OAR 333-590-0040: Determination of Service Area for Existing Hospitals

For purposes of divisions 545 through 670 of OAR chapter 333, the service area for an existing general hospital will be defined as including those zip codes from which either ten percent or more of the hospital's discharges originate, or in which the hospital has at least a 20 percent market share. Minor adjustments to the boundaries of the hospital service area may be made to create a contiguous service area or to conform more closely to the boundaries of demographic units for which census data are reported (county, county census division, enumeration district, or zip codes if conversion has been done). (1) Discharge and patient day market shares in the service area of the applicant facility should be calculated from the most recent statewide patient origin studies. Changes in relative market shares should be examined if two or more such studies are available. Appropriate steps should be taken to adjust for comparability between these studies if they differ in number of hospitals included, and/or other pertinent factors. More recent patient origin data on a less than statewide basis may also be considered if a method of adjustment for balance-of-state origins and utilization acceptable to the division and the applicant can be developed prior to filing the application. (2) Federal (V.A.) hospitals may be excluded from the calculation of discharge and patient day market shares, and from other steps in this methodology, but if federal hospitals are excluded from any step, they must be excluded from all steps. For instance, market shares cannot be calculated using nonfederal patient days when the service area use-rate is calculated based on combined federal and nonfederal patient days. If explicit adjustments for projected declines in users eligible for care in federal facilities acceptable to the division and the applicant can be developed prior to filing the application, this factor must be considered. (3) In the absence of evidence to the contrary, current market shares will be expected to be stable. Factors to which consideration may be given include population shifts; different rates of population growth among subareas within the hospital service area; changes in hospital location service mix, age mix, reimbursement mix, transportation patterns, locations of physician specialists; projected changes in amount or types of utilization among other providers with market shares in the hospital service area; and documented commitments to develop procompetitive initiatives such as alternative delivery systems, selective contracting, successful competitive bidding, and other market oriented changes.