STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
BOCA RATON COMMUNITY )
HOSPITAL, INC., )
)
Petitioner, )
)
vs. )
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION; BETHESDA ) HEALTHCARE SYSTEM, INC.; AND ) INDIAN RIVER MEMORIAL HOSPITAL, ) INC., d/b/a INDIAN RIVER ) MEMORIAL MEDICAL CENTER, INC., )
)
Respondents. )
Case No. 01-2713CON
)
BETHESDA HEALTHCARE SYSTEM, ) INC., )
)
Petitioner, )
)
vs. )
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION, )
)
Respondent, )
)
and )
) COLUMBIA/JFK MEDICAL CENTER ) LIMITED PARTNERSHIP, d/b/a JFK ) MEDICAL CENTER, AND TENET ) HEALTHSYSTEM HOSPITALS, INC., ) d/b/a DELRAY MEDICAL CENTER, )
)
Intervenors. )
Case No. 01-2715CON
)
TENET HEALTHSYSTEM HOSPITALS, INC., d/b/a DELRAY MEDICAL CENTER,
Petitioner,
vs.
AGENCY FOR HEALTH CARE ADMINISTRATION AND BOCA RATON COMMUNITY HOSPITAL, INC.,
Respondents.
)
)
)
)
)
)
) Case No. 01-2894CON
)
)
)
)
)
)
)
LAWNWOOD MEDICAL CENTER, INC., ) d/b/a LAWNWOOD REGIONAL MEDICAL ) CENTER, )
)
Petitioner, )
)
vs. )
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION AND MARTIN ) MEMORIAL MEDICAL CENTER, INC., ) d/b/a MARTIN MEMORIAL MEDICAL ) CENTER, )
)
Respondents. )
Case No. 01-2896CON
)
COLUMBIA/JFK MEDICAL CENTER ) LIMITED PARTNERSHIP, d/b/a JFK ) MEDICAL CENTER, )
)
Petitioner, )
)
vs. )
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION AND MARTIN ) MEMORIAL MEDICAL CENTER, INC., ) d/b/a MARTIN MEMORIAL MEDICAL ) CENTER, )
)
Respondents. )
Case No. 01-2897CON
)
COLUMBIA/JFK MEDICAL CENTER ) LIMITED PARTNERSHIP, d/b/a JFK ) MEDICAL CENTER, )
)
Petitioner, )
)
vs. )
)
AGENCY FOR HEALTH CARE ) ADMINISTRATION AND BOCA RATON ) COMMUNITY HOSPITAL, INC., )
)
Respondents. )
Case No. 01-2898CON
)
MARTIN MEMORIAL MEDICAL )
CENTER, INC., )
)
Petitioner, )
)
vs. )
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION; BETHESDA ) HEALTHCARE SYSTEM, INC.; AND ) INDIAN RIVER MEMORIAL HOSPITAL, ) INC., d/b/a INDIAN RIVER )
MEMORIAL, )
)
Respondents. )
Case No. 01-2913CON
)
RECOMMENDED ORDER
Upon proper notice, this case was heard by William R. Pfeiffer, a duly-designated Administrative Law Judge at the Division of Administration Hearings, on December 1 through 5, 8 through 12, 15 through 19, 2003, and January 4 through 9, and 11
through 16, 2004, in Tallahassee, Florida.
APPEARANCES
For Boca Raton Community Hospital, Inc.:
H. Darrell White, Esquire McFarlain & Cassedy, P.A.
305 South Gadsden Street Post Office Box 2174
Tallahassee, Florida 32316-2174
Seann M. Frazier, Esquire Greenberg Traurig, P.A.
101 East College Avenue Post Office Box 1838 Tallahassee, Florida 32302
For Agency for Health Care Administration:
Richard J. Saliba, Esquire Thomas R. Moore, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Mail Station No. 3 Tallahassee, Florida 32308
For Martin Memorial Medical Center, Inc., d/b/a Martin Memorial Medical Center:
Paul H. Amundsen, Esquire Amundsen & Gilroy, P.A.
502 East Park Avenue Post Office Drawer 1759
Tallahassee, Florida 32302-1759
Robert D. Newell, Jr., Esquire Newell & Terry, P.A.
817 North Gadsden Street Tallahassee, Florida 32303-6313
For Bethesda Healthcare System, Inc.:
W. David Watkins, Esquire Karl D. Acuff, Esquire Watkins & Caleen, P.A. 1725 Mahan Drive, Suite 201 Post Office Box 15828
Tallahassee, Florida 32317-5828
For Columbia/JFK Medical Center Limited Partnership, d/b/a JFK Medical Center and Lawnwood Medical Center, Inc., d/b/a Lawnwood Regional Medical Center:
Stephen A. Ecenia, Esquire
R. David Prescott, Esquire
J. Stephen Menton, Esquire
Rutledge, Ecenia, Purnell & Hoffman, P.A.
