UnityPoint Health Cedar Rapids d/b/a St. Luke's Hospital v. Iowa Department of Public Health, State Health Facilities Council and Mercy Hospital Cedar Rapids d/b/a Mercy Medical Center

IN THE COURT OF APPEALS OF IOWA

No. 17-1317
Filed January 9, 2019

UNITYPOINT HEALTH CEDAR RAPIDS d/b/a ST. LUKE'S HOSPITAL,
Plaintiff-Appellant,

vs.

IOWA DEPARTMENT OF PUBLIC HEALTH, STATE HEALTH FACILITIES
COUNCIL,
Defendant-Appellee,

and

MERCY HOSPITAL CEDAR RAPIDS d/b/a MERCY MEDICAL CENTER,
Intervenor/Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Polk County, Eliza J. Ovrom, Judge.

A hospital appeals from the district court’s decision on judicial review

affirming the State Health Facilities Council’s decision to grant a certificate of need

to another nearby hospital, thereby allowing that hospital to establish its own open-

heart surgical program. AFFIRMED.

Rebecca A. Brommel and Douglas E. Gross of Brown, Winick, Graves,

Gross, Baskerville and Schoenebaum, PLC, Des Moines, for appellant.

Thomas J. Miller, Attorney General, and Tessa Register and Heather L.

Adams, Assistant Attorneys General, for appellee.

Edwin N. McIntosh and William J. Miller of Dorsey & Whitney LLP, Des

Moines, for appellee intervenor.

Heard by Potterfield, P.J., Doyle, J., and Danilson, S.J.*

*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2019).
 2

POTTERFIELD, Presiding Judge.

UnityPoint Health Cedar Rapids, doing business as St. Luke’s Hospital,

appeals from the district court’s ruling on judicial review affirming the State Health

Facilities Council’s decision to issue a Certificate of Need (CON) to Mercy Hospital

Cedar Rapids,1 which allows Mercy to establish its own open-heart surgical

program in its Cedar Rapids hospital.

On appeal, St. Luke’s maintains the Council’s decision to grant the CON

should be reversed because the Council’s interpretation of the minimum utilization

rule—found in Iowa Administrative Code rule 641-203.2(3)(a)(1)—as a guideline

rather than a mandate is either erroneous, see Iowa Code § 17A.19(10)(c) (2015),

or “irrational, illogical, or wholly unjustifiable,” see Iowa Code § 17A.19(10)(l).

Additionally, St. Luke’s challenges whether some of the findings made by the

Council are supported by substantial evidence in the record, see Iowa Code

§ 17A.19(10)(f), including some findings that are required by Iowa Code section

135.64 before a CON can be issued.

I. Background Proceedings.

In July 2015, Mercy sent a letter to the Iowa Department of Public Health

advising it of the hospital’s intention to offer open-heart surgery at its Cedar Rapids

hospital. Mercy followed that letter by filing a CON application in August. In

support of its application, Mercy asserted that each year, approximately 150 of

Mercy’s patients have to go outside the Mercy system for their cardiac surgery. In

a later response to the department’s request for more information, Mercy again

1
The Iowa Department of Public Health is responsible for providing administrative support
and advice to the Council. See Iowa Code §§ 135.62(1), .65, .66, .69.
 3

asserted that it estimated a volume of 150 patients for cardiac surgical services,

with a 2% growth projected each year following the initial year.

A public hearing on the application was held before the State Health

Facilities Council on November 15, 2016. St. Luke’s participated in the hearing as

an “affected person” and spoke out against the granting of the CON. See Iowa

Code § 135.61(1)(c) (including in the definition of “affected persons” “each

institutional health facility . . . which is located in the geographic area which would

appropriately be served by the new institutional health service proposed in the

application”).

At dispute in the hearing was whether the minimum utilization rule was a

guideline to be used by the Council in reaching its ultimate decision or a mandatory

requirement that the Council must not grant the CON unless Mercy projected at

least 200 procedures annually. The rule, Iowa Administrative Code rule 641-

203.2(3)(a)(1), states: “Adult cardiovascular surgical programs should project an

annual minimum rate of over 200, or no approval shall be granted. Higher case

loads over 200 per annum, are encouraged.”

