                            IN THE SUPREME COURT OF MISSISSIPPI
                                     NO. 2000-SA-02123-SCT
JEFF ANDERSON REGIONAL MEDICAL CENTER
v.
MISSISSIPPI STATE DEPARTMENT OF HEALTH AND RUSH FOUNDATION
HOSPITAL

DATE OF JUDGMENT:                                 11/21/2000
TRIAL JUDGE:                                      HON. STUART ROBINSON
COURT FROM WHICH APPEALED:                        HINDS COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT:                          JAMES T. COX
                                                  JAMES D. KOPERNAK
ATTORNEYS FOR APPELLEES:                          BARRY K. COCKRELL

                                                  MICHAEL R. HESS

                                                  ELLEN Y. DALE O'NEAL

                                                  J. RICHARD BARRY
NATURE OF THE CASE:                               CIVIL - STATE BOARDS AND AGENCIES
DISPOSITION:                                      AFFIRMED-10/31/2001
MOTION FOR REHEARING FILED:
MANDATE ISSUED:                                   11/21/2001

      BEFORE McRAE, P.J., COBB AND DIAZ, JJ.

      McRAE, PRESIDING JUSTICE, FOR THE COURT:

¶1. Rush Foundation Hospital (Rush) applied for and was granted a Certificate of Need (CON) for the
implementation of an additional invasive cardiac care center in the Meridian area. The Mississippi State
Department of Health (Department) approved the CON. After an administrative hearing which also resulted
in approval of the CON, Jeff Anderson Regional Medical Center (Jeff Anderson RMC) appealed to the
Chancery Court of the First Judicial District of Hinds County alleging that the methodology employed by the
Department was arbitrary and capricious and that the Department did not properly consider the cost
containment purposes of the CON laws in making its decision to grant the CON to Rush. The chancellor
affirmed the approval, and Jeff Anderson RMC filed a notice of appeal to this Court. We affirm the
chancellor's decision to approve the CON, noting that, while we find the Department's actions were not
arbitrary and capricious and that there was substantial evidence in the record to support the decision, this is
a legislative process which should be reviewed by the Legislature for an assessment as to whether there is a
dire need or circumstance for a CON.

                                                   FACTS

¶2. Jeff Anderson RMC is an established therapeutic cardiac catheterization and open-heart surgery center
servicing the Meridian area. Rush, also located in Meridian, filed an application for a CON to offer similar
services in the Meridian area. Jeff Anderson RMC objected to having a similar facility serving essentially the
same area arguing there is no need for duplicate services in this part of Mississippi. Jeff Anderson RMC
requested a public hearing on the matter. A public hearing was held before a Hearing Officer of the
Department. At the public hearing, the Staff of the Department recommended approval of the CON to the
State Health Officer. The Hearing Officer also recommended approval of the project to the State Health
Officer who, in turn, approved the application and granted the CON by final order. From this decision, Jeff
Anderson RMC appealed to the Chancery Court of Hinds County. Upon review of the record, the
Chancellor affirmed the agency decision. Thereafter, Jeff Anderson RMC timely filed a notice of appeal to
this Court arguing that the chancellor incorrectly read HTI Health Servs. of Miss., Inc. v. Mississippi
State Dep't of Health, 603 So. 2d 848 (Miss. 1992), and extended the holding in Delta Reg'l Med.
Ctr. v. Mississippi State Dep't of Health, 759 So. 2d 1174 (Miss. 1999), without warrant.

¶3. Jeff Anderson RMC believes the cost containment purpose of CON laws is compromised by allowing
two invasive cardiac care centers in this particular area. Jeff Anderson RMC also contends that the
methodology employed by the Department in determining the population of two Alabama counties was
arbitrary and capricious.

                                              DISCUSSION

     I. IS THE METHODOLOGY EMPLOYED BY THE DEPARTMENT IN CALCULATING
     OUT-OF-STATE POPULATION FOR INCLUSION IN RUSH'S POPULATION BASE TO
     DETERMINE NEED ARBITRARY AND CAPRICIOUS?

¶4. A brief explanation of the factors to be considered in evaluating a proposal in a CON application will be
discussed first. The main determination to be made is need, hence the title "Certificate of Need." In this
determination, the proposal must be consistent with the specifications and criteria established by the
Department and in substantial compliance with the Mississippi State Health Plan (Plan). Miss. Code Ann.
§ 41-7-193 (2001). In our review, we will not determine whether there is an actual need for the Rush
project. Instead, we will look to make sure there was substantial evidence to support the decision and that
the decision was not arbitrary and capricious.

¶5. Mississippi is divided into seven planning areas. The Plan states that need shall be determined using
designated planning areas (Cardiac Catheterization/Open-Heart Surgery Planning Areas (CC/OHSPAs)),
1999 Mississippi State Health Plan, IX-79, and a minimum population base of 100,000 per planning area
is required, with exception. Id. at IX-77. If an applicant submits "adequate documentation acceptable to the
[Department]," population outside the applicant's planning area will be considered in determining need. Id.
at IX-76. The Plan does not specify how a population base is to be determined, so we must look to
precedent. The Department uses "market sharing" as the method of determining a population base when
service areas overlap.(1)

¶6. Rush included in its population base calculation the population of seven Mississippi counties, five of
which are within its planning area, (2) and two Alabama counties. Rush used the market sharing
methodology to calculate the population base from the counties outside its planning area. Jeff Anderson
RMC acknowledges that the market sharing methodology is a proper tool, as recognized by this Court in
HTI, and that out-of-state population can be considered in calculating a population base. HTI, 603 So. 2d
at 852. However, Jeff Anderson RMC argues that Rush did not submit "adequate documentation" to the
Department to warrant consideration of out of area population, and therefore, the market sharing
methodology was not properly applied.

