oversight

Planning, Construction, and Use of Medical Facilities in the Jacksonville, Florida, Area

Published by the Government Accountability Office on 1971-08-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

REPORT TO THE SUBCOMMITTEE ON
EXECUTIVE REORGANIZA TION A ND
GOVERNMENT RESEARCH
COMMITTEE ON
GOVERNMENT OPERA TIONS
UNITED STATES SENATE




Planning, Construction,
And Use Of Medical Facilities
In The Jacksonville, Florida, Area
                              8- 167966




 BY THE COMPTROLLER GENERAL
 OF THE UNITED STATES


                /_~-~       AUG. 27. i17
             COMPTROLLER GENERAL OF THE UNITED STATES
                        WAIHINOTON. D.C.   tUe"




B- 167966



Dear Mr. Chairman:

      This is our report on the results of our review of the
planning, construction, and use of medical facilities in the Jack-
sonville, Florida, area. The review was made in response to
your request of September 18, 1969.

      The responsible Federal, State, and local health organiza-
tions have not been given an opportunity to formally examine and
comment on this report, although most of the matters were dis-
cussed with their representatives during the review.

       We plan to make no further distribution of this report un-
less copies are specifically requested, and then we shall make
distribution only after your agreement has been obtained.

                                  Sincerely yours,




                                  o
                                  Comptroller   General
                                  of the United States

The Honorable Abraham A. Ribicoff
Chairman, Subcommittee on
 Executive Reorganization and
 Government Rese arch
Committee on Government Operations
United States Senate




                  50TH ANNIVERSARY 1921-1971
                       Contents


DIGEST                                                    1

CHAPTER

   1      INTRODUCTION                                    4
              Hill-Burton program                         4
              Jacksonville area health complex            5
              Other health planning organizations         5

   2      PLANNING AND CONSTRUCTION OF HOSPITALS          8
              Planned changes in hospital bed capacity   10
              Overstatement of bed needs in 1970 State
                plan                                     12
                  Adjustments to use rate                12
                  Adjustments for Medicare benefi-
                     ciaries                             13
                  Adjustment for tourists                13
              Utilization of existing hospital beds      17
              Lack of control by planning agencies
                over construction of hospitals and
                skilled-nursing-care facilities          19
              Hospitals in neighboring counties          20
                  Planned changes in hospital bed ca-
                     pacity                              21

  3       PLANNING AND CONSTRUCIION OF SKILLED.-
          NURSING-CARE FACILITIES                        24
              Planned changes in bed capacity of
                skilled-nurs'ng-care facilities          25
              Occupancy rates of skilled-nursing-care
                facilities                               27
              Overstatement of bed needs in 1970 State
                plan                                     28

  4       COORDINATION AMONG HCOPITALS IN PLANNING AND
          SHARING MEDICAL SERVICES                       30
              Similar specialized services and equip-
                ment available at hospitals              30
              Use of specialized medical equipment       31
CHAPTER

              Role of council in controlling services
                provided by hospitals                    34
              Role of State agency in controlling ser.
                vices provided by hospitals              35
      5   SCOPE OF REVIEW                                37
                        ABBRMYATIOS
FHA       Federal Hous ing Administration
GAO       General Accounting Office
HEW       Department of Health, Education, and Welfare
PHS       Public Health Service
'.'OMPTROLLER GENERAL'S REPORT                 PLANNING, CONSTRUCTION, AND USE
''0 THE SUBCOMMITTE'    ON                     OF MEDICAL FACILITIES IN THE
4''XE'CUTIIVE HEORGANIZAT'ION                  JACKSONVILLE, FLORIDA, AREA
AND GOVERNMENT RESEARCH                        B-167966
COMMITTEE ON GOVERNMENT OPERATIONS
1INIrTED S1TATES SENATE


DIGEST

WHY THE REVIEW WAS MADE

      At the request of the Chairman, Subcommittee on Executive Reorganization
      and Government Research, Senate Committee on Government Operations, the
      General Accounting Office (GAO) examined into the coordination among Fed-
      eral and State agencies and local health organizations in planning and
      constructing acute-care hospitals and skilled-nursing-care facilities in
      certain metropolitan areas.
      GAO also reviewed the extent to'which certain medical facilities and ser-
      vices were shared among hospitals.
      The reviews were made in Baltimore, Maryland; Cincinnati, Ohio; Denver,
      Colorado; Jacksonville, Florida; San Francisco, California; and Seattle,
      Washington. These areas were selected on the basis of geographic distri-
      bution and the levels of Federal financial participation in the construc-
      tion of hospital and skilled-nursing-care facilities. GAO did not review
      the quality of care being provided by hospitals and skilled-nursing-care
      facilities. This report presents the results of GAC's review in the Jack-
      sonville area.
      Federal, State, and local health organizations have not been given an
      opportunity to formally examine and comment on the contents of this re-
      port.

FINDINGS AND CONCLUSIONS

      Background

      The Bureau of Community Medical Facilities in the Flordia Department of
      Health and Rehabilitative Services (State agency) administers grants made
      under title VI of the Public Health Service Act (42 U.S.C. 291), commonly
      known as the Hill-Burton program, by the Public Health Service (PHS) of the
      Department of Health, Education, and Welfare (HEW) for construction and
      modernization of hospitals and other medical facilities.
      'ihe State agency annually prepares a plan setting forth an estimate of
      the number of acute-care hospital beds and skilled-nursing-care beds needed
      for 5 years in the future. Although GAO verified the mathematical accuracy
      of the State agency's computation of future bed needs, an evaluation was


                                         I
 not made of the appropriateness of the methodology prescribed by PHS for
 use by the State planners in determining future bed needs. (See pp. 4 and
 37.)
 Need for hospital bed8

 According to the 1970 State plan, Duval County (which consists mainly of
 the city of Jacksonville) will need 2,510 hospital beds by 1974. The
 capacity of non-Federal hospitals in Duvai County at December 31, 1969,
 was 637 fewer beds than the projected need. By 1974 the capacity, as
 estimated by GAO on the basis of plans for future construction, will about
 equal the projected need. (See p. 8.)
 Although the State agency used the PHS formula in computing hospital bed
 needs, it made adjustments to its computations that were not inaccordance
 with PHS regulations. Had the State somputed its needs without these ad-
 justments, the projected need by 1974 would have been 1,847 beds, or 663
 fewer beds than shown as needed in the State plan. GAO noted that such
 adjustments were not made in computing bed needs for the 1971 State plan.
 (See p. 12.)
Federal financing can be made available for the construction of a medical
facility only if the State agency issues a certificate of need for the
proposed facility. The certificate of need must be based on a comparison
of the current bed capacity of facilities inservice or under construction
with the projected need as shown in the State plan. Consequently an over-
stated estimate of future bed needs may lead to Federal financial assis-
tance for the construction of facilities not actually needed. (See p. 16.)
Four hospitals, containing 788 beds and involving $3'.8 million in Federal
grants ($3 million) and mortgage insurance ($28.8 million) are under con-
struction or planned for construction in Duval County. Because the need for
hospital beds in Duval County as shown in the 1969 and 1970 State plans was
overstated, Federal financial assistance has been made available for construc-
tion of these hospitals for which a need would not have been determined had
the future bed need been determined in accordance with the PHS formula. (See
p. 16.)
 The State agency established individual counties or groups of counties in
 Florida as service areas rather than followed PHS regualtions which re-
quired that in establishing service areas consideration be given to loca-
 tions where hospital patients lived and obtained their hospital care and
where medical manpower was readily available. (See p. 20.)
Duval County hospitals have medical specialists and specialized equipment
which are not available in the hospitals in the neighboring counties.
Many hospital patients who reside in the six counties neighboring Duval
County receive their care in Duval County hospitals. Hospitals in the
neighboring counties are experiencing low occupancy rates. Therefore it
appears that the six counties and Duval County should be combined into
one service area for planning purposes. (See p. 20.)