Before the hearing took place, legal counsel to the Council issued an email

regarding the application of the rule. Counsel advised it should be considered

discretionary, noting that the rule used both the terms “should” and “shall.”

Additionally counsel stated, “Interpreting the rule as a guideline would be in

keeping with the Council’s longstanding practice of applying utilization

requirements in its administrative rules . . . as guidelines only and not mandatory

requirements.” Following counsel’s email but before the CON hearing, St. Luke’s
 4

petitioned the Department of Public Health for a declaratory ruling on the proper

interpretation of the rule. The department denied St. Luke’s request.

Immediately following the public hearing, the Council voted 3-2 to grant

Mercy’s request for the CON.

In the written ruling that followed, the Council ruled that the minimum

utilization rule

should be interpreted as a guideline in light of (1) the Council’s prior
construction of this rule as guideline in approving a CON to an
applicant which projected below 200 surgeries per year; (2) the
totality of the language of the rule—which states programs should
project a certain number of cases and that higher case loads are
merely encouraged, not required—providing a discretionary
approach to the utilization issue; and (3) the Council’s longstanding
prior interpretation of the utilization standards in chapter 203 as
guidelines.

The Council found “that patients needing urgent cardiac surgery are waiting an

average of four to nine days due to limited access to cardiac surgery in the

community. Additionally, patients needing elective open heart surgery found wait

times increase from 4.9 weeks in 2014 to 5.3 weeks in 2015.” The increase in wait

time “increased costs related to additional hospital stays, increased anxieties for

the patients and their families, and potential loss of wages due to the inability to

work.” The Council also recognized that patient stress “is exacerbated by having

to leave the Mercy system to receive care in a new health system.” In making this

finding, the Council noted that when St. Luke’s requested a CON in 2014 to begin

offering radiation therapy services—a service patients historically had to leave St.

Luke’s and go to Mercy for—the Council had granted its request, in part, because:

St. Luke’s cancer patients in need of radiation therapy must currently
leave the facility and provider network, resulting in each patient being
treated by a new set of health providers and supporting team
 5

members from a different health care system. This movement
between systems can result in delays, unnecessary costs, and
duplication of testing and other services.

The Council’s written decision included findings as to the necessary four factors

contained in Iowa Code section 135.64(2)(a)–(d).

St. Luke’s filed a request for rehearing, which the Council denied. St. Luke’s

then filed a petition for judicial review. After full briefing on the issues and a

reported hearing, the district court affirmed the Council’s decision to issue a CON

to Mercy for its open-heart surgery program.

St. Luke’s appeals.

II. Score and Standard of Review.

“We review a district court decision on petition for judicial review pursuant

to section 17A.19 for errors at law.” Greenwood Manor v. Iowa Dep’t of Public

Health, State Health Facilities Council, 641 N.W.2d 823, 830 (Iowa 2002). “[O]ur

review is limited to whether the district court correctly applied the law.” Id. “To

determine whether our conclusions are aligned with those of the district court, we

look to standards of section [17A.19(10)].” Id.

III. Discussion.

A. Minimum Utilization Rule.

St. Luke’s maintains the Council wrongly interpreted the minimum utilization

rule when it decided it was a guideline rather than a mandate. Additionally, St.

Luke’s asserts that the Council has not been vested with the power to interpret the

rule so we must review with the nondeferential, errors-at-law standard. See Iowa

Code § 17A.19(10)(c); see also Iowa Dental Ass’n v. Iowa Ins. Div., 831 N.W.2d

138, 143 (Iowa 2013). St. Luke’s maintains the district court erred when it utilized
 6

the “highly deferential ‘irrational, illogical, or wholly unjustifiable’ standard” in

reviewing the Council’s interpretation. See Iowa Dental, 831 N.W.2d at 143

(quoting Iowa Code § 17A.19(10)(l)).

