11-0900-5215-2

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE COMMISSIONER OF HEALTH

In the Matter of the License FINDINGS OF FACT

Application of Fosston Hospital CONCLUSIONS OF LAW

Association, Fosston, Minnesota AND RECQMMENDATION

The above-entitled matter came on for hearing before Administrative Law

Judge Barbara L. Neilson at 7:00 p.m. on January 30, 1991, at the Fosston

Hospital Association Cafeteria in Fosston, Minnesota. The record in this

matter was closed on February 15, 1991, the date of receipt of the last

post-hearing submission from the Department of Health.

David Hubbard, P.O. Box 202, Fosston, Minnesota 56542 and James Aagenes,

Director of Emergency Services, 117 Park Place, Fosston, Minnesota 56542,

appeared on behalf of the Fosston Hospital Association (hereinafter referred to

as "the Applicant"). Don Bakken, a Polk County Commissioner, testified at the

hearing in support of the application. Three written submissions were received

following the hearing and were made part of the record. There were no

intervenors in this matter.

This report is a recommendation, not a final decision, The Commissioner

of Health will make the final decision after a review of the record and may

adopt, reject or modify the Findings of Fact, Conclusions of Law and

Recommendations contained herein. Pursuant to Minn. Stat. 14.61, the final

decision of the Commissioner of Health shall not be made until this report has

been made available to the parties to the proceeding for at least ten days. An

opportunity must be afforded to each party adversely effected by this report to

file exceptions and present argument to the Commissioner of Health. Parties

should contact John McCally, Commissioner of Health, 717 Delaware Street S.E.,

Minneapolis, Minnesota 55440, to ascertain the procedure for filing exceptions

or presenting argument.

STATEMENT OF ISSUE

The issue in this proceeding is whether the Applicant's application for a

permanent license to operate a basic ambulance service should be granted under

the standard set forth in Minn. Stat. 182.802, subd. 3(g).

Based upon the record herein, the Administrative Law Judge makes the

following:

FINDINGS OF-FACT

Procedural History

1. The Applicant was granted a temporary license to provide basic

ambulance service in a primary service area (PSA) surrounding the City of

Fosston in Eastern Polk County on August 14, 1990. The temporary license

expired on or about February 14, 1991.

2. The Applicant is a nonprofit corporation which also operates the

Fosston Municipal Hospital and a nursing home facility. It was awarded a

temporary basic ambulance license after the owner of the Fosston Ambulance

Service forfeited his license to the State of Minnesota due to financial

difficulties. The temporary license included variances permitting the use of

an esophageal obturator airway, a cardiac monitor/defibrillator and intravenous

infusions. Mr. Hubbard testified that he has not received any complaints

concerning the Applicant's ambulance service from those served during its

period of temporary licensure.

3. On or about November 13, 1990, the Applicant submitted an application

for a new permanent license to supply basic ambulance service in the same PSA.

4. On December 18, 1990, the Commissioner of Health issued a Notice of

Completed Application and Notice of and Order for Hearing setting a hearing in

this matter for January 30, 1991. Notice of the hearing was published in the

Crookston Daily Times and in the December 24, 1990, issue of the State

Commissioners; the Community Health Board; the Regional EMS System; ambulance

services in Thief River Falls, Fertile, Mahnomen, Oklee and Red Lake Falls; and

the mayors of the cities of Erskine, Fosston, Gully, Lengby, McIntosh, Mentor,

Trail and Winger.

Description of the Proposed Service

5. As mentioned above, the Applicant seeks a permanent license to

provide basic ambulance service with variances to allow the use of an

esophageal obturator airway, a portable cardiac monitor or defibrillator, and

intravenous infusions.

6. The PSA proposed by the Applicant is in Polk County, Minnesota, and

includes the cities of Erskine, Fosston, Gully, Lengby, McIntosh, Mentor,

Trail, and Winger, and the townships of Johnson, Gully, Chester, Grove Park,

Badger, Lessor, Hill River, Eden, Queen, Brandsvold, King, Knute, Woodside,

Garden, Winger, Sletten, Rosebud, and Columbia. The proposed PSA is identical

to that served under the Applicant's temporary license.

7. The Applicant estimates that it will make 276 runs during the next

year, at an average patient charge of $280.00. It estimates total operating

revenues of $116,080.00. Public subsidies and grants are estimated to account

for one-third of its revenue sources.