                                   2
Need foi SkiZZed-nursing-care beds
According to the 1970 State plan, Duval County will need 1,379 skilled-
nursing-care beds by 1974. The capacity of skilled-nursing-care facili-
ties in Duval County at December 31, 1969, was 1,247 beds. By 1'74 the
capacity, as estimated by GAO on the basis of plans for future construc-
tion, will be about 1,897 beds, or about 518 more beds than the projected
need. (See p. 24.)
The 1970 State plan did not include 548 beds in facilities which did not
conform to Hill-Burton construction standards in the inventory of skilled-
nursing-care beds that would be available to meet the projected bed re-
quirements by 1974. These facilities complied with State and local
licensing and safety requirements. (See pp. 28 and 29.)
PHS regulations, however, require that such beds be considered in determin-
ing whether the number of bed spaces in facilities in operation or under
construction is sufficient to meet future bed requirements.
Had the 1970 State plan recognized these beds, the plan would have shown
that the bed capacity of skilled-nursing-care facilities as of December 31,
1968, exceeded the projected need in 1974 by 307 beds rather than showed a
need for 241 additional beds. Exclusion of nonconforming beds in comput-
ing bed capacity to meet estimated needs in the 1970 State plan resulted
in the issuance of certificates of need by the State agency for the con-
struction of additional skilled-nursing-care facilities. Federal financial
assistance later was approved for the construction of these facilities.
(See pp. 24 and 29.)
Sharing of medical equipment and services
Seven non-Federal h3spitals in Duval County (each with over 100 beds) gen-
erally provide the same types of specialized medical services, such as
neurosurgery, and have similar medical equipment. At each of these hospi-
tals, neither the volume of work nor the number of patients was sufficient
to utilize fully the available equipment. Low utilization of equipment re-
sults in higher charges for each unit of service. GAO believes that State
planning organizations should make detailed studies to determine the po-
tential for sharing specialized medical services and that the State agency
should know what services are available and needed before it approves new
projects for an area. (See pp. 30 to 36.)
Recent legislation--Public Law 91-296--increases Federal financial partici-
pation in projects involving the sharing of health services. It should pro-
vide hospitals which are seeking Federal grant funds with incentive to
share services.




                                     3
                           CHAPTER 1

                         INTRODUCTION
 HILL-BURTON PROGRAM

      Title VI of the Public Health Se-vice Act (42 U.S.C.
 291), commonly known as the Hill-Burton program, authorizes
 the Public Health Service to make graunts to States for
                                                         the
 construction of medical facilities. PHS, under the Hill-
 Burton program, requires each State to designate a single
 agency to administer the program and to prepare a State
 plan annually, projecting for each designated service
                                                         area
 of the State the need for medical facilities and comparing
 that projected need with the resources expected to exist.

     Pursuant to Florida law, the Bureau of Community Medi-
cal Facilities was designated as the State agency respon-
sible for administering the Hill-Burton program. The
                                                       State
agency annually prepares a plan setting forth an estimate
of the number of acute-care hospital beds and skilled-
nursing-care beds needed for the ensuing 5 years. Separate
estimates are made for each service area.

      The basic data used by the State agency to estimate the
 need for hospitals and skilled-nursing-care facilities
 sists of current and projected population data furnishedcon-
                                                           by
 the Bureau of the Census and hospital and skilled-nursing-
 care-facility utilization data, expressed in terms of
patient-days during the most recent year, furnished by
 facilities. The PHS guidelines for preparing the State the
                                                          plan
do not require that PHS; Veterans Administration; or
                                                      military
facilities, or the days of care that were rendered in
                                                       these
facilities, be considered in the planning process.
      To arrive at an estimated average daily census of pa-
tients, the State agency multiplies the projected popula-
tion by the current use rate (the number of days of irpa-
tient care in the most recent year for each 1,000 population)
and divides the result by 365. The resulting average
                                                       daily
census is divided by 80 percent for hospitals and 90
                                                      percent
for skilled-nursing-care facilities to arrive at an
                                                     estimate
of beds needed, assuming an 80-percent occupancy rate
                                                       for
hospitals and a 9 0-percent occupancy rate for


                              4
skilled-nursing-care facilities. This provides an estimated
20- or 10-percent vacancy rate to meet emergencies. ALi ex-
tra 10 beds are added to the estimated number of hospital
beds needed as an additional precaution to ensure that emer-
gency patients can be treated.

JACKSONVILLE AREA HEALTH COMPLEX

     The State agency has divided the State into 58 service
areas, primarily on a county basis. According to PHS regu-
lations, a service area is:

     "The geographic territory from which patients
     come or are expected to come to existing or pro-
     posed hospitals *** or medical facilities ***."

     Duval County is considered to be a service area by the
State agency. The six counties which neighbor Duval County
constitute five service areas.

     There are 11 hospitals, including a facility operated
by the U.S. Navy, and 13 skilled-nursing-care facilities in
Duval County. In the neighboring six counties, there are
five hospitals and six skilled-nursing-care facilities. The
map on page 6 shows the location of the hospitals in the
Jacksonville area.

     Generally there are two types of nursing-care facili-
ties: (1) those which provide care for convalescent or
chronic-disease patients requiring skilled nursing care and
which are under the general direction of persons licensed
to practice medicine or surgery in the State and (2) those
which provide domiciliary care. Only the facilities pro-
viding skilled nursing care qualify for Hull-Burton grants.
Our review included only those facilities providing skilled
nursing care.

OTHER HEALTH PLANNING ORGANIZATIONS

     In accordance with the Hill-Burton legislation, the
Governor of Florida appointed a State Hospital Advisory
Council. Its membership includes representatives of non-
governmental organizations or public agencifs concerned
with the construction, operation, or utilization of hospitals


                              5
            MAP OF HOSPITALS IN JACKSONVILLE AREA
   N                                    GgO_




                                                        NASSAU COUNTY            O
            GEORGIA




       I                                    ,'~ DUVAL COUNTY


           IBAKER COUNTY                                             D


                  I
   o
UNION COUNTIY
                S. U '        IIT                                   U- N
                       MEMRST.                                                 JOHNS COUNTY
           6)   EMRA     HS    IT              CLAY COUNTY               E




   0              to            I1~                so               4o

                         sCALE or   MILES                                            I   ,




             1. DUIVAL MEDICAL CENTER                        10.   DOCTOR'SHOSPITAL
            2 ST. LUKE'S HOSPITAL                            1.    U.S. NAVY HOSPITAL
            3 METHODIST HOSPITAL
                                                             12    ED FRAZER MEMORIAL HOSPITAL
           4 HOPE HAVEN CHILDRENS HOSPITAL
                                                             13    HUMPHREY'S MEMORIAL HOSPITAL
           5 E.APTIST MEMORIAL HOSPITAL
                                                            14     BRADFORD COUNTY HOSPITAL
           6 MEMORIAL HOSPITAL
                                                            15     CLAY MEMORIAL HOSPITAL
           7 BEACHES HOSPITAL
                                                            16,    FLAGER HOSPITAL
           8 RIVERSIDE HOSPITAL
                                                            17.    UNION COUNTY HOSPITAL
           9 ST VINCENT HOSPITAL
                                                                    (UNDER CONSTRUCTION)




                                               6
and other facilities and representatives of consumers fa-
miliar with the need for services provided by the facili-
ties. The council meets at least once each year to con-
sider the annual revisions in the State plan and the con-
struction schedule of projects proposed under the plan.

     Public Law 89-749, approved November 3, 1966, created
the Partnership for Health Program which introduced the
concept of comprehensive health planning. Under this new
type of planning, it is envisioned that both providers and
consumers of health services will participate in identify-
ing health needs and resources, establishing priorities,
and recommending courses of action.

     The Bureau of Comprehensive Health Planning, Division
of Administrative Services, Florida Department of Health
and Rehabilitative Services, is responsible for administer-
ing and -oordinating comprehensive health planning at the
State level.