1. Standard of Review.

In Birchansky Real Estate, L.C. v. Iowa Dep’t of Public Health, State Health

Facilities Council, 737 N.W.2d 134, 136 (Iowa 2007), our supreme court

considered whether the Council had been vested with the authority to interpret

section 135.63—a statute dealing with CONs. The court determined the Council

had been vested with the authority after considering the following:

The Department[2] was expressly created by the legislature to,
among other things, make the final decision on all CON applications.
Iowa Code § 135.62(2)[(f)]. The Department is also statutorily
mandated with the responsibility for adopting all rules “necessary to
enable [the Department] to implement this division,” including
procedures and criteria for reviewing CON application. Id.
§ 135.72(1); see also id. § 135.62(2)[(f)](5).

Birchansky, 737 N.W.2d at 138 (third alteration in original).

Yet St. Luke’s maintains we should determine the Council is not vested with

the power to interpret Iowa Administrative Code rule 641-203.2(3)(a)(1), asserting

Renda v. Iowa Civil Rights Comm’n, 784 N.W.2d 8, 13 (Iowa 2010) changed the

framework used to determine whether an agency has been vested with

interpretative power. Additionally, St. Luke’s argues that case law finding the

Council is vested with the power to interpret other statutes does not require us to

2
In Birchansky, our supreme court recognized, “The State Health Facilities Council, a
division of the Iowa Department of Public Health, is charged with reviewing CON
applications and deciding when a CON should be issued.” 737 N.W.2d at 136 n.2 (citing
Iowa Code § 135.62(2)(d)). The court then noted, “For simplicity, we will not distinguish
the actions of the Council from the actions of the Department.” Id. We do the same.
 7

find the Council has the power to interpret the rule at issue here. See Renda, 895

N.W.2d at 13–14 (“[I]t is possible that an agency has power to interpret some

portions of or certain specialized language in a statute, but does not have the

authority to interpret other statutory provisions.”).

We acknowledge Renda clarified the judicial framework for determining

whether the legislature has clearly vested interpretive theory in an agency. See

id. at 10–14. However, that clarification does not require us to find that the Council

has not been clearly vested with the authority to interpret rule 641-203.2(3)(a)(1).

First, in Renda, the supreme court cited to its previous holding in Birchansky

without overruling or casting doubting on it. See Renda, 784 N.W.2d at 12 (noting

the court had previously concluded “that because the term was not defined in the

statute and because the department must necessarily interpret the term in order

to carry out its duties, the power to interpret the term was clear vested in the

department and deference was therefore given, citing Birchansky in support).

Second, the court’s determination in Renda that “a grant of mere rulemaking

authority” is not sufficient to establish the legislature intended to give the agency

authority to interpret all statutory language does not cause us to question the

holding in Birchansky, as the Birchansky court did not rely solely upon the agency’s

rulemaking authority to reach its decision. Renda, 784 N.W.2d at 13. In

Birchansky, the court held that the that the authority of the department to make a

final decision on all CON applications coupled with rulemaking authority

demonstrated that the authority was clearly vested with the department to interpret

an exception to the certificate of need requirements. Birchansky, 737 N.W.2d at

138.
 8

The Council has been given both broad powers and specific duties

regarding CONs. See Iowa Code §§ 135.64(1), (2) (listing the eighteen factors to

be considered and the four findings that must be made by the Council before it

issues a CON); 135.69 (providing the Council shall make the final decision on a

CON application); 135.62(2)(f)(1)–(5) (enumerating the duties of the Council).

Included in the Council’s powers are the abilities to “[d]etermine and adopt such

policies as are authorized by law and are deemed necessary to the efficient

discharge of its duties” and to “[a]dvise and counsel with the director concerning

the provisions of this division and the policies and procedures adopted by the

department.” Id. § 135.62(2)(f)(2). “Indications that the legislature has delegated

interpretive authority include ‘rule-making authority, decision-making or

enforcement authority that requires the agency to interpret the statutory language,

and the agency’s expertise on the subject or on the term to be interpreted.’” See

Neal v. Annett Holdings, Inc., 814 N.W.2d 512, 518–19 (Iowa 2012) (citation

omitted).

We agree with the district court the Council had been clearly vested with the

power to interpret rule 641-203.2(3)(a)(1). In reaching this conclusion, we note

that we have reached the same conclusion before. See Fox Eye Surgery, L.L.C.

v. Iowa Dep’t of Pub. Health, No. 09-1679, 2010 WL 3324944, at *1 (Iowa Ct. App.

