Northwest Hospital v. Illinois Health Facilities Planning Bd.

• Decision Date: 06 April 1978
• Docket Number: No. 77-980,77-980
• Citation: 17 Ill.Dec. 43,59 Ill.App.3d 221,375 N.E.2d 1327
• Parties: , 17 Ill.Dec. 43 NORTHWEST HOSPITAL, Plaintiff-Appellee, v. ILLINOIS HEALTH FACILITIES PLANNING BOARD, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

Page 1327

375 N.E.2d 1327

59 Ill.App.3d 221, 17 Ill.Dec. 43

NORTHWEST HOSPITAL, Plaintiff-Appellee, v. ILLINOIS HEALTH FACILITIES PLANNING BOARD, Defendants-Appellants.

No. 77-980.

Appellate Court of Illinois, First District, Fourth Division.

April 6, 1978.

William J. Scott, Atty. Gen. of Illinois for defendants-appellants; George H. Klumpner, Asst. Atty. Gen., of counsel.

Edward M. Burke, Chicago, for plaintiff-appellee; Nathan & Klafter, Chicago, of counsel.

LINN, Justice.

In an action for administrative review in the circuit court of Cook County, judgment was entered for plaintiff, Northwest Hospital, reversing the final administrative decision of defendant, Illinois Health Facilities Planning Board. Defendant had denied plaintiff's application for a permit, made pursuant to the Illinois Health Facilities Planning Act (Ill.Rev.Stat.1975, ch. 1111/2, pars. 1151 et seq.) to add 154 medical/surgical beds and 12 intensive care beds to its already existing facilities. The trial court found that the denial of the permit for the number of beds requested was against the manifest weight of the evidence.

We affirm the judgment of the trial court.

Subsequent to the initial denial by defendant of plaintiff's September 16, 1975 application, an Appeal Fair Hearing was requested. At the hearing, held November 22, 1976, William Ewing testified that he is the project review administrator for the Illinois Department of Public Health. He holds a bachelor's degree in business administration. In his capacity as administrator, he is in charge of the preparation of reports for defendant on proposed projects. He is familiar with administrative Rule 3.05, promulgated pursuant to the Act, which allows variances for proposed projects not in accord with the plan for computed bed needs in certain instances.

Under Rule 3.05.1, bed capacity can be increased where the hospital experiences consistently high occupancy rates; and that upon review, patient occupancy, length of stay, and room utilization are found to be appropriate and that the foregoing experiences will continue. Under Rule 3.05.2, ¹ approval for an increase in hospital beds may be given where the principal function of the proposed project is the provision of primary inpatient care to a medically underserved and/or economically depressed population group. Under these rules, the applicant has the burden of proving entitlement to the variance.

Ewing stated that the additional number of beds which may be needed under Rule 3.05.1 is determined by the length of stay, admissions, and lack of available or potentially available beds in the area. A determination as to the need to relieve high occupancy is generally based upon a determination of the hospital's present average daily census, divided by an assumed optimum occupancy rate of 90% for medical/surgical beds, 75% for pediatric and obstetric beds, and 60% for intensive care beds. This methodology would determine how many additional beds are needed to relieve high occupancy and allow the hospital to operate at the optimum occupancy rate.

The original review, made about a year before the hearing, indicated that there was insufficient evidence to substantiate the need for all the beds requested. At most, 25 beds were believed to be sufficient to relieve high occupancy. A subsequent review was undertaken in the spring of 1976 with other factors considered, such as patient origins, data relating to the hospital's area, and distances from other hospitals. After this second report was presented in April, 1976, an ad hoc committee was formed to study and review the matter.

Ewing gathered additional utilization data and formulated a calculation based Ewing also concluded that the average length of stay for the medical/surgical unit was excessive at 10.2 days. Plaintiff contested Ewing's conclusions, claiming further that the length of stay figure should be 9.2 days. Under this latter figure, additional bed need would be 17.

[17 Ill.Dec. 45] upon the number of patient days of care in 1975 and divided by 365 to arrive at an average daily census. This figure was divided by the [59 Ill.App.3d 223] assumed optimum occupancy rate under the 1975 plan. In the case of medical/surgical beds, that rate was 88%. Thus, using this formula, 48 additional beds were deemed to be needed. Applying the same methodology, a total of 12 intensive care beds were needed, the number presently in use at plaintiff's facility.