     The Health Planning Couincil of the Jacksonville Area,
inc., is the comprehensive health planning agency for Jack-
sonville.  Its service area encompasses northeast Florida--
Duval, Baker, Bradford, Clay, Nassau, and St. Johns counties.
The council, incorporated by the State as a nonprofit cor-
poration in 1963, is a voluntary organization. The council,
at its outset, devoted its efforts to studying the manner
in which such medical facilities as hospitals and nursing
homes should be expanded, taking into consideration hospital
and nursing home utilization trends and demographic (popula-
tion) characteristics of the Jacksonville area.

     In October 1968 the council was designated as the area-
wide comprehensive health planning agency. It expanded its
planning efforts and established the objectives of ensuring
that residents have adequate health-care facilities and of
securing the highest quality of care consistent with econ-
omy.




                             7
                         CHAPTER 2

          PLANNING AND CONSTRUCTION OF HOSPITALS

     According to the 1970 State plan prepared by the State
agency, Duval County will need 2,510 hospital beds by 1974.
The bed capacity of non-Federal hospitals in Duval County
as of December 31, 1969, was 1,873 beds, or 637 fewer beds
than the projected need. We estimate that, if current plans
of hospital officials are carried out, the total bed capac-
ity by 1974 would be increased to 2,518 beds, or eight beds
in excess of the need as projected in the State plan.

     Although the State agency used the PHS formula in com-
puting hospital bed needs for use in the State plan, it made
adjustments to its computations that were not in accordance
with PHS regulations. Had the State agency computed future
bed needs in Duval County in accordance with the PHS for-
mula, the projected need for 1974 would have been 1,847
beds, rather then 2,510 beds.

     Four hospitals, containing 788 beds and involving
$31.8 million in Federal grants ($3 million) and mortgage
insurance ($28.8 million), are under construction or planned
for construction in DIcal County. Because the need for hos-.
pital beds in Duval County as shown in the 1969 and 1970
State plans was overstated, Federal financial assistance has
been made available for construction of these hospitals for
which a need would not have been determined had the future
bed need been determined in accordance with the PHS formula.

     Of the 10 non-Federal hospitals in Duval County, five
had 399 beds in use or available for use that did not con-
form to Hill-Burton construction standards. Most of the
399 beds did not conform because the buildings in which the
beds were located were not constructed of fire-resistant
materials or did not meet other safety requirements of the
Hill-Burton construction standards.
     One of the five hospitals, containing 29 of these beds,
was operating under a provisional State license pending




                             8
completion of a replacement facility. The remaining four
hospitals complied with State licensing and safety require-
ments. One of these four hospitals, containing 202 noncon-
forming beds,was to be replaced by a new facility which was
under construction at the time of our fieldwork. According
to the State plan, the remaining nonconforming beds would
require modernization to conform to Hill-Burton standards.

     PHS regulations require that suct nonconforming beds be
considered in determining whether the number of beds in fa-
cilities in operation or under construction are sufficient
to meet future bed requirements. The State plan included
these beds as being available to meet current and future
patient-care needs.

     The State agency established individual counties or
groups of counties in Florida as service areas rather than
related the establishment of service areas to the locations
where large numbers of hospital patients lived and where med-
ical manpower was readily available, as required by PHS.

     Studies of patients receiving care in Duval County hos-
pitals showed that a large number of these patients lived in
the six counties neighboring Duval County. Five of these
counties have hospitals which had experienced low occupancy
rates. In the other neighboring county, which at the time
of our fieldwork did not have a hospital, Federal assistance
has been obtained for the construction of a 25-bed hospital.
(See p. 22.)




                              9
  PLANNED CHAIGES IN HOSPITAL BED CAPACITY
       In accordance with PHS regulations, the State agency
 in preparing the State plan does not consider platmed in-
 creases or decreases in bed capacity but considers only ad-
 ditional capacity under construction. Therefore we inter-
 viewed hospital officials and local planning officials to
 determine plans for increasing or decreasing hospital bed
 capacity.

      We were informed that six of the 10 hospitals in Duval
 County planned to increase their total bed capacity by 645
 beds by 1974. Three of the six hospitals were constructing,
 or planned to construct, additional facilities which would
 increase their total bed capacity by 366 beds. Another
 hospital was planning to convert 50 existing beds from
 skilled-nursing-care beds to use for acute-care beds. The
 remaining two hospitals were constructing new facilities
 which would have a capacity of 460 beds and which would re-
 place facilities containing 231 beds, or a net increase of
 229 beds.
      Following is our analysis of the projected changes in
 bed capacity--planned and under construction--in Duval
 County for the period 1970 to 1974.
                          Bed capacity      Increase              Projected    Increase     Projected
                           at 12-31-69      in beds             bed capacity   in         bed capacity
       Hospital             (note a)      durina 1970            at 12-31-70   1971-74       by 1974
St. Vincent                     341                     b            379
                                                  38                              -             379
Baptist Mamoriel                391              256                 647                        647
Djval Medical Center            202              1 54                356                        356
St. Luke's                      238                                  310
                                                  72 d                                          310
Riverside                       159               .                  159          -             159
Methodist                       164               -                  164          -164
Hope Haven Childrens             80                         .         80                        80
Beaches                          69               -                   69                        69
Memorial                        200                                  200         50-           250
Doctor's                                               f
                                 29               75                 104         -             104
                              1.873              595               268           50          2.518
aBased on State agency's statistics and informa ion.

bUnder construction as of December 31,   1970.
cExisting 202-bed hospital to be replaced by a hospital with a capacity of 356 acute-care
 beds. Preliminary plane call for the existing hospital to be converted to a skilled-
 nursing-care facility.
dFacilities for 72 beds completed in June 1970.

aSkilled-nursing-care   beds to be converted for use as acute-care beds.
fExisting 29-bed hospital to be replaced by a hospital with a capacity of 104 beds.




                                                  10
     Of the five hospitals in Duval County for which new or
additional facilities were under construction or were plan-
ned for construction, four received Federal financial as-
sistance in the form of Hill-Burton grants or Federal Hous-
ing Administration (FHA) mortgage insurance.
                     Esti-   Federal
                     mated    assis-
    Hospital          cost    tance      TXIe of assistance

                       (millions)
Baptist Memorial     $34.7    $25.0    FHA mortgage insurance
Duval Medical Cen-
  ter                 14.7      1.5    Hill-Burton grant
St. Luke's             5.2      1.5    Hill-Burton grant
Jacksonville Gen-
  eral (note a)        4.2      3.8    FHA mortgage insurance

    Total            $58.8    $31.8

aName of proposed new 104-bed osteopathic hospitalwhich is to
 replace 29-bed Doctor's Hospital.

     The U.S. Navy operates a 463-bed general hospital in
Duval County. This facility provides medical service to
active duty military personnel and their dependents and to
retired military personnel and their dependents. These per-
sonnel constitute about 37 percent of the estimated popula-
tion of 500,000 of Duval County. Hospital officials told
us that there were no plans to change the capacity of the
hospital.
 OVERSTATEMENT OF BED NEEDS IN 1970 STATE PLAN
     Although the State agency used the PHS formula in com-
puting hospital bed needs, it made adjustments to its com-
putations that were not in accordance with PHS regulations.
The 1970 State plan shows that Duval County will need 2,510
beds by 1974; however, if future needs had been computed
solely on the basis of the PHS formula, the projected need
would have been 1,847 beds by 1974, or 26 fewer beds than
the 1,873 beds that were available at December 31, 1969.
Three adjustments made by the State agency in computing fu-
ture bed needs in Duval County are discussed below.

Adiustments to use rate

     PHS regulations state that a service area's use rite
(number of days of patient care each year for each 1,000
people) is the best measure of use for planning purposes.
PHS regulations provide that a use rate be based on the most
current hospital use experience available.

      In computing bed needs for Duval County, the State
agency applied the use-rate data for calendar year 1968, the
most current data available at the time the State plan was
prepared. In preparing the State plan, however, the State
agency increased the 1968 use rate by 23 percent for all ser-
vice areas in Florida, including Duval County. This in-
crease in the use rate was based on State-wide data which
showed that the hospital use rate throughout Florida had in-
creased by 23 percent during the period 1963-68. Over the
same period, however, the use rate for Duval County had in-
creased by only 11 percent. The State agency had made use-
rate adjustments annually from 1966.