Aug. 25, 2010) (“Because the council’s review of CON applications is a matter

vested within its discretion, we only reverse if the council’s decision to deny the

application was ‘irrational, illogical, or wholly unjustifiable.’”).
 9

Thus, we review the Council’s interpretation of the rule with the “highly

deferential ‘irrational, illogical, or wholly unjustifiable’ standard.” See Iowa Dental,

831 N.W.2d at 143

2. Merits.

Next, we review the Council’s interpretation of the minimum utilization rule

as a guideline rather than a mandate. The rule states, “Adult cardiovascular

surgical programs should project an annual minimum rate of over 200, or no

approval shall be granted. Higher case loads over 200 per annum, are

encouraged.” Iowa Admin. Code r. 641-203.2(3)(a)(1).

St. Luke’s maintains the interpretation of the rule as a directive is irrational,

illogical, and wholly unjustifiable because the use of the word “shall” in the rule is

unambiguous and requires the Council to deny applications when the projected

rate is less than 200. Alternatively, St. Luke’s maintains that even if the rule is

ambiguous, it is irrational, illogical, and wholly unjustifiable to interpret the rule as

a directive because (1) the change in language of the rule in 1980 establishes the

intent of the drafters to make it mandatory, (2) the purpose of the 200-minimum

requirement is to ensure patient safety, and (3) the Council’s precedent establishes

it previously interpreted the rule to be mandatory.

Ambiguity can arise in two ways: “from (1) the meaning of a specific term;

or (2) the overall meaning of a statute when its provisions are considered in their

totality.” Miller v. Marshall Cty., 641 N.W.2d 742, 748 (Iowa 2002). And while we

have often found statutory language to be unambiguous when the word “shall” is

used, here, when considering the totality of the language of the rule, including the

use of “should” and “shall” and “encouraged,” we find the rule is ambiguous. See,
 10

e.g., Allen v. Tyson Fresh Meats, Inc., No. 17-0313, 2018 WL 1099117, at *2 (Iowa

Ct. App. Feb. 21, 2018) (listing authorities to support the proposition that statutory

interpretation requires the determination that the use of “shall” means a necessity

or a requirement). Moreover, our supreme court has recently recognized “the

ambiguity inherent in the word ‘shall.’” Iowa Supreme Ct. Attorney Disciplinary Bd.

v. Attorney Doe No. 819, 894 N.W.2d 1, 6 (Iowa 2016). “[T]he use of the word

‘shall’ in legal rules has fallen into disfavor because it may indicate a mandatory or

permissive rule.” Id. at 5.

When “a statute is ambiguous, we must utilize the rules of statutory

interpretation.” Miller, 641 N.W.2d at 748. “The rules for construction of

administrative rules are nearly identical to those for construction of statutes.”

Hollinrake v. Iowa Law Enf’t Acad., Monroe Cty., 452 N.W.2d 598, 601 (Iowa

1990). “One difference is that it is the intent of the agency in promulgating the rule

which provides the basis of construction.” Id.

St. Luke’s relies upon the change in the language of the rule to show the

intent of the drafters to make the rule mandatory. See Iowa Code § 4.6(3)

(providing that if a statute is ambiguous, the court may use the legislative history

in determining the intent of the legislature). In 1978, the rule was written as follows:

A new cardiac surgical program should reasonably expect to
attain an annual rate of 75 pump-assisted procedures within one
year, 125 pump-assisted procedures projected for the second year,
and then unless 200 such procedures can be projected within three
years, no approval should be granted. New cardiac surgical services
should not be established if they will interfere with the level of
efficiency of existing units.

Iowa Admin. Code 470-203.2(1)(e). St. Luke’s claims the change from “no

approval should be granted,” to the current language, “no approval shall be
 11

granted,” establishes an intent to change the rule from directory to mandatory. See

Iowa Admin. Code r. 641-203.2(3)(a)(1) (“Adult cardiovascular surgical programs

should project an annual minimum rate of over 200, or no approval shall be

granted. Higher case loads over 200 per annum, are encouraged.” (emphasis

added)). But we cannot read that phrase of the amendment alone. As the district

court stated:

The amendment does not persuade the court that the Council
intended to require itself to disapprove applications for cardiac
surgical programs that project fewer than 200 procedures. If the
Council intended to do that, it could have easily stated that programs
“must” project over 200 surgeries per year, and that caseloads over
200 are required, instead of “encouraged.”