215 South Monroe Street, Suite 420 Post Office Box 551
Tallahassee, Florida 32302-0551
For Tenet Healthsystem Hospitals, Inc., d/b/a Delray Medical Center:
C. Gary Williams, Esquire Michael J. Glazer, Esquire Ausley & McMullen
227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302
STATEMENT OF THE ISSUES
The issues in this case are whether a need exists for the establishment of one or more new adult open heart surgery (OHS) programs in Agency for Health Care Administration (AHCA) Planning District 9, and, if so, whether the Certificate of Need (CON) applications filed by Boca Raton Community Hospital, Inc. (Boca), Martin Memorial Medical Center, Inc. (Martin), and/or Bethesda Healthcare System, Inc. (Bethesda), in March 2001, meet the statutory and rule criteria to satisfy that need.
PRELIMINARY STATEMENT
On January 26, 2001, AHCA published a fixed need pool for one additional adult open heart surgery program in District 9 for the July 2003 planning horizon. Thereafter, in April 2001,
Bethesda, Boca, and Martin each filed a CON application to implement adult OHS programs at their respective hospitals. Competing applications, subsequently abandoned, were also filed by Good Samaritan (CON No. 9453) and Indian River (CON
No. 9454). On May 25, 2001, in Volume 27, Number 21 of the Florida Administrative Weekly, AHCA noticed its intent to approve the Boca and Martin applications, and deny the Bethesda, Good Samaritan, and Indian River applications.
Thereafter, Bethesda and Indian River timely filed petitions for an administrative hearing to contest the preliminary denial of their applications, as well as the preliminary approval of the Boca and Martin applications. Petitions challenging the preliminary approvals were also filed by: JFK (challenging both approvals); Lawnwood (challenging Martin); Palm Beach Gardens Medical Center (challenging Martin); and Delray (challenging Boca Raton). Petitions were also subsequently filed by Boca and Martin, challenging all other
co-batched applicants, and petitions to intervene in opposition to Bethesda were filed by JFK and Delray, and in opposition to Indian River by Lawnwood.
By Order dated August 6, 2001, all petitions were consolidated for purposes of final hearing. In April and May 2003, respectively, Palm Beach Gardens and Indian River filed notices of voluntary dismissal abandoning their
petitions, and in the case of Indian River, its application. In December 2003, the case reached final hearing.
At final hearing Boca presented the testimony of James Gary Strack, an expert in the field of health and hospital administration; Daniel N. Weiss, M.D., an expert in the field of cardiology and cardiac electro-physiology; Jacquelyn Nicholson, an expert in the field of medical screening programs; Monica Noether, Ph.D., an expert in the field of health care economics; Rick Knapp, an expert in the field of health care finance; Richard Greenwald, M.D., an expert in the field of medicine and hospital and medical affairs administration; Rose Amberson, an expert in the field of human resources; Thomas Davidson, an expert in the field of health care planning; and George
Miceli, M.D., an expert in the field of emergency medicine and hospital emergency department management. By deposition, Boca also presented the testimony of Peter Mercer, an expert in the field of hospital administration; Ralph DeCerbo, an expert in the field of hospital finance; Christine Lynn; Dr. George Desjardins, an expert in the field of anesthesiology; Jennifer Rosser, an expert in the field of cardiology services; Dwight Warren, an expert in the field of physiology; and Mark B. Saltzman, M.D., an expert in the field of cardiology, including interventional cardiology. Boca Exhibits numbered 5, 6, 8, 10
through 13, 17 through 58, 60 through 68, 71 through 74, and 83 were received into evidence.
Martin presented the testimony of Nancy Dgetluck, an expert in the field of bio-statistics, public health and hospital quality management; Joseph V. Ferrara, an expert in the field of emergency medical services and paramedics in Florida; Janice Norman, an expert in the field of emergency room nursing and nurse administration; Richmond M. Harman, an expert in the field of health care administration and health care finance; Karen C. Keane, an expert in the field of cardiac catheterization management and radiology technology; Samuel F. Steinhauer; Thomas Wharton, Jr., M.D., F.A.C.C., an expert in the field of interventional cardiology; William Spotnitz, M.D., an expert in the field of thoracic and cardiac surgery; Judith L. Horowitz, an expert in the field of health care planning and finance;
Lori E. Myers, an expert in the field of critical care nursing and nursing administration; and Marvin Dewar, M.D., an expert in the field of medicine. By deposition Martin also presented the testimony of Dr. Howard Helfman, an expert in the field of cardiology; Chuck Fullett, an expert in the field of perfusion; Charles Heinemann, an expert in the field of hospital equipment; Dr. George E. McLain, an expert in the field of anesthesiology; Dr. James Bradley, an expert in the field of cardiology; Diane Giersdorf, an expert in the field of critical care nursing and
nursing administration; Edward L. Hengtgen, an expert in the field of architecture; and Karen Ripper, an expert in the field of hospital administration, nursing administration, and nursing. Martin's Exhibits numbered 1 through 14, 17 through 27, 29
through 46, 48 through 52, 54, and 57 through 59 were received into evidence.