The ad hoc committee recommended that plaintiff be allowed 12 additional intensive care beds because patients had to be moved sooner than they should because of the insufficient number of such beds.

On cross-examination, Ewing testified that he worked on plaintiff's application for over one year but neither he nor any board member ever visited the hospital. He also worked on the applications for variances requested by Provident and Tabernacle hospitals. Although both of these hospitals are located in areas that have an excess number of hospital beds, variances were given since the hospitals were serving a population that could not receive adequate medical care, in an area that was economically depressed, and patients had to travel to Cook County Hospital instead of a closer facility. Such factors were not a consideration in determining plaintiff's application.

Ewing recommended approval of the applications for Provident and Tabernacle hospitals although they had occupancy levels of 71% and 76% respectively.

The hospital area's public transportation was not studied, nor the ability of patients to travel to other facilities. Although plaintiff's facility was running at 100% capacity, it was felt that a strict numerical formula should be applied. The formulas used in computing bed need were applied solely to plaintiff's application.

Ewing further testified that he agreed with the second official report of the Department of Public Health which stated that variance 3.05.2, relating to medically underserved population groups, was precisely the type of situation which plaintiff comes within. The report also noted that this was so although a paradox existed in that the area is the most heavily over-bedded in the State. Dividing the hospital service area into specific areas, plaintiff would need 164 new beds to accommodate its area of service. Ewing stated that the report related to a variance not then claimed by plaintiff, despite the conclusion of the official report that the application requested the proper variance.

For plaintiff, Peter Rusin testified that he is Director of Planning at Northwest Hospital. His qualifications include a bachelor's degree in management and a master's degree in public health. Rusin was involved in plaintiff's application, and was assisted by the Chicago Hospital Council and the auditing firm of Arthur Anderson and Company. Both agreed that plaintiff's occupancy had remained high for the past five years, reaching 103% in 1975, and that occupancy would remain at 95-100% when the proposed addition was completed. The Arthur Anderson Company concluded that many patients had to travel well outside of their immediate community for care due to the lack of other major clusters of hospital resources near plaintiff's facility, and that expansion would not have a significant impact on the utilization of other hospitals in the area.

The review process for plaintiff's application consisted of three levels of examination. The first level was before a local planning body, the Inter-Hospital Association of the Western Suburbs. Cost-containment was discussed at length since plaintiff's project cost was about $8,000,000 while other projects under review were planned to cost between forty and ninety million dollars. The application was unanimously approved.

The second review was done by Dr. Martin Gallagher of Comprehensive Health Planning, Inc. Public Hearings were held, but no adverse testimony was offered. Costs were broken down into two classifications. The renovation and remodeling of the present facility would cost $5,300,000, and the bed addition would cost $2,700,000. The cost per bed for the proposed addition would be $16,000. In contrast, the cost per bed was $100,000 for Tabernacle Hospital, and $180,000 for Provident Hospital. Various additional meetings were held where additional data was presented.

At the hearing, it was also disclosed that the Chicago Fire Department sometimes had to take emergency calls to facilities other than plaintiff's because of the high occupancy problem. The next closest facility was 4.5 miles away. The board of Comprehensive Health Planning recommended that the project be approved.

The last level of review was before defendant. It was pointed out that other hospitals in the area were experiencing very high occupancy rates, and that plaintiff drew 70% of its patients from within a 3 mile radius of its facility and 82% of the patients in the area had to leave their community and travel 8-10 miles to other facilities. It was also indicated that plaintiff's facility has only 2.4 beds per thousand population in its primary service area, while the national average is 4.2 per thousand, and for Chicago the figure is 3.4 per thousand. Based upon the overall Chicago average, plaintiff would need 194 additional medical/surgical beds merely to operate at 100% occupancy, and 275 beds to operate at 88% occupancy.

Dr. Martin Gallagher testified that he is the executive director of Comprehensive Health Planning, Inc., of Metropolitan Chicago. He holds a doctorate degree in health organization research and a bachelor's degree in sociology. Comprehensive Health Planning is the reviewing agent for the State of Illinois and has reviewed approximately 90% of all applications that have come before defendant.

In initially reviewing plaintiff's application, the project review committee of Comprehensive Health Planning recommended that the project for modernization be approved, but...