As stated above, the rule was amended to its current version in 1980. Since then,

on at least one occasion, the Council has granted a CON application when the

applicant did not meet the 200-case threshold—treating the rule as a guideline

rather than a mandate. In a 1988 decision, the Council granted St. Joseph Mercy

Hospital’s CON application to start an open-heart surgery program even though

“[t]he Council recognized that the number of projected open heart surgeries

annually, 162, is below the standard of a 200 procedure minimum.” The Council

stated it “recognized that the applicant used a very conservative utilization

projection,” but the Council did not make a finding that the hospital would actually

perform 200 or more surgeries before it decided to issue the CON.

Finally, we consider St. Luke’s argument that the 200-minimum rule is a

mandate because performing 200 surgeries annually is linked to better safety for

patients. We acknowledge that both St. Luke’s and the University of Iowa—which

took no position but did file information before the hearing as an “affected party”—
 12

provided support for the position that clinical outcomes are better for larger

cardiovascular programs. But this does not persuade us it is irrational, illogical, or

wholly unjustifiable for the Council to take the rule into account as a guideline rather

than interpreting it as a mandate. According to Mercy, all of the Iowa programs

conducting open-heart surgery have received a two-star rating (out of a possible

three), even though the various programs being rated complete anywhere from 72

to 739 procedures each year. Additionally, at least in the Cedar Rapids area, some

open-heart surgeons are performing surgeries at more than one hospital, so while

a particular program may be the site of only a small number of surgeries each year,

the surgeon completing the surgery may still be performing a large number of

surgeries.

Based on the foregoing, we cannot say the Council’s interpretation of rule

641-203.2(3)(a)(1) as a guideline in considering whether to issue a CON is

irrational, illogical, or wholly unjustifiable.

B. Decision to Grant CON.

Iowa Code section 135.64 outlines four findings the Council must make

before issuing a CON. See Iowa Code § 135.64(2)(a)–(d) (“[T]he council shall

grant a certificate of need for a new institutional health service . . . only if it finds in

writing, on the basis of data submitted to it by the department, that . . . .”). St.

Luke’s asserts that though the Council made them, the findings are not supported

by substantial evidence in the record, see Iowa Code § 17A.19(10)(f)(1), and the

district court erred in finding they were so supported. Additionally, St. Luke’s

claims that because three of the necessary findings are not supported by the
 13

record, the Council’s decision to grant Mercy’s CON application was “irrational,

illogical, or wholly unjustifiable.” See id. § 17A.10(m).

“When reviewing a finding of fact for substantial evidence, we judge the

finding ‘in light of all the relevant evidence in the record cited by any party that

detracts from that finding as well as all of the relevant evidence in the record cited

by any party that supports it.’” Cedar Rapids Cmty. Sch. Dist. v. Pease, 807

N.W.2d 839, 845 (Iowa 2011) (quoting Iowa Code § 17A.19(10)(f)(3)). That being

said, “[e]vidence is not insubstantial merely because different conclusions may be

drawn from the evidence.” Id. “Our task, therefore, is not to determine whether

the evidence supports a different finding; rather, our task is to determine whether

substantial evidence, viewing the record as a whole, supports the findings actually

made.” Id.

1. Section 135.64(2)(a).

The council found, “Less costly, more efficient, or more appropriate

alternatives to the proposed institutional health service are not available and the

development of such alternatives is not practicable.” Iowa Code § 135.64(2)(a).