Bethesda presented the testimony of Robert B. Hill, an expert in the field of hospital administration; Ernestine M. Ziacik, an expert in the field of nursing administration; Christopher Schirmer, M.D., an expert in the field of emergency medicine; Mark Rosenberg, an expert in the field of emergency medicine and emergency department administration; Mary McClory, an expert in the field of health care quality management, including continuous quality improvement and performance improvement; Sheila Elijah-Barnwell, an expert in the field of health care architecture; Cheryl Jensen, an expert in the field of nurse recruiting; Shelly Luckey, Director of Bethesda's Financial Assistance Unit; Armand Balsano, an expert in the field of health care planning and finance; and Peggy Cella, an expert in the field of health care planning. By deposition Bethesda also presented the testimony of William Bihlajama, an expert in the field of nursing management; John Hillenmeyer, an expert in the field of hospital administration; Teresa Hunter, an expert in the field of nursing and cardiac catheterization;
Veronica Le, an expert in the field of critical care nursing; Geoffery Lynn, an expert in the field of thoracic and cardiovascular surgery; April Quinones, an expert in the field of anesthesiology; Janus Styperek, an expert in the field of cardiology; Debra Connor, an expert in the field of critical care nursing; Darla Jamison, an expert in the field of critical care nursing; Jose Perez, an expert in the field of emergency department management; Jacqueline Southworth, an expert in the field of critical care nursing; Robert Lee Taylor, Jr., an expert in the field of health care finance; and Regina Crafa, an expert in the field of human resources. Bethesda's Exhibits numbered 1 through 4, 9 through 22, 24 through 28, 31 through
87, 91 through 97, 99, 106 through 118, 120, and 121 were received into evidence.
AHCA presented the testimony of Jeffrey Gregg, an expert in the field of health care planning.
Delray presented the testimony of William D. Gieseke, M.D., an expert in the field of cardiovascular and thoracic surgery; Mitchell S. Feldman, an expert in the field of health care facility administration; Aaron M. Goodstein, an expert in the field of cardiac catheterization nursing; Geralyn Lunsford, an expert in the field of nursing administration; Kim Streit, an expert in the field of survey methodology; Maria Dulaney, an expert in the field of nursing and nursing administration; David
Katzin, M.D., an expert in the field of cardiology and hospital quality assurance; Daniel J. Sullivan, an expert in the field of health care planning and health care finance; and Robert Greene, an expert in the field of health care planning and administration. By deposition, Delray also presented the testimony of Doreen Eckert, an expert in the field of cardiac catheterization nursing; Gerald Johnston, an expert in the field of medical screening programs; Brooke Liddle, an expert in the field of paramedics; Rob Moreland, an expert in the field of paramedics; Dr. Jeffrey Newman, an expert in the field of cardiovascular and thoracic surgery; and Dr. Randall Wolfe, an expert in the field of emergency medicine. Delray's Exhibits numbered 1 through 17, 19 through 28, and 33 through 54 were received into evidence.
JFK and Lawnwood presented the testimony of Jay Midwall, M.D., an expert in the field of cardiology and interventional cardiology; Phillip D. Robinson, an expert in
the field of hospital administration; Michael L. Schwartz, an expert in the field of health care planning; Darryl Weiner, an expert in the field of health care finance; Terrence Peter Downing, M.D., an expert in the field of cardio-thoracic surgery; Richard A. Baehr, an expert in the field of health care finance, health care planning, and health care policy. By deposition, JFK and Lawnwood also presented the testimony of
Kenneth Scheppke, an expert in the field of emergency medicine; and Gail Grasso, an expert in the field of nursing and cardiovascular lab administration. JFK and Lawnwood's Exhibits numbered 1 through 18 were received into evidence.
The Statement of Stipulations jointly filed by the parties on February 2, 2004, is incorporated by reference in this Recommended Order. The parties timely filed their respective proposed recommended orders, which have been duly considered.
FINDINGS OF FACT
The Parties
AHCA
AHCA is the state agency responsible for the administration of the CON program in Florida. See § 408.034(1), Fla. Stat. (2000).
Applicant Boca Raton Community Hospital
Boca is a not-for-profit hospital that began operations in 1967. It is the only hospital located in the city of Boca Raton. Boca's primary service area for acute care services covers 16 zip code areas in southern Palm Beach County.
