A certificate-of-need battle in Florida could be headed to court, now that state regulators have granted Health Management Associates final approval to build a hospital near the company's headquarters in Naples, Fla.
Not-for-profit Naples (Fla.) Community Hospital has fought the $75.1 million proposal every step of the way. The city's other hospital, 70-bed Cleveland Clinic Florida Hospital, initially fought HMA and proposed a 40-bed expansion of its own hospital. But the Cleveland Clinic dropped its objection after Florida's Agency for Health Care Administration ruled against its expansion project.
The state agency first granted investor-owned HMA approval to build the 100-bed hospital in June 2002. Naples Community appealed that decision, but a state administrative law judge upheld the approval in August and the state health agency issued the final order this month.
Edward Morton, chief executive officer of Naples Community's parent, NCH Healthcare System, said his chief concern was charity care. Morton said HMA's new hospital, planned for a site in the southern portion of Collier County, would "cherry-pick" profitable procedures while not taking a commensurate amount of charity-care cases.
"Absent HMA agreeing to provide its fair share of charity care," Morton said, "we intend to take whatever legal steps are necessary."
Under Florida law, Naples Community has 30 days from the filing of the order to file a notice of appeal with the state Court of Appeals to block the CON approval, said Kimela Reed, a spokeswoman for the state health agency. The final order was dated Oct. 2.
As to what a fair share of charity care would be, Morton pointed to HMA's recent agreement with Washington state regulators that allowed the company to purchase two not-for-profit hospitals from Providence Health System, a Seattle-based Roman Catholic system with 15 hospitals (Aug. 25, p. 28). HMA agreed to provide charity care equal to 2.24% of net revenue, the average level of other hospitals in central Washington.
Naples Community provided an estimated 6% of patient days-patient days are the standard used under Florida law-to those who qualified for charity care in the fiscal year ended Sept. 30, Morton said. If HMA agreed to provide that level of charity care, Morton said, "I think we would welcome them to the community. We just don't want anyone to cherry-pick."
Florida law requires hospitals to provide charity care equal to 2% of patient days to qualify for reimbursement for some indigent patients, and the CON approval requires HMA's Collier County hospital to meet that standard. HMA spokesman John Merriwether said the hospital would likely exceed that level because about 40% of Naples Community's charity-care patients live in the area where the new hospital is to be built.
"To think that those people are going to drive by our hospital for another 15 to 20 minutes to Naples Community Hospital-I think that's shortsighted," Merriwether said. "If anything, HMA will relieve Naples Community of what they call their indigent-care burden."
The administrative law judge who upheld the state health agency's approval of the CON agreed with HMA, writing, "with the addition of HMA, (Naples Community) will not be required to shoulder all charity or indigent care" in the area.
When asked if HMA would build the hospital if it were forced to provide charity care equaling 6% of patient days, Merriwether said it wouldn't come to that. "We're not going to kowtow to NCH," he said. "This is just a delay tactic. That's all it is."
The new hospital's 100 beds will all be in private rooms, something that Naples Community can't offer, the administrative law judge also noted. The judge ruled that HMA had demonstrated that another hospital would reduce the wait times and crowded conditions at Naples Community without hurting the not-for-profit hospital financially.
HMA executives are weighing whether to proceed with construction of the hospital despite the threat of a lawsuit, Merriwether said. Construction is expected to take 18 to 24 months, he added.