Relationship to Community Health Plan

8. The 1988-89 Community Health Services Biennial Plan for Polk County

contains a provision regarding emergency medical services in Polk County. Ito

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Goal VII of the plan. There are no relevant provisions in the 1990-91

Community Health Services Plan Update. The 1988-89 plan notes that Polk County

is a large rural county with a low population density (approximately 17 people

per square mile), and states that that factor, combined with the long travel

distances required within the county and the high cost of ambulance service,

makes decisions regarding ambulance service difficult and delicate. Polk

County has a larger percentage of older residents living within its corporate

limits than the State of Minnesota (18% of Polk County's citizens are 62 years

of age or older). The plan also indicates that, because the elderly are the

most frequent users of ambulance service and payments from Medicare have been

reduced, ambulance services have experienced decreased revenues.

9. The Polk County plan adopts a goal of ensuring that Polk County

residents who experience out-of-hospital life-threatening emergencies will be

served by a coordinated emergency medical service system in as short a response

time as possible. The following objectives are stated:

1. To maintain or improve the level of service provided

by the five primary ambulance services that Polk County

now has in its boundaries.

Alternative Objective I

To improve the level of ambulance service currently

existing in the County.

2. To maintain and improve the level of education and

training needed in fire departments for the practice of

emergency medical techniques by their personnel.

3. To provide educational opportunities to the general

public in the areas of CPR, First Care and First Aid.

4. To educate the general public in what is available to

them in emergency care and the location of emergency care.

10. The Applicant has been continually attempting to improve its service

through quality assurance programs, continuing education for the emergency

medical technicians, and maintaining state-of-the-art equipment and dependable

ambulances. It has also conducted CPR and First Aid classes for the

Fosston-Lengby Fire Department, the Fosston Incinerator, the Pioneer Memorial

Care Center in Erskine, and the Fosston Civic Center. CPR classes are

currently scheduled for March, 1991, to re-certify the staff of the Fosston

Dental Clinic. The Applicant also works closely with the fire departments

within the PSA because the fire departments of Erskine, McIntosh, and Winger

first respond to all of the ambulance calls within their own fire districts and

the Fosston Fire Department responds to all calls that may require any special

rescue effort or extrication.

11. In September and October of 1990, the Applicant sponsored free

emergency medical technician and First Responder classes that were open to the

general public. It has also notified each nursing home and placed

advertisements in the local newspapers within the PSA concerning the use of the

911 system, and has completed a workshop for elementary students on rural farm

accidents.

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Comments of Governing Bodies and Public Officials

12. Numerous comments and recommendations supporting the Applicant's

censure were submitted by the Applicant as part of i ts application. see

Application, Tab C. The Foss ton City Council , the Gully City Council, the

Erskine City Council, the Lengby Village Council, and the Trail City Council

provided letters of support. The application is also supported by the Polk

County Board of Commissioners, the Polk County Township Association, the Chief

of the Fosston Police Department, the Fosston Rural Fire Department, the

Fosston Public Schools, Roger D. Moe (Senate Majority Leader) and Edgar Olson

(Representative from District 2B).

13. Mr. Don Bakken, a Polk County Commissioner, testified at the hearing

in support of the application. He indicated that Rupert Syverson, the County

Commissioner from the Fosston District, was unable to attend the hearing due to

illness but is also in support of the application. As noted above, a letter

was submitted on behalf of the entire Polk County Board of Commissioners

supporting the application.

Deleterious Effects from Duplication of Ambulance Services

14. Although the Applicant indicated at the hearing that advanced

ambulance services based in Fargo (approximately 100 miles from Fosston) and

Grand Forks (approximately 70 miles from Fosston) also serve the Fosston area

on occasion, these ambulance services did not lodge any objection to the

application.

15. The only objection to the application was made by Steven Belau, who

is a Registered Emergency Medical Technician-Paramedic with the County

Emergency Medical Service, an advanced ambulance service based in Fertile,

Minnesota. Fertile is approximately thirty miles away from Fosston. Mr. Belau

objects to the application primarily because the proposed PSA would overlap

with the PSA currently served by the County EMS.

16. Information supplied by the Department of Health following the

hearing indicates that County EMS of Fertile and the Applicant would have the

following PSA in common: all of Grove Park, Woodside, and Garden Townships;

sections 19-21 and 28-33 of Knute Township; and sections 3-10, 15-22, and 27-34

of Winger Township, which includes the City of Winger.

17. Mr. Belau argues that the overlapping primary service areas would

result in competition that is deleterious to the public health because

individuals who are not familiar with the ambulance services available in the

overlapping territory and thus do not specify which ambulance service they wish

to be sent might receive service from the Applicant's basic ambulance service

rather than the advanced ambulance service operated by the County EMS.