In doing so, the Council relied upon “the significant waiting periods [patients are

experiencing] prior to surgery, which result in additional costs related to hospital

fees and transfer fees to a different hospital for cardiac surgery.” The Council also

based its finding on the fact that “approximately half of all patients diagnosed with

heart disease in Cedar Rapids are treated at Mercy [Cedar Rapids] and that

continuing to require patients to navigate two distinct health care systems to

receive cardiac surgery is not an efficient or appropriate alternative.”
 14

St. Luke’s disputes the credibility of the evidence Mercy submitted regarding

wait times for cardiac patients. Mercy reported to the Council that patients in the

“urgent” category3 “should receive surgery within 48 hours” but due to access

delays, are waiting an average of 5.8 days. Additionally, Mercy reported that the

“average wait time for elective cardiac surgical cases has increased from 4.9

weeks in 2014, to 5.3 weeks in 2015.” St. Luke’s asserts that delay for “urgent”

patients averages three days and eighteen days for “elective” patients.

Additionally, St. Luke’s offered a different reason for delay than scheduling

accessibility. Dr. James Levitt, a cardiac surgeon who works for St. Luke’s,

testified that the “timing of [heart] surgery is very key” and the cardiac surgeon’s

job “is to offer [the patient] a good operation at a time when their risk is as low as I

can get it before I take them to the operating room.” In order to increase the

patient’s chance of a successful surgery, doctors will require them to stop taking

certain prescriptions, quit smoking for a period of time, take care of certain dental

needs that may otherwise result in dangerous bacteria being present in their body,

and make sure their diabetes is under control—among other things.

It is not our role to determine the credibility of the evidence. See

Christiansen v. Iowa Bd. of Educ. Exam’rs, 831 N.W.2d 179, 192 (Iowa 2013) (“The

law is well-settled. It is the agency’s duty ‘as the trier of fact to determine the

3
According to testimony offered at the hearing, there are nationally-defined guidelines for
prioritizing heart surgeries. In the “emergent” category are those patients who “need
surgery now. You send them to the operating room.” Next is the “urgent” patients, which
are those where “the patient is stable enough that they don’t need to be rushed to the
operating room, but it is urgent enough that the doctor says that it isn’t safe for them to go
home.” The final group is referred to as “elective,” and in that group the “patient is stable
enough to go home from the hospital and monitored closely as an outpatient until that
surgery can be scheduled.”
 15

credibility of witnesses, weigh the evidence, and decide the facts in issue.’”

(citation omitted)). While the evidence offered by St. Luke’s may support a

different finding than the one the Council made, case law circumscribes our right

to make a different finding. See Pease, 807 N.W.2d at 845 (“Our task, therefore,

is not to determine whether the evidence supports a different finding; rather, our

task is to determine whether substantial evidence, viewing the record as a whole,

supports the findings actually made.”); see also Burns v. Bd. of Nursing, 495

N.W.2d 698, 699 (Iowa 1993) (“Because review is not de novo, the court must not

reassess the weight to be accorded various items of evidence. Weight of evidence

remains within the agency’s exclusive domain.”).

We agree with the district court that substantial evidence supports this

finding.

2. Section 135.64(2)(b).

St. Luke’s challenges whether substantial evidence supports the Council’s

finding that “[a]ny existing facilities providing institutional health services similar to

those proposed are being used in an appropriate and efficient manner.” Iowa Code

§ 135.64(2)(b). The Council determined current facilities are—and will continue to

be—used in an appropriate and efficient manner because the number of open-

heart procedures performed by St. Luke’s rose from 265 in 2013 to 328 in 2015.

Additionally, because of the changed standard of care regarding heart procedures

in diabetic patients, “cardiac surgery utilization is projected to further increase.”

St. Luke’s maintains the Council failed to consider one of the guidelines

regarding when the Council should allow the expansion of heart surgery-programs.

See Iowa Admin. Code r. 641-203.2(3)(b)(1) (“There should be no additional adult
 16

cardiovascular surgery units initiated unless each existing unit within two hours

surface travel time is operating at a minimum of 350 open heart surgery cases per

year.”). It is undisputed that not all programs within two hours’ surface travel of

Cedar Rapids are operating at a minimum of 350 procedures. Moreover, St. Lukes

argues if Mercy stops sending 150 surgeries out to those other programs each

year, the number of surgeries completed by the nearby surgical units will decrease.