     The chief of the State agency informed us that he be-
lieved that en adjustment in the use rate was needed. He
explained that, because the use rate increased by 23 per-
cent from 1963 to 1968, it was reasonable to assume that
this increase in hospital use would continue. He said, how-
ever, that, in preparing future State plans, the State
agency would consider adjusting the use rate for each ser-
vice area on the basis of each service area's experience,
rather than on the basis of State-wide experience.



                            12
     The State agency, in estimating future bed needs for
inclusion in the State plan each year, is required by PHS to
use the most current hospital use data to compute a use rate.
A change in the use rate of a service area from the previous
year's rate would change the estim' :ed future bed require-
ments in the new State plan. Therefore the adjustment to
the use rate for Duval County in the 1970 State plan re-
sulted in an overstatement of future bed requirements in
the plan.
     We were informed by a PHS official that the adjustment
of the use rate had been deleted from the formula used in
computing bed needs for the 1971 State plan.

Adjustments for Medicare beneficiaries

     The projected need for beds was increased by 10 percent
to meet the anticipated needs of persons aged 65 or over who
were eligible for Medicare benefits.

     The 10-percent increase was used for the 1967 and 1968
State plans because sufficient statistics were not avail-
able at the time these plans were prepared to forecast the
increased need as a result of the Medicare program. From
July 1966, however, Medicare patients have been using Flor-
ida hospitals and the impact of the program was reflected
in hospital use data. Therefore adjustments to the State
plans for 1969 and 1970 to provide for Medicare patients did
not seem appropriate.

     The chief of the State agency agreed that the
10-percent adjustment was no longer needed since Medicare
patient-days were already included in hospital patient-days.
This adjustment was not made in computing bed needs for the
1971 State plan.
Adjustment for tourists

     The State agency added about one million tourists, or
an increase of about 14.5 percent, to the State's projected
resident population in estimating bed needs. Although the
addition of tourists appears to have increased estimated bed
needs, it actually had the opposite effect, because it



                            13
caused the projected area use rate to be less than it would
have been if the tourists had not been included.

     The inclusion of tourists in population data appears
to have been contrary to title VI of the Public Health Ser-
vices Act, as amended in 1964 by section 3(a) of Public Law
88-443 which provides that the State plan set forth the num-
ber of general hospital and long-term-care beds for inpatient
care of persons residing in the State. Inasmuch as Florida
tourists generally are residents of other States, they are
therefore included in the resident populations used by those
States in computing bed needs.

     Also PHS regulations provide that the projected popula-
tion of all service areas in a State not be more than the
projected State-wide population estimate furnished by PHS,
except as may be required by (1) exclusion of large popula-
tion groups served by facilities not included in the State
plan (i.e., Indians served by PHS facilities) and (2) ad-
justment for State border areas which serve an interstate
population group. The adjustment for tourists was not made
in computing bed needs for the 1971 State plan.


     A comparison of bed needs for Duval County by 1974 for
the 1970 State plan, as determined by using the State agency
method and the PHS formula, is shown below.




                             14
                                                               State
                                                              agency            PHS
                                                              method          formula
Area use rate--1968:
    (1) Duval County Hospital patient-days--1968            477,218           477,218
    (2) Duval County population (thousands)--1968                     a                   b
                                                                544 .6            500.5
    (3) Duval County area use rate (per thousand) (1) ; (2)     876               953
Projected area use rate--1974:
    (4) State-wide patient-days per thousand
          population--1968                                     1,034
    (5) State-wide patient-days per thousand
          population--1963                                       841
    (6i Percentage increase in State-wide patient-
          days per thousand population                            23
    (7} Duval County projected area use rate--1974:
        876 x 123 percent                                      1,077
        953 x 100 percent                                                         953
Projected average   daily census--1974:
    (8) Projected   area use rate                              1,077              953
    (9) Projected   population (thousands)--1974                                          b
                                                                 6 16   .1a       562.3
   (10) Projected   average daily census (8) x (9) i 365       1,818            1,469
Projected bed need--1974:
   (11) Projected average daily census                         1,818            1,469
   (12) Percent occupancy                                         80               AO
   (13) Additional beds for programming purposes                  10               10
   a'¶\ Projected bed need (11)   i (12)   i (13)              2,282            1,847
        .ercent increase in bed need for Medicare
          patients                                                 10
   (16) Additional beds for Medicare patients                    228
   (17) Total projected bed need                               2,510            1,847
aTncludes tourist population and population, except active duty military personnel,
 supported by the Navy hospital.

bExcludes tourist population but includes population, except active duty military
 personnel, supported by Navy hospital.



      We discussed the 1970 State plan with the Associate
 Regional Program Director, PHS, who stated that the bed needs
 shown in the plan were overstated due to adjustments to the
 use rate and adjustments for Medicare beneficiaries and
 tourists. He said that the bed needs were so overstated
 that the plan's effectiveness as a planning document was
 lost and that it was possible for nearly any project sponsor
 to obtain a certificate of need for the construction of a
 hospital.



                                            15
     The Associate Regional Program Director informed us
that he had met with the chief of the State agency to
                                                       dis-
cuss these adjustments. He informed us also that, in
                                                       pre-
paring the 1971 State plan, the State agency had deleted
                                                          the
three adjustments--for use rate, for Medicare beneficiaries,
and for tourists. If the State agency had continued
                                                      to make
these adjustments, the bed need in future State plans
                                                       would
have been overstated.

     Federal financial assistance, in the form of Hill-
Burton grants, FHA mortgage insurance, or Small Business
                                                          Ad-
ministration loans, can be made available for the construc-
tion of a medical facility only if the State agency issues
a certificate of need for the proposed facility. The
                                                       deci-
sion to issue a certificate of need is based on a comparison
of the existing bed capacity of facilities (in service
                                                        and
under construction) with the projected need as shown in
                                                         the
State plan.

      As stated previously, four hospitals, containing 788 beds
and involving Federal assistance of $31.8 million, are
                                                         under
construction or planned for construction in Duval County.
Because the need for hospitals in Duval County as shown
                                                          in
the State plans for 1969 and 1970 has been overstated
                                                        due
t, the adjustments made by the State agency, Federal finan-
cial assistance has been made available for the construction
of four hospitals in Duval County (see p. 11) which, had
                                                           the
future bed need been determined in accordance with the
                                                         PHS
formula, would not have been needed according to the State
plan.




                             16
 UTILIZATION OF EXISTING HOSPITAL BEDS

     The average occupancy rate for nine of the 10 non-
Federal hospitals in Duval County for the period October 1,
1968, to Setember 30, 1969, was abort 82 percent. Data was
not available for the remaining hospital. A local planning
official advised us that a desirable level of occupancy was
90 percent for hospitals of 100 beds or more and 80 percent
for hospitals of fewer than 100 beds. PHS guidelines pre-
scribe an occupancy factor of 80 percent for use in computing
the number of beds required in a service area.

     The following table shows the bed capacity and the occu-
pancy rates of the non-Federal hospitals in Duval County.

                                                            Average
                             Capacity at                occupancy rate
                          December 31, 1969                 (note a)
                        Licensed      Survey       Licensed        Survey
      Hospital          (note b)     (note c)      capacity       capacity
St. Vincent                 361          341         87.7%         92.8%
Baptist Memorial            400          391         81.7          83.6
Duval Medical Center        256          202         69.1          87.6
St. Luke's                  239          238         88.7          89.1
Riverside                   159          159         69.9          69.9
Methodist                   174          164         75.9          80.5
Hope Haven Childrens         72           90         54.1          48.7
Beaches                      68           69         54.3          53.5
Memorial                    310          200          (d)           (d)
Doctor's                     29           29         58.8          58.8
                          2 068        1 873        77.8        81.8
 Based on occupancy statistics for the period October 1, 1968, to Sep-
 tember 30, 1969. At the time of our fieldwork, these were the most
 recent statistics available.
bLicensed beds represent the maximum number of beds that the State
 authorized the facility to use.
CSurvey beds represent the available capacity as determined by the
 State agency by applying PHS formula. This determination is based
 primarily on a minimum requirement standard of square footage of
 usable floor space for each bed. Minimum required square footage  is
 defined as 100 square feet for each bed in a single room and at least
 80 square feet for each bed in a multibed room.
dNew facility which began operation in May 1969.