Mr. Belau asserts that the Fosston ambulance service historically has been

automatically dispatched to medical emergencies by the Polk County 911 public

safety answering point. Mr. Belau provided a copy of a resolution passed by

the Winger City Council in December of 1986 indicating that the Fertile

paramedics shall be designated the primary ambulance provider for the City of

Winger and that the Fertile paramedics shall be dispatched to requests for

medical aid received by the Polk County 911 public safety answering point

originating within the City of Winger.

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1 8 County EMS of Fertile has not provided any information regarding the

impact of granting the Applicant's application upon its financial situation or

the number of runs it makes into the areas in which its PSA overlaps with that

of Applicant. Because the Applicant and its predecessor have operated a basic

ambulance service (with variances) in the PSA for some time, it would be

difficult for County EMS to demonstrate the adverse impact of Applicant's

licensure.

Estimated Effect on the Public Health

19. The Applicant apparently is the only provider of ambulance services

with respect to the portion of the proposed PSA which does not overlap with the

PSA of County EMS of Fertile. The proposed service thus would make ambulance

service available to persons who would otherwise not be served.

20. The proposed PSA is comprised largely of rural communities in Eastern

Polk County. Polk County has a higher percentage of elderly persons than the

state as a whole, and a higher mortality rate than the state as a whole. Many

of these elderly persons suffer from heart disease and malignant neoplasms. In

addition, many elderly Polk County residents live in long term care facilities

and require emergency care or transportation. The PSA also encompasses a

number of farming communities in which farming accidents are not uncommon and

large distances may have to be travelled to medical facilities. In addition to

the elderly and farm populations which have a special need for prompt emergency

medical service, many other types of injuries occur within the proposed PSA

which require prompt response, well trained staff and adequate equipment, such

as motor vehicle accidents, falls, poisonings, fires, drowning, and suffocation.

21. In its application, the Applicant indicates that the average probable

response time within the PSA in good weather is ten minutes, and in severe

weather is twenty minutes. The Applicant also states that the maximum probable

response time in good weather from the proposed base of operation (900

Hilligoss Boulevard, S.E. in Fosston, Minnesota) to the most distant boundary

in the proposed PSA is twenty five minutes, and the maximum probable response

time in severe weather is fifty minutes. The projected distance to be

travelled from the proposed base of operation to the most distant boundary in

the proposed PSA is 25 miles.

2 2 . The Applicant seeks a variance to allow the use of an esophageal

obturator airway in order to reduce the complications associated with passive

regurgitation in cardiac arrest cases. The Applicant notes that, in 1988,

34.1% of all deaths in Polk County were from heart disease. James Aagenes,

Director of Emergency Services, testified at the hearing that the use of the

esophageal obturator airway is very important, especially in cardiac arrest

situations which may occur in Trail and Gully (two communities to the north

that are sixteen to twenty miles away). As of the time of the application, the

four full-time emergency medical technicians on staff with the applicant had

been trained in the use of the airway. The use of the airway also has been

approved by the Applicant's medical director, Dr. Paul Havens. Dr. Havens also

has reviewed and approved the medical protocols and training program developed

with respect to advanced airway management, and has examined and approved the

continuing education program and quality assurance program for the emergency

medical technicians.

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2 3 . The Applicant also seeks a variance to allow the use of a portable

cardiac monitor or defibrillator , emphasizing the large distances involved in

travelling to certain communities within its PSA and the Importance of early

defibrillation when cardiac arrest is experienced. Without early

defibrillation, patients will not survive if they are in cardiac arrest. When

only CPR can be delivered initially and definitive therapy occurs only after

arrival at the hospital, survival rates of 5% or less are usual. In contrast,

when pre-hospital defibrillation is available, survival rates for patients

discovered in ventricular fibrillation range from 15% to 30%. The Applicant's

medical director, Dr. Havens, has reviewed and approved the medical protocols

and training program for the emergency medical technicians with respect to the

cardiac monitor/defibrillator, and has examined and approved the continued

education and quality assurance programs for the emergency medical

technicians. All four of the full-time emergency medical technicians employed

as of the date on which the application was filed had been trained with respect

to the use of the cardiac monitor/defibrillator.

24. The Applicant seeks a third variance to allow the establishment or

maintenance of intravenous infusions. Approximately 3o% of the calls received

by the Applicant pursuant to its temporary license have been classified as

trauma runs. The use of intravenous infusions is very important in trauma

situations. All four of the full-time emergency medical technicians employed

as of the date of the application had been trained with respect to this

variance. The Applicant's medical director, Dr. Havens, has reviewed and

approved the medical protocols and training program for the emergency medical

technicians with respect to the variance to allow intravenous infusions, and

has examined and approved the continuing education and quality assurance

programs for the emergency medical technicians.

