit. The MSDH decision, finding that the proposed medical office building is needed and the CON application satisfies all applicable general review considerations, was not arbitrary or capricious. Furthermore, this Court finds that the MSDH order was supported by substantial evidence, was not contrary to the manifest weight of the evidence, was not in excess of the statutory authority or jurisdiction of the MSDH, and did not violate any vested constitutional rights of any party involved in the appeal. Therefore, the judgment of the chancery court upholding the decision of the MSDH is affirmed. Id. at 972-73. ¶ 35. Very similar to Jackson HMA, Inc., ROH has proposed an expansion project to meet its current and future patient needs and demands. We find that ROH's CON application was supported by substantial evidence and that the Department's decision to grant the CON was not arbitrary or capricious. Accordingly, the chancery court did not err in affirming the Department's decision.