                                  17
       As shown in the above table, certain hospitals in
 County are experiencing relatively low occupancy         Duval
                                                   rates--less
  than 80 percent. If current plans of hospital officials
 carried out, total bed capacity in Duval County            are
                                                  will be in-
 creased to 2,518 beds, or 671 more beds than the
                                                   need that
 would have been projected in the State plan if the
                                                     State
 agency had computed future bed requirements in accordance
 with the PHS formula. Since the estimate of future
                                                      bed needs
 for Duval County in the State plan was overstated
                                                    due to the
 adjustments, however, the State plan showed that
                                                    there was
 a substantial need for additional hospital bed spaces
                                                        in
 Duval County. Therefore organizations which sought
                                                      Federal
 assistance for the construction of medical facilities
                                                        re-
 ceived certificates of need from the State agency.

      As shown on page 11, four hospitals in Duval County,
 which new or additional facilities were being constructed for
 were planned for construction, received Federal            or
                                                 assistance
 in the form of Hill-Burton grants or FHA mortgage
                                                   insurance.
     Facilities excess to needs result in underutilization
of facilities, and underutilization generally results
                                                        in
higher operating costs for each patient-day. Since
                                                      the Gov-
ernment reimburses hospitals and skilled-nursing-cart
ities under the Medicare and Medicaid programs, the     facil-
                                                      Govern-
ment can be expected to share in the higher operating
                                                        costs.
      Newly constructed hospitals can affect substantially
 the occupancy rate of existing hospitals. For example,
hospitals, Baptist Memorial and Methodist, experienced two
stantial decline in their occupancy rates when Memorial a sub-
                                                         Hos-
pital, a 200-bed facility, opened in May 1969. During
                                                        the
12-month period prior to the opening of Memorial
                                                  Hospital,
Baptist Memorial had an occupancy rate of 93.9 percent.
occupancy rate of Baptist Memorial Hospital. declined      The
                                                      to 86.3,
however, during the first year that Memorial Hospital
                                                       was
open.

     The occupancy rate of Methodist Hospital during
                                                      the
same 12-month period prior to the opening of Memorial
                                                       Hos-
pital was 85.6 percent. During the first year of
                                                  operation
of Memorial Hospikal, the occupancy rate of Methodist
pital dropped to 72.1 percent.                         Hos-
     Further, dring the 6-month period July to December
1970, Memorial Hospital had a 92.9-percent occupancy rate
while the occupancy rates of Baptist Memorial and Methodist
Hospitals dropped to 74.1 percent and 62.2 percent, respec-
tively.

     We noted that Baptist Memorial had obtained an FHA-
insured loan to finance the construction of a facility that
would provide 256 additional bed spaces. This facility was
under construction at the time of our fieldwork. In view
of the declining occupancy rates the hospital experienced
since the opening of Memorial Hospital, it is reasonable to
assume that the occupancy rate of Baptist Memorial will fur-
ther decline after the addition of 256 bed spaces.

LACK OF CONTROL BY PLANNING AGENCIES
OVER CONSTRUCTION OF HOSPITALS AND
SKILLED-NURSING-CARE FACILITIES

     The only direct control over the construction of hos-
pitals and skilled-nursing-care facilities that is available
to State agencies applies to facilities to be constructed
with Federal assistance, in that, before such assistance can
be furnished, a certificate of need must be issued by the
State agency. (See p. 16.)

     If a proposed project is to be financed privately and
if its design and specifications meet State construction
standards, the State agency cannot disapprove the project
even though the facilities will be excess to projected needs.
Also the Health Planning Council of the Jacksonville Area,
Inc., which is responsible for comprehensive health planning
at the local level, has no effective means of preventing
construction of facilities excess to projected needs; it can
only recommend that construction not be undertaken and
attempt to persuade project sponsors to curtail construc-
tion plans.




                            19
 BOSPITALS IN NEIGHBORING COUNTIES
       There are six counties neighboring Duval County
                                                       which
 constitute five separate service areas in the
                                                Florida State
 plan. Bradford, Clay, Nassau, and St. Johns Counties
 represent a service area, and Baker and Union          each
                                                Counties rep-
 resent one service area. (See p. 6.) Most of
                                                 the towns in
 the six neighboring counties are within 45 miles
                                                   of Jackson-
 ville. Also the Duval County hospitals have medical
 ists and specialized equipment which are not availablespecial-
                                                         in the
 hospitals in neighboring counties.

      Studies made by the council of hospital patients
showed that a large number of patients living
                                                in the coun-
ties neighboring Duval County received care in
                                                 Duval County
hospitals. In each of five neighboring counties,
                                                    hospitals
were experiencing low occupancy rates. In the
                                                 sixth county,
Union County, a 25-bed hospital was under construction
the time of our fieldwork. This hospital was             at
                                               financed pri-
marily with Federal funds. Federal, State, and
                                                  local
health officials informed us that faciiities in
counties could serve the medical needs of the     adjacent
                                               people in-
tended to be served by the new hospital and expressed
as to whether Union County had, or could get,           doubt
                                               the resources
to staff and operate the new hospital.

      PHS regulations require that the State agency
lish service areas on the basis of (1) locations     estab-
                                                   of hospi-
 tal patients' homes, (2) availability of medical
                                                   manpower,
(3) distance and travel time to hospitals, and
                                                (4) the so-
cioeconomic, demographic, trade, and transportation
teristics of the areas. The regulations also          charac-
                                               provide that
county boundaries not be used to define service
                                                  areas un-
less they represent the most logical areas for
                                                planning
health facilities and services.

     Studies conducted by the council showed that,
                                                    for the
12-month period ended June 1969, 53 percent of
                                                the resi-
dents of Baker County who were hospitalized
                                            in the
county area (Duval, Baker, Bradford, Clay, Nassau, six-
St. Johns) surveyed by the council went to Duval    and
                                                  County
hospitals. During this same period, the occupancy
the Ed Fraser Memorial Hospital in Baker County     rate for
                                                 was only


                             20
22 percent. Further, during the same period, 41 percent of
the residents of Clay County who were hospitalized in the
six-county area went to Duval County hospitals. The occu-
pancy rate during this period for the Clay Memorial Hospi-
tal in Clay County was 59 percent.

     The following table shows the bed capacity and the oc-
cupancy rates for the five hospitals in the counties neigh-
boring Duval County.

                                                            Average
                                                        occupancy rate
                                     Capacity at           (note a)
                                  De~mber 3 -j969      Licensed   Survey
  County         Hospital         Liceased  Survev     capacitv caD8citx
Baker       Ed Fraser Memorial       25       25         20.5      20.5
Bradford    Bradford County          50       50         66.3      66.3
Clay        Clay Memorial            60       60         65.6      65.6
Nassau      Humphrey's Memorial      53       56         54.4      51.5
St. Johns   Flager                  131      122         70.1      75.2

aBased on occupancy statistics for the period July 1, 1969, to June 30,
 1970.



Planned changes in hospital bed capacity

     A new hospital was under construction in a neighboring
county at the time of our fieldwork. Further, plans were
being formulated for the construction of two new hospitals
and for the conversion of an existing hospital for use as a
skilled-nursing-care facility. Following is an analysis of
planned changes in bed capacity in the six counties neigh-
boring Duval County.