25. Since the completion of the Applicant's application materials, three

additional emergency medical technicians have been added to the crew. These

emergency medical technicians have not yet completed their training with

respect to the variances, and will not use the variance techniques until their

training is completed. The Applicant's present crew consists only of emergency

medical technicians.

26. The emergency medical technicians employed by the Applicant will

receive training and testing on an annual basis with respect to the equipment

and techniques encompassed by the three variance requests, The procedures

encompassed by the variances will also be covered every three months in a

classroom setting.

27. The ambulance service is run as a department of the Fosston Hospital

and is required to submit a monthly quality assurance plan for review by a

quality assurance committee within the hospital.

28. The application for licensure is supported by the Northwest Minnesota

Emergency Medical Services Corporation. The Corporation acknowledged "the

professionalism, commitment, and dedication of [the Applicant] to provide

quality emergency health care in northwest Minnesota." See Application, Tab C.

29. Paul D. Havens, M.D., of the Fosston Clinic (who is also the

Applicant's medical director) also supports the application. Dr. Havens

praised the ability of the Fosston Hospital Association "to provide excellent

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in-patient and out-patient care in extremely trying times," and expressed his

belief that the Fosston Hospital Association is "in the best possible position

to coordinate pre-hospital community in-patient care, as well as coordinating

transfer of patients to tertiary facilities." let Application, Tab C.

30. Wesley 0. Ofstedal, M.D., of the Fosston Clinic also supplied written

comments supporting the application. Dr. Ofstedal noted that an ambulance

service is needed in the Fosston area. He emphasized that, in the absence of a

Fosston-based ambulance service, it would take in excess of thirty minutes for

an ambulance to arrive in may instances, and that such a delay would have a

negative impact upon many of the patients. He stated that the operation of the

ambulance service by the Applicant "would be a large step forward in providing

quality ambulance services to the people of the East Polk County area. The

hospital has the resources and financial capability of operating a safe and

effective emergency system. The hospital takes its role as a caregiver in this

area very seriously and the ambulance service would be another help in

achieving that goal." Set Application, Tab C.

31. The following health care professionals also submitted letters in

support of the application: Brenda L. Menier, the Director of the Polk County

Nursing Service in Crookston; Curtis Jenson, Administrator of the McIntosh

Manor Nursing Home in McIntosh; and Patti Bacon, Director of the Fosston

Hospice. See Application, Tab C.

32 . Additional letters in support of the application were submitted by

the following local organizations: the McIntosh Men's Action Club, the Fosston

Ministerial Association, the Fosston Nutrition Site, the Embassy Community

Center, the Fosston Senior Citizen Center, the Fosston Jaycees, and the

Singles' Christian Fellowship Assembly. See Application, Tab C.

Benefit to Public Health Versus Costs of the Proposed Service

33. The Applicant did not offer any detailed evidence concerning the

costs of the proposed service. Because the Applicant has been licensed under a

temporary license to provide basic ambulance service (with the three variances

requested as part of its permanent license), it should not be necessary to

incur additional costs for new equipment or additional personnel or training.

34. The Applicant has made a commitment to the Polk County Commissioners

that the subsidy that had been issued to the predecessor ambulance service

could be kept at the same level for the Applicant for one year.

35. The Applicant plans to purchase two ambulance rigs if it is

successful in obtaining a permanent license. The Applicant has leased its

ambulance rigs while operating under its temporary license. No comparison of

the relative costs of leasing and purchase was provided at the hearing.

36. Because the Applicant receives county tax monies, the Applicant

provides Polk County and the Health Care Advisory Board with a profit and loss

statement and a statistical analysis on a monthly basis so the County can

oversee the financial performance of the ambulance service.

37. Because the Fosston Hospital is a nonprofit institution, some costs

of the ambulance service may be absorbed by the hospital resulting in reduced

rates to the patients.

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Based upon the foregoing Findings of Fact, the Administrative Law Judge

makes the following:

CONCLUSIQNS

1. The Administrative Law Judge and the Commissioner of Health have

jurisdiction in this matter pursuant to Minn. Stat. 14 50 and 144.802. The

notice of hearing was proper in all respects and all procedural and substantive

requirements of law and rule have been fulfilled.

2. Minn. Stat. 144.802, subd. 3(g) provides:

The administrative law judge shall review and comment

upon the application and shall make written

recommendations as to its disposition to the commissioner

within 90 days of receiving notice of the application.

In making the recommendations, the administrative law

judge shall consider and make written comments as to

whether the proposed service..... is needed, based on

consideration of the following factors:

(1) the relationship of the proposed service . . .

to the current community health plan as approved by

the commissioner under section 145.918;

(2) the recommendations or comments of the governing

bodies of the counties and municipalities in which

the service would be provided;

(3) the deleterious effects on the public health

from duplication, if any, of ambulance services that

would result from granting the license;

(4) the estimated effect of the proposed

service . . . on the public health.

