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In re William B. Kessler Memorial Hospital

Decided: November 14, 1977.

IN THE MATTER OF THE 1976 HOSPITAL REIMBURSEMENT RATE FOR WILLIAM B. KESSLER MEMORIAL HOSPITAL


Allcorn, Morgan and Horn.

Per Curiam

[154 NJSuper Page 149] This appeal arises under the Health Care Facilities Planning Act (N.J.S.A. 26:2H-1 et seq.) and the 1976 Hospital Rate Review Program Guidelines established

by the Commissioners of Health and Insurance. William B. Kessler Memorial Hospital (Kessler) appeals from the December 10, 1976 decision of the Commissioner of Health adopting in toto the recommended findings and conclusions of the hearing examiner which denied Kessler's appeal of Department challenges to Kessler's proposed budget for 1976. The decision resulted in establishment of Kessler's "final administrative rate" for 1976, the per diem payment which, after some adjustment not here pertinent, Kessler will receive from Blue Cross and Medicaid for its covered patients.

In 1975 the Department of Health began development of a program of uniform cost accounting for hospital and reimbursement rate review pursuant to the Health Care Facilities Planning Act, N.J.S.A. 26:2H-1 et seq. In accordance with the Department's 1976 Guidelines for this program, Kessler submitted its proposed budget for 1976. After analysis by Department of Health analysts, two items in the budget were challenged -- emergency rooms costs and newborn care center costs. Kessler took an administrative appeal (N.J.A.C. 8:3-3.1 et seq.), pursuant to which a hearing relating to the two contested items was held.

The evidence adduced therein disclosed the following: Kessler is situated in a rural area on the outskirts of Hammonton, between the major highways carrying traffic to and from the Philadelphia metropolitan area and the New Jersey resorts of Atlantic City, Ocean City and points south. The White Horse Pike, the Black Horse Pike and the Atlantic City Expressway are major traffic arteries in close proximity to the hospital. It is the only immediately available hospital for the area, the next closest one being more than 20 miles away. Because of these facts a significant number of emergency patients are received in Kessler's emergency room. Cardiac patients, accident victims and victims of crime are typical of the emergencies handled in this facility.

Central to the dispute concerning the costs of this facility is the cost attributable to the employment of licensed physicians to provide a 24-hour-a-day coverage for the emergency room. Until July 1975 Kessler had staffed its emergency room with interns, i.e. , nonlicensed physicians, at a salary of $4.70 an hour. In response to an incident (rape victim being brought to the hospital and no licensed physician present to examine her) the principal field representative for the Department of Health, Mrs. Pabian, was sent to Kessler to determine whether such an incident resulted from violation of section III, Q7B of the Manual of Standards for Hospital Facilities (1972) which provides:

Q. All hospitals applying for license shall provide the following professional departments, services and facilities:

7.7 Accident-emergency services

B. All hospitals shall provide twenty-four hour licensed physician coverage in the emergency department according to a plan established by the medical staff and/or approved by the governing board. There shall be a licensed physician responsible for the prompt and efficient treatment of all emergency patients.

Despite the ambiguity that the Department sought to inject into this seemingly clear provision, there is no doubt from the record of Mrs. Pabian's testimony that she told Kessler, during her visit to that facility, that licensed physician coverage on a 24-hour basis was required. Although she was, of course, concerned over Kessler's then existing practice of staffing its emergency room with unlicensed physicians, her order was not confined to correcting that deficiency but was unequivocal as to her demand, in accordance with her interpretation of the regulation, that licensed physicians cover the emergency unit 24 hours a day.

It was further her testimony that a house physician doubling as one covering the emergency unit would not constitute sufficient compliance with the regulation, and should she encounter ...


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