                                   21
                            Bed capac-   Increase       Projected    Increase or    Projected
                              ity at      in beds       bed capac-   decrease (-)
                             12-31-69                                                   bed
                                          during          ity at       in beds      capacity
   QUaYt   anLd hospital     (note a)      197Q         I.-31-70       1971-74       bt19174
  Baker:
      Ed Fraser Memorial       25           -               25           -             25
  Bradford:
      Bradford County          50           -              50            -             50
 CI-y:
     Clay Memor'al             60           -              60           -60 b          -
     New (unnamed)
 Nassau:                                                                150 c         150
      Humphrey's Memorial      56           -              56            -             56
 St. Johns:
      Flager                  122           -             122            -            122
     New (unnamed)
 Union:                                                                  51 C          51
      Union County             -           25   d
                                                           25            -             25
 aAs deter         -sing PHS criteria.   (See p. 21.)
 bPlans be , vprepared for conversion of beds from
                                                   acute-care beds to skilled-nurring-
  care beds.

 tIn preliminary planning stage.

 dUnder construction as of Decamber 31. 1970.

      Union County Hospital, a 25-bed hospital, which
under construction at the time of our fieldwork,       was
                                                  is located
in a rural county having about 7,150 residents,
                                                 about
45 miles southwest of Jacksonville. Of the estimated
                                                        cost
of $939,000 of the hospital, $920,000, or 98
                                              percent, is
being financed with Federal funds consisting of
                                                 a Hill-
Burton grant of $365.n00 and a loan of $555,000
                                                 from the
Departmen. of Housing and Urban Development.

      The chief of the State agency and other State
                                                     and Fed-
 eral officials informed us that they were opposed
 project because (1) the occupancy rates of four    to the
                                                 hospital 8s
within 30 miles of the new hospital which would
                                                  serve Union
County were low, (2) Union County did not have
 to serve the new hospital, and (3) there were a physician
                                               not enough
people in the county to jus.ify the new hospital.
theless the project was approved by the State        Never
                                               Hospital Advi-
sory Council because the 1968 State plan showed
                                                 that the
county, by not having a hospital, had a high
                                              priority for
Hill-Burton funds.

     Because a large number of patients residing
counties neighboring Duval County received       in the six
                                           their care in
Duval County hospitals and because hospitals
                                             in
boring counties are experiencing low occupancy the neigh-
                                               rates, it

                                            22
appears that the six counties and Duval County should be
combined into one service area for planning purposes.

     The chief of the State agency informed us that desig-
nating the service area was one of the most important fac-
tors in planning. He agreed that a county should not nec-
essarily be designated a service area because it did not
always represent the true need of an area for medical fa-
cilities. He stated that the State agency had not been
able to establish service areas throughout the State in ac-
cordance with PHS regulations because of the lack of ade-
quate data, such as (1) the locations of hospital patients'
homes and (2) the availability of medical manpower.




                            23
                          CHAPTER 3

                PLANNING AND CONSTRUCTION OF

               SKILLED-NURSING-CARE FACILITIES

     According to the 1970 State plan, Duval County will
need 1,379 skilled-nursing-care beds by 1974. We made an
analysis of the capacity of Available facilities as of De-
cember 31, 1969. Our analysis showed that a total of
1,247 skilled-nursing-care beds were in use in 12 non-
Federal facilities and that accommodations for 291 addi-
tional beds were under construction.

     Local nursing-home and hospital officials had plans
to increase the bed capacity of skilled-nursing-care faci-
lities bv 359 beds by 1974. If the plans of these offi-
cials are carried out, the bed capacity of skilled-nursing-
care facilities in Duval County by 1974 will total about
1,897 beds in 17 facilities. Therefore we estimate that
by 1974 Duval County may have about 518 more skilled-
nursing-care beds than the projected need of 1,379.

      The 1970 State plan showed that the capacity of
skilled-nursing-care facilities in operation or under con-
struction at December 31, 1968, totaled 1,138 beds, or 241
beds less than the projected need of 1,379 beds by 1974.
The State plan showed also that, as of December 31, 1968,
11 skilled-nursing-care facilities, having a total of 548
beds, did not conform to Hill-Burton construction standards
because the facilities were not constructed of fire-
resistant material. These facilities complied with State
and local licensing and safety requirements. The State
plan did not include these beds in the inventory of
skilled-nursing-care beds that would be available to meet
the projected need of Duval County for 1974.
     PHS regulations, however, require that such beds be
considered in determining whether the number of beds in
facilities in operation or under construction will be suf-
ficient to meet future bed requirements. Had these beds
been included in the 1970 State plan as being available to
meet the projected need for 1974, the plan would have shown
that the capacity of skilled-nursing-care facilities as of


                           24
 December 31, 1968, exceeded the projected need for 1974 by
 307 beds, rather than showed a need for 241 additional beds
 by 1974.

     The exclusion of nonconforming beds in computing bed
capacity to meet estimated needs in the State plan resulted
in the issuance of certificates of need by the State agency
for the construction of additional skilled-nursing-care
facilities. Federal financial assistance later was approved
for the construction of these facilities.

     As of January 1970, seven of the 11 nonconforming
facilities, having a total of '55 beds, had been closed.
The remaining four facilitier having a total of 393 non-
conforming beds, complied wi -.State and local licensing
and safety requirements.
PLANNED CHANGES IN BED CAPACITY
OF SKILLED-NURSING-CARE FACILITIES
       In accordance with PHS regulations, the State agency,
 in computing the need for skilled-nursing-care beds, does
not consider planned increases or decreases in bed capacity
but considers only additional capacity under construction.
Therefore we interviewed hospital and nursing-home officials
to determine plans for increasing or decreasing the bed
capacity of existing skilled-nursing-care facilities.
      These officials informed us of definite plans by three
skilled-nursing-care facilities to construct facilities
for 207 additional beds by 1974 and of plans of one hospital
to convert 202 acute-care hospital beds to skilled-nursing-
care beds. One skilled-nursing-care facility plans to con-
vert 50 skilled-nursing-care beds to acute-care beds.
      Following is our analysis of the projected changes in
bed capacity--planned and under construction--in Duval
County by 1974.




                            25
                                                           Increase or
                                                           decrease(-)                 Increase or   Proj cted
                                        Bed capacity         in beds      Projected    decrease(-)       ed
               Skilled-nursing-          at 12-31-69         during       capacity       in beds     capacity
                 care facility            (note a)            1970       at 12-31-70     1971-74      L 1S74
Cathedral Health Center (note b)                                     c
                                                               128            128                        128
Duval Medical Center                                                          -           202 d          202
Memorial Hospital                                               73e            73         --50 f          23
Baptist Memorial Hospital (nte g)              -                57 h           57                         57
Medicenter of America                          176             .44i           132          44i           176
Arlington Manor (note g)                       -                              -           120J           120
All Saints Home (note b)                           30            30 k             60        -              60
Arms of Mercy                                   48               -                4        -              48
Donovan's                                      180               -            10           -             180
Earths M. H. White (note b)                   120                -            120           -            120
Jacksonville Convalescent Cen-
  ter (note g)                                100                -            100           -            100
Mason Manor                                   100                -            100           -            100
River Garden Hebrew Home (note b)              90                901          160           -            180
Rosewood Haven                                     55            -                55        -              55
St. Jude Manor (note g)                       138                -            138          -             138
Southside Center                              100                -            100           -            100
Unicare Trowbridge                          _o10                              110           -            110
       Total                                1247              334           1 581         316         1.897
abased on State agency's statistics    nurdinformation.
bFinanced under a HilL-Burton grant.

Cfacility, which opened in March 1970, was constructed under a Hill-Burton grant of $768,000.

dBeds will be converted from hospital use to long-term-care use.

eFacility,which opened in July 1970, was constructed under a Hill-Burton grant of $750,000.
fBeds will be converted from long-term-care use to hospital use.
8
    FHA-insured mortgage project.

hCommitment made by FHA to insure loan; construction to start in 1971.

iBeds, temporarily leased to St. Vincent Hospital for care of hospital patientsa,       will be returned
 to long-term-care use.
JOn November 11, 1970, FHA approved a commitment to insure a loan for construction of this nursing
 home.
k0 r August 19, 1970, PHS authorized the award of the construction contract.

iFacility opened in April 1970.