(5) whether any benefit accruing to the public

health would outweigh the costs associated with the

proposed service . . . .

The administrative law judge shall recommend that the

commissioner either grant or deny a license or recommend

that a modified license be granted . . . .

3. The proposed basic ambulance service with variances is consistent

with the current community health plan for Polk County. The plan has adopted

the goal of ensuring that persons experiencing emergencies outside of hospitals

will be served by a coordinated emergency medical system as soon as possible.

The provision of basic ambulance service from a base of operations in Fosston,

with the requested variances, will enhance the provision of emergency medical

services in Eastern Polk County.

4. The governing bodies of Fosston, Gully, Erskine, Lengby, and Trail

support the application. No governing body of any municipality within the PSA

filed any comments objecting to the application.

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5. The public health will not suffer as a result of any duplication of

ambulance services. The proposed PSA does overlap the PSA served by the County

Emergency Medical Service of Fertile. Because the Applicant seeks to operate a

basic service and the County EMS operates an advanced service, however, there

should be little duplication of service. Moreover, by licensing the

Applicant's predecessor and County EMS and by awarding the Applicant a

temporary license, the Commissioner of Health has previously determined that

there would be no deleterious effects on the public from any duplication of

services that may result in the overlapping portion of the PSA.

The case of Twin Ports Convalescent Inc. v. Minnesota State, Board of

Health, 257 N.W.2d 343 (1977), and the Commissioner's decisions cited by County

EMS do not mandate the denial of the application of this case. The

Commissioner's Determinations upon which County EMS relies (LST 85-6-MDH (June

17, 1985), LST 85-1-MDH (February 5, 1985), and LST 82-9-WDA (November 1,

1982)) are distinguishable from the present case because they involve

situations in which the proposed PSA substantially or completely overlapped

that of existing providers, there was insufficient demand in the PSA to sustain

the applicant as well as the existing providers, and there was an insufficient

showing of local support for the application. In contrast, the proposed PSA to

be served by the basic ambulance service of the Fosston Hospital Association

overlaps only a portion of the PSA of the advanced ambulance service of County

EMS, the PSA for some time has supported both an advanced and a basic service,

and there is ample local support for the Applicant's licensure. Although the

Supreme Court's decision in the Twin Ports case makes it clear that the

statutory scheme does not contemplate that competition between ambulance

providers be fostered as part of a "free enterprise" approach to ambulance

licensure, the Court's decision does not preclude licensure where there has

been no convincing demonstration of deleterious effect on the health of those

in the overlapping PSA. The deleterious effect alleged by County EMS--that of

the "automatic" dispatching of the Applicant's basic ambulance service by 911

dispatchers in the overlapping PSA where advanced ambulance service would be

more appropriate--could (and should) be resolved through the development of

appropriate selection protocols for use by the 911 dispatchers.

6. The proposed service will have a positive effect on the public health

because it will provide the only ambulance service that is currently available

in a large portion of the proposed PSA. In addition, if the requested

variances are granted, it will result in better quality care in the field and

improved response in accident, trauma, and cardiac arrest situations. Granting

of the variance request will be of particular benefit to the public health in

responding to emergencies occurring in the more geographically distant areas of

the PSA.

7. The benefits accruing to the public health outweigh any likely costs

associated with the proposed service. The Applicant has committed to receiving

the same level of subsidy for one year as its predecessor. Moreover, because

the applicant is a nonprofit institution, it is likely that some cost of the

ambulance service will be absorbed by the hospital, resulting in reduced rates

to the patients.

8. The proposed service is needed, and the application for basic

ambulance service in the proposed PSA with the requested variances for the

establishment or maintenance of intravenous infusions, the use of a portable

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cardiac monitor or defibrillator, and the use of an esophageal obturator airway

should be granted.

Based upon the foregoing Conclusions, the Administrative Law Judge makes

the following:

RECOMMENDATION

IT IS HEREBY RESPECTFULLY RECOMMENDED that the Commissioner of Health

grant the application of the Fosston Hospital Association to provide basic

ambulance service within the proposed primary service area and grant the

variances requested by the Applicant for the establishment or maintenance of

intravenous infusions, the use of a portable cardiac monitor or defibrillator,

and the use of an esophageal obturator airway.

Dated this 21st day of February, 1991.

BARBARA L. NEILSON

Administrative Law Judge

Reported: Taped, not transcribed (tape no. 9978).

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