¶7. Jeff Anderson RMC takes issue with the method of apportionment of counties not within the planning
area as part of the population base. Jeff Anderson RMC distinguishes the HTI case and the case at bar
based upon review of the Department's Staff Analysis in that case. Jeff Anderson RMC asserts that in HTI,
Hinds County was within the applicant's service area but that it also had three other existing open heart
service facilities. Instead of awarding the entire county population to the applicant as part of the population
base, the Department gave only a percentage of the population toward the population base. The reasoning
was that the discharges received by Hinds County amounted to only 1% of the total for Hinds County, and
therefore, only this percentage was includable in the population base.

¶8. In light of this, Jeff Anderson RMC argues that the Department improperly gave Rush 100% of the
population of the two Alabama counties noting that the definition of population base is "that proportion of
the population reasonably expected to be served by the facility proposing the new service." Id. Jeff
Anderson RMC contends that this apportionment is mere speculation and is therefore, an arbitrary and
capricious agency action.

¶9. While Jeff Anderson RMC's frustration is understandable, the issues before us are whether the order
granting the CON was supported by substantial evidence and whether the methodology employed was
arbitrary and capricious. We conclude that there was substantial evidence to support the final order and that
the methodology employed was not arbitrary and capricious. Jeff Anderson RMC's points relate to a
legislative process and would be more appropriately addressed by the Legislature.

¶10. We have noted that patient origin data from two-week sample periods is a sufficient method for
determining service area and population base. Miss. State Dep't of Health v. Southwest Miss. Reg'l
Med. Ctr., 580 So. 2d 1238, 1240-41 (Miss. 1991). Therefore, Rush's four two-week patient origin
studies constitute "adequate documentation" as required by the Plan to allow the use of population outside
the planning area to be considered in the need analysis. Also, Rush provided statistical studies concerning
Alabama patients which the Hearing Officer also considered.

¶11. Further, the market share methodology has been approved by this Court in many cases, most notably
HTI and Delta Reg'l. It should also be noted that

      [t]he methodology used to determine or measure population base in any given case should not be
      carved in granite; instead some flexibility is required. It is prudent to utilize the methodology that will
      accommodate the various and sundry circumstances found in each individual case. The objective of it
      all, in the final analysis, is to determine need.

HTI, 603 So. 2d at 853. Even though the methodology employed in this case has been held valid in
previous cases, it is not the only factor to be considered. As Rush points out, such factors as the number of
cardiologists in an area can be considered in calculating a population base. This is especially poignant here
since there is only one cardiologist serving the Meridian area through Jeff Anderson RMC.

¶12. Further, both parties offered extensive testimony and substantial evidence at the hearing. The record is
voluminous. The Hearing Officer reviewed all materials before him and made extensive findings of fact and
conclusions of law which were submitted to the State Health Officer with a recommendation for approval of
the Rush CON. The chancery court reviewed the record and accordingly affirmed the Department's final
order granting Rush the CON. We find no error in the chancery court's holding.

      II. DID THE DEPARTMENT PROPERLY CONSIDER THE COST CONTAINMENT
      PURPOSES OF THE CERTIFICATE OF NEED (CON) LAWS IN APPROVING RUSH'S
      APPLICATION?

¶13. Jeff Anderson RMC argues that the Department ignored the CON law's cost containment purposes in
approving Rush's application. The record is contrary to this point in that the Hearing Officer specifically
found the approval of Rush's application to promote cost containment because Rush proposed lower rates.
The Hearing Officer also noted that the Rush facility would benefit the entire community by providing a
cost-effective competitor. Also, testimony from experts and Department agents included discussions of cost
containment. There is substantial evidence in the record indicating that the Department properly considered
cost containment in its decision.

                                               CONCLUSION

¶14. We find that the methodology employed by the Department in calculating the out-of-state population
for inclusion in Rush's population base to determine need was not arbitrary and capricious. Further, we find
there was substantial evidence in the record to show the Department properly considered the cost
containment purposes of the CON laws in approving Rush's application. Finding that there was substantial
evidence in the record to support the final order approving Rush's application for a CON, we affirm the
judgment of the chancery court upholding the decision of the Department. We note that this case deals with
a legislative process which should be reviewed by the Legislature to evaluate whether there is a dire need or
circumstance warranting the issuance of a certificate of need.

¶15. AFFIRMED.

      SMITH, MILLS, WALLER, COBB, DIAZ, AND EASLEY, JJ., CONCUR. PITTMAN,
      C.J., and BANKS, P.J., NOT PARTICIPATING.

1. A service area is the geographical area from which a hospital receives patients. The Department defines a
facility's service area as the counties from which the facility receives 2% or more of its discharges.

2. The definition of and significance of planning areas will be discussed later.