                                                        .WV"'.             AVAILABL




                                             26
OCCUPANCY RATES OF
SKILLED-NURSING-CARE FACILITIES

     On the basis of patient-day statistics provided by the
State agency for calendar year 1969, we estimated that the
average occupancy rate for 11 of the 12 skilled-nursing-care
facilities in Duval County was about 75 percent. Occupancy
data was not available for the remaini:g facility. The fol-
lowing table shows additional data on the capacity and oc-
cupancy rates of skilled-nursing-care facilities in Duval
County.
                                                                    Average
                                        Capacity at            occupancy rate
                                     December 31. 1969             (note a)
                                    Licensed     Survey     Licensed      Survey
  Skilled-nursing-care facility     (note b)    (note c)    .capacitY    capacity
Medicenter of America                   176         176       3 0.7°d     30.7-d
All Saints Home                          30          30       94.1        94.1
River Garden Hebrew Home                120          90       91.8       122.0
Eartha M. M. White                      120         120       95.5        95.5
St. Jude Manor                          140         138       67.4        68.3
Jacksonville Convalescent Center        100         100       72.5        72.5
Arms of Mercy                            48          48       83.3        83.3
Donovan' s                              180         180       66.7        66.7
Mason Manor                             100         100       75.6        75.6
Rosewood Haven                           55          55       90.1        90.1
Southside Center                        100         100       (e)         (e)
Unicare Trowbridge                      110         110       86.3        86.3
    Total                             1.279         27        72.7        74.5
aBased on patient-day statistics provided by the State agency for the period Jan-
 uary 1 to December 31, 1969.

bLicensed beds represent the maximum number of beds that the State has authorized
 the facility to use.

CSurvey beds represent the available capacity as determined by the State agency
 either from questionnaires returned by the skilled-nursing-care facilities or as
 a result of onsite inspections.

dBased on actual data for a 7-month period and projected for a full 12-month
 period.

eDue to a change in management, patient statistics were not available.




                                      27
 OVERSTATE4ENT OF BED NEEDS
 IN 1970 STATE PLAN

      Our review showed that, in preparing the State plan,
 the State agency excluded skilled-nursing-c re facilities
 which did not conform to Hill-Burton construction standards.
 We noted that, in the 1970 State plan, a total of 548 beds
 in 11 skilled-nursing-care facilities which did not conform
 to Hill-Burton construction standards were excluded from the
 inventory of skilled-nursing-care beds that would be avail-
 able to meet the projected need of Duval County for 1974.

     PHS regulations state that the inventory of facilities
include all existing facilities in each area which provides
inpatient care. It further states that facilities providing
only domiciliary care are to be excluded and that facilities
owned and operated by the Federal Government may be included
but that all data related to these, such as days of care
provided, should be excluded from area totals. The regula-
tions do not provide for the exclusion of facilities which
do not conform to Hill-Burton construction standards.

     Following is an analysis of the effect of the exclusion
of nonconforming beds on the 1970 State plan.

     Projected bed need according to
       1970 State plan                  1,379    1,379
     Bed capacity according to State
       plan                             1,138      -
     Bed capacity, including noncon-
       forming beds                       -      1,686

         Beds needed                      241
         Excess beds                               307
     As discussed on page 16, Federal financial assistance
can be made available for the construction of a medical fa-
cility only if the State agency issues a certificate of need
for the proposed facility. The decision to issue a certifi-
cate of need is based on a comparison of the existing bed
capacity of facilities (in service and under construction)
with the projected need as shown in the State plan.




                              28
     As noted above, however, the State plan showed a need
for more skilled-nursing-care beds in Duval County by 1974
because the State plan excluded beds in facilities which did
not conform to Hill-Burton construction standards from the
inventory of available beds. Had the State plan included
these nonconforming beds,the 1970 State plan would have
shown that Duval County had an excess of beds, rather than
a need for more beds.

     One expansion project, Baptist Memorial Hospital, in-
cludes 57 skilled-nursing-care beds. To qualify for FHA
mortgage insurance, the hospital had to obtain a certificate
of need for the skilled-nursing-care-bed spaces. The State
agency issued the certificate of need on the basis of the
1970 State plan.

     Another expansion project, the All Saints Home, will
provide 30 additional skilled-nursing-care beds under a Hill-
Burton grant of $187,500.- On August 19, 1970, PHS authorized
the award of the construction contract for the project.

     Construction of a new nursing-home facility will pro-
vide 120 additional skilled-nursing-care beds. On August 27,
1970, the Health Planning Council of the Jacksonville Area,
Inc., approved this project on the basis that the facility
would provide needed nursing-home beds at a lower cost. An
FHA official informed us that a certificate of need was is-
sued by the State agency on September 18, 1970, for the
120-bed facility. He also stated that FHA had issued a com-
mitment to insure a loan in the amount of $848,700 for the
project on November 4, 1970.




                            29
                          CHAPTER 4

                COORDINATION AMONG HOSPITALS

          IN PLANNING AND SHARING MEDICAL SERVICES

      Our survey of specialized medical services, such as neu-
rosurgery and open-heart surgery, provided by hospitals in
Duval County showed that there was a potential for sharing
such services. We believe that, before this potential can
be fully realized, studies will have to be made to determine
specifically what services can be shared and how such shar-
ing can be accomplished to benefit all concerned. To achieve
optimum sharing of medical services, these studies should be
made at the time that plans are formulated for new facili-
ties.

     Seven non-Federal hospitals in Duval County (each over
100 beds) generally provide the same types of specialized
medical services and have similar medical equipment. At
each of these hospitals, neither the volume of work nor the
number of patients was sufficient to utilize fully the avail-
able equipment. Low utilization of equipment at these hos-
pitals results in higher charges for each unit of service.

      Section 113 of Public Law 91-296, which amends the Pub-
lic Health Service Act, provides that States are entitled to
receive grants amounting to 90 percent of a project's cost
if the project offers potential for reducing health care
costs "through shared services among health care facilities"
or "through interfacility cooperation." It appears that
this legislation, which increases Federal financial partici-
pation in those projects that involve sharing, should pro-
vide hospitals which are seeking Federal grant funds with an
incentive to share services. More aggressive action, how-
ever, will be required by PHS, State agencies, and local
planning groups if the full potential for sharing services
is to be achieved.

SIMILAR SPECIALIZED SERVICES AND EQUIPMENT
AVAILABLE AT HOSPITALS

     Following is a listing of similar specialized services
and equipment available at the hospitals in Duval County.

                             30
                  Number of                             Number
                    of                                    of
                 hospitals                             hospitals
                 providing                              having
    Service       service       Related equipment      equipment
Neurosurgery         7        Electroencephalography
                                recorder                   7
Cardiovascular                Cardiac catheteriza-
  surgery            6          tion unit                 4
Open-heart
  surgery            3        Heart-lung machine          3
Blood analysis       7        Automatic blood-
                                analyzing equipment       7
     It is planned that the new Jacksonville General Hospital
to be built in Duval County (see p. 11) will also provide
these services.

     The Navy hospital does not provide neurosurgery or open-
heart surgery but does provide cardiovascular surgery and
most of the other services available at the Duval County ci-
vilian hospitals. The Navy hospital does not have a cardiac
catheterization unit or a heart-lung machine. The Navy hos-
pital's facilities, however, can be used only by eligible
persons, except in cases of emergency. We were advised by
the Navy hospital's Administrative Officer that patients in
need of services not available at the Navy hospital were
transferred or referred to other hospitals--military patients
to other military hospitals and civilian patients to Duval
County hospitals.

     As of July 1970 radiation therapy was available at two
hospitals in the area--Duval Medical Center and Baptist Me-
morial Hospital. The other hospitals referred their pa-
tients to these hospitals if they needed radiation therapy.