Rule 641-203.2(3)(b)(1) appears to provide 350 surgeries as a numerical

measure for “appropriate and efficient manner,” but we note that the rule is only a

guideline—which St. Luke’s does not dispute. According to Mercy, since a 2013

change in the standard of care for diabetic patients, the number of open-heart

surgeries—as opposed to the placement of stents—is on the rise. Additionally,

Mercy maintained that the numbers were expected to rise further because the

“population of adults over 60 years old is increasing in Iowa, and diabetes is a risk

factor for heart disease, and the age-adjusted prevalence of diabetes has

increased 67—66.7 percent in the Midwest from 1995 to 2010.”

We agree with the district court that substantial evidence supports this

finding.

3. Section 135.64(2)(d).

St. Luke’s challenges the Council’s final necessary finding—“Patients will

experience serious problems in obtaining care of the type which will be furnished

by the proposed new institutional health service or changed institutional health

service, in the absence of that proposed new service.” Iowa Code § 135.64(2)(d).

In reaching this conclusion, the Council again relied upon Mercy’s evidence

regarding patient wait times for heart surgery, resulting in increased hospital costs,
 17

loss of wages, and stress. The Council also noted that the Heart Rhythm Society

had proposed new guidelines that required any hospital that performs complex

ablations—which Mercy does—to have an on-site open-heart surgery program. If

Mercy did not receive the requested CON, its patients may experience trouble in

the future regarding other procedures they were currently able to obtain at Mercy.

Additionally, St. Luke’s disputes the Council’s reliance on one of its own prior

decision, when it considered the “delays, unnecessary costs, and duplication of

testing and other services” as part of the problems patients experience when

deciding whether to issue the CON.

St. Luke’s notes that of the patients who presented testimony to the Council,

none “present[ed] any examples of patients whose care was compromised as a

result of being transferred to St. Luke’s for open heart surgery.” But the question

is not whether patients are receiving substandard or worse care when they transfer

to St. Luke’s. The question is whether the patients are experiencing problems in

obtaining the care. Based on the evidence the Council found more credible,

patients—whether they originate their care at St. Luke’s or Mercy—are

experiencing longer wait times, which results in a number of stressors and

challenges for those patients and could ultimately result in patient death.

We agree with the district court that substantial evidence supports this

finding.

4. Other Findings.

St. Luke’s challenges Mercy’s projection of 150 procedures annually,

claiming the number was “pulled from thin air.” We disagree. Mercy transferred

for cardiac surgery 122 patients in 2012, 104 in 2013, and 117 in 2014. However,
 18

it also transferred an additional number of patients each year with “severe disease

with the intent that they received medical management prior to possible surgery.”

In 2012, an additional 28 patients were referred, in 2013 an additional 29 patients,

and in 2014 an additional 23 patients. In 2015, Mercy projected a total of 140

patients would be referred out for cardiac surgery with an additional 56 patients

referred with the intent they received medical management before surgery. And

in fact, by the time of the hearing in 2016, Mercy was able to report that in 2015, it

transferred 148 patients for cardiac surgery. Moreover, it is logical to assume more

patients with heart issues would choose to originate their care at Mercy once the

limit on cardiac services they may receive at Mercy is removed.

St. Luke’s also challenges the Council’s and the district court’s “reli[ance]

upon Mercy’s claim that volume is not an accurate predictor of quality, because

there are quality programs that perform fewer than 200 surgeries per year.” Even

if we agree with St. Luke’s contention that studies show volume is a predictor of

quality, it is unclear to what relief St. Luke’s believes it is entitled. And while there

appears to be a correlation between the volume of procedures and the quality of

the program, Mercy’s projection of 150 surgeries each year would make it one of

the larger programs in Iowa.

Because the Council’s findings are supported by substantial evidence in the

record, its decision to grant Mercy’s CON is not “irrational, illogical, or wholly

unjustifiable.” Iowa Code § 17A.10(m).

IV. Conclusion.

We agree with the district court that the Council is vested with the power to

interpret rule 641-203.2(3)(a)(1) and its interpretation of the rule as a guideline is
 19

not illogical, irrational, or wholly unjustifiable. Additionally, the Council’s necessary

findings pursuant to Iowa Code section 135.64(2) are supported by substantial

evidence in the record, and its decision to grant the CON is not irrational, illogical,

or wholly unjustifiable. We affirm the district court’s ruling on judicial review.

AFFIRMED.