USE OF SPECIALIZED MEDICAL EQUIPMENT

     We reviewed the hospitals' use of four selected spe-
cialized items of equipment. According to hospital offi-
cials, most of the equipment was not being used to capacity
(on the basis of tests made or patients treated). The aver-
age daily use ,,f the equipment, as reported by hospital per-
sonnel, in November and December 1970 was as follows:

                              31
                                 ernap o-        caear riac           He art          Automato c
                               encephalo-       catheter-            Heart-              blood-
                                  graphy          ization              lung           analyzing
                                recorder           unit             machine _        Equipment
                              Daily Ae      -Da l y     Aver-           `    Avey
                                                                              r-      DDail       ver-
                              capac- age     capac-      age     capac-      age     capac-       age
                               ity    daily     ity     daily      ity      daily      ity       daily
                            (note a) use (note a)        use    (note a)     use    (note a)      use
     Baptist Memorial       5 to 7      5         3     0.43        1       0.24      400       60
     Memorial               4           4         -       -         -         -        00       (b)
     Riverside              3         1.8        (b)     (b)       (b)       (b)      330       21
     St. Vincent            4.5       4.5         -       -                   -       400       40 to 50
     St. Luke's             16        6           4       1         -         -       400       35
     Methodist              4.5       2.3                 -          -        -       800      100
     DWval Medical Center   (b)       (b)        (b)     (b)       (b)       (b)      (b)       (b)
     Navy                   6         3           -                                   425      175
     aAverage number of treatments or tests which can be provided in a workday, as estimated
      by hospital officials.

     bHospital nas equipment but use date has not been obtained.




     The administrator of Baptist Memorial Hospital told us
that, because of the shortage of physicians in the area,
each hospital had made an effort to attract physicians by
having available--without regard to the equipment available
at other hospitals--a full range of modern, expensive equip-
ment. He s;aid that, as a result, there had been a duplica-
tion of costly equipment within the area.

     He cited the proliferation of blood-analyzing equipment
and cardiac catheterization units as examples of duplicated
equipment. He said that equipment of this type in one or
two of the hospitals would be sufficient to meet the needs
of the area.
     He stated that at one hospital the number of tests or
patients treated did not constitute sufficient use of the
equipment. As a result, the cost of the equipment was being
allocated to a small number of patients and the charges made
to patients were higher than the normal charges for such ser-
vices.

      In a letter dated April 22, 1970, to the executive sec-
retary of the Health Planning Council of the Jacksonville
Area, Inc., concerning the duplication of equipment in the
area, the administrator of Baptist Memorial Hospital stated
that:


                                                       BET DOCUMENI AVAIL ALI
                                            32
"In addition to this, over the past few months we
have seen the installation of SMA-12/60's [blood-
analyzing equipment] in laboratories. One or two
of these instruments, located strategically in
the city, could handle this particular laboratory
testing for every patient in the community, in-
cluding those going to the private doctor's of-
fices. We have seen, with the advent of two neu-
rologists coming to the community, a prolifera-
tion of EEG relectroencephalography] departments
to the point that it is no longer possible to
charge a reasonable fee for this service and
break even on it. In addition to that, I sud-
denly find that St. Luke's Hospital is develop-
ing a cardiac catheter laboratory and that
St. Vincent's is also considering the same thing.
"Undoubtedly, Memorial has some plans in the
vault along this Line too.
"I cannot deny that each individual hospital
probably has the feeling it needs everything
it is doing, but somewhere sanity must pre-
vail or the $100 per day cost estimate will
come true."




                       33
 ROLE OF COUNCIL IN CONTROLLING
 SERVICES PROVIDED BY HOSPITALS

     We noted that the Health Planning Council of the Jack-
sonville Area, Inc., did not have any control over services
being planned or provided by hospitals in Duval County.

     We noted also that, in its October 1969 report on radi-
ation therapy, the council--recognizing not only the exist-
ing radiation therapy needs but also, and possibly more im-
portant, the costs involved and the difficulty of recruiting
trained personnel to staff a facility--stated that perhaps
only one facility should be planned at that time. The coun-
cil stated also that it was imperative that planning be done
prior to building radiation facilities and that the addi-
tional cost of providing more than one facility be recognized
and considered.

     Prior to the release of the council's report, both
Duval Medical Center and Baptist Memorial Hospital had plans
for major radiation facilities. Baptist Mimorial Hospital
had plans to install a complete radiation-therapy unit which
the council had originally approved in 1964. The Duval Med-
ical Center already had some radiation-therapy capability
and had plans for a major radiation facility.

      The executive secretary of the council stated, at a
council meeting in November 1969, that the council should be
concerned with the planning and installation of a complete
radiation-therapy unit. The administrator of Baptist Memo-
rial Hospital stated at this meeting that he agreed with the
concepts of comprehensive health planning but that he be-
lieved that such planning should be done before developments,
such as the planning for the installation of a complete ra-
diation therapy unit at Baptist Memorial Hospital, were ini-
tiated.

     Subsequently the administrator of Baptist Memorial Hos-
pital told us that he belived that the council, to avoid un-
necessary duplication, should have more control in determin-
ing what equipment and services would be available at local
hospitals.




                            34
     The administrator of St. luke's Hospital told us that
there was almost no coordination among Jacksonville hospitals
and that, as a result, some equipment had been duplicated
unnecessarily. He said that one reason for the duplication
was that hospital administrators just did not know what the
other hospitals were planning or doing. He explained that
one hospital might order an expensive piece of equipment
only to find out that another hospital had already ordered
the same type of equipment. He stated that, if the Health
Planning Council of the Jacksonville Area, Inc., had the au-
thority to review hospitals' proposed purchases of costly
equipment, it could help to prevent duplication.

     The Navy hospital had not kept the colmcil advised of
its activities or functions. The Navy hospital's Adminis-
trator told us that the council was concerned primarily with
area planning and that the Navy hospital really was not in-
volved.

POLE OF STATE AGENCY IN CONTROLLING
SERVICES PROVIDED BY HOSPITALS

     PHS Health Grants Manual, part 23-2, dated January 29,
1968, provides that the State agency develop administrative
policies related to (1) prevention of unnecessarily dupli-
cated services, (2) coordination of services, and (3) limi-
tations relating to size of facility and services provided.
We found no evidence, however, that any such policies had
been developed.

     The chief of the State agency stated that there was
nothing that could be done by the State agency regarding the
number of similar specialized services available at Duval
County hospitals, because the State agency did not get in-
volved in the administration of the separate hospitals. He
stated that this was a problem area resulting from various
factors--primarily the lack of coordination among the hospi-
tal administrators who each wanted his hospital to offer the
full range of services and facilities to satisfy staff phy-
sicians. He said that physicians did not like to transfer
patients to other hospitals for treatment.

     He stated that controlling and coordinating services
should be the responsibility of the local health planning
council.

                             35
     We believe that detailed studies should be made
State and local planning organizations to determine by
                                                     the po-
tential for sharing specialized medical services
                                                  and that
the State agency should know what services are
                                                available or
needed before it approves new projects for an
                                               area.




                           36
                          CHAPTER 5

                       SCOPE OF REVIEW

      We reviewed the coordination among Federal and State
 agencies and local organizations in planning and construct-
 ing acute-care hospitals and skilled-nursing-care facilities
 in the Jacksonville area. We reviewed the planning and con-
 struction of medical facilities financed either with private
 funds or through Federal financial assistance. We compared
 the existing and planned capacity of acute-care hospitals
 and skilled-nursing-care facilities with projected needs as
 determined by the State agency. Although we verified the
 mathematical accuracy of the State agency's computation of
 future bed needs, we did not evaluate the appropriateness of
 the method prescribed by PHS for use by the State agency in
 determining future bed needs.

      We also considered the actions taken to effect the
 sharing of certain facilities and equipment among the various
 hospitals.

     Information was developed primarily on the basis of
discussions with Federal, State, and local officials. We
made our review at the State agency; the Health Planning
Council of the Jacksonville Area, Inc.; and at Jacksonville
area hospitals, skilled-nursing-care facilities, and other
health organizations.




U.S. GAO, Wsh., D.C.         37