Boca currently operates 394 licensed beds consisting of
384 general, medical/surgical, and acute care beds, and ten tertiary Level II neonatal intensive care unit (NICU) beds. The hospital employs approximately 2,200 staff.
Boca is a full service community hospital. With the exception of OHS and trauma services, Boca provides a full range of medical and surgical services, including pediatrics, obstetrics, general and other surgical specialties, and a full range of medical subspecialties, including hematology, cancer services, and pulmonology.
Boca predominantly serves the elderly population. The average age of its patients is 73 years of age, nearly ten years older than the statewide average. Excluding obstetrical deliveries, 70 percent of Boca's patient days, and 60 percent of its admissions are Medicare patients.
Boca has 700 physicians on its medical staff that provide care across a full range of medical specialties, including cardiology, pediatrics, obstetrics, and various surgical subspecialties.
Applicant Martin Memorial Hospital
Martin is comprised of two distinct not-for-profit hospitals located in Martin County. Martin North is a 226-bed hospital located in the city of Stuart, and Martin South is a 100-bed hospital located seven miles southwest of Stuart. Martin proposes to locate an OHS program at its north campus.
Martin and its affiliates offer a comprehensive array of medical services including various cardiology services, vascular surgery, pulmonary services, cancer services,
ambulatory surgery, colon and rectal surgery, diagnostic radiology, endocrinology, geriatrics, rehabilitation services, gynecology, pediatrics, Level II NICU, allergy care, hematology, nephrology, neurology, neurosurgery, oral/maxillo facial surgery, orthopedics, pharmacy services, internal medicine, ophthalmology, gastroenterology, urology, ENT, plastic surgery, and podiatry.
Martin opened its cardiac catheterization lab in 1989 and added a second lab in 1999. Martin provides an extensive continuum of cardiac services, excluding OHS, and operates a high-volume cardiac catheterization program; a full range of noninvasive cardiac lab work, as well as support work; and heart rehabilitation services. It has experience in performing interventional special procedures (peripheral angioplasties on arterial vessels, other than coronary vessels,) in its radiology special procedure rooms.
Martin's north campus operates a 22-bed emergency department that received over 30,000 patients in 2002. Its south campus maintains a 21-bed emergency department and received almost 24,000 patients in 2002.
Applicant Bethesda Memorial Hospital
Bethesda is a 362-bed private, not-for-profit hospital located in Boynton Beach. Established in 1959, it has served the area as a safety-net provider for the past 45 years.
Bethesda also operates a large outpatient center in western Boynton Beach.
Bethesda has over 500 physicians, including 41 cardiologists, on its staff representing more than 30 medical specialties. It provides a broad range of services, including obstetrics, Level II and Level III NICUs, pediatrics, internal medicine, orthopedics, infectious disease, peripheral vascular therapy, including complicated vascular and intra-abdominal surgery and invasive angiograms, and neurological and stroke services.
With the exception of OHS and coronary angioplasty (PTCA), Bethesda offers a full range of cardiac services, including echocardiography, electrocardiography, diagnostic cardiac catheterization, and cardiac rehabilitation. Its cardiology program offers tilt table studies, cardiovascular studies, and trans-esophageal echo (TEE) procedures.
In addition, Bethesda's cardiology program utilizes a Siemens Table and Hycore Digital System and has the necessary equipment, inventory, and experienced staff to perform PTCAs. Many of its cardiologists who currently perform diagnostic cardiac caths at Bethesda also perform interventional cardiac procedures, PTCAs and stent implantations at other nearby facilities.
Bethesda currently operates four ICUs, including a 12-bed surgical ICU, a ten-bed medical ICU, a 12-bed NICU II, and a three-bed NICU III suite. It operates a ten-bed critical care unit and 78 telemetry beds, including 48 beds for cardiac monitoring. Bethesda also operates a 14-bed special care unit for patients with long-term ventilator needs, and a four-bed dialysis unit.
Bethesda recently completed a three-story construction project that doubled the size of its emergency department, added a new lobby and administrative offices, and established a new ultrasound department. The construction expansion also included shelled space on the third floor to house the proposed OHS and PTCA programs and existing CCL program.
Bethesda maintains a state-of-the-art emergency facility equipped to treat cardiac emergencies and other life- threatening illnesses. Its emergency department treats more than 50,000 emergency patients each year.
OHS/PTCA Providers JFK and Lawnwood
There are four existing providers of adult OHS in District 9, including JFK and Lawnwood. JFK is a 424-bed, for- profit, acute care facility, owned by Hospital Corporation of America (HCA) and located in northern Palm Beach County in Atlantis, Florida. Lawnwood, the newest approved OHS provider in District 9, is a 335-bed licensed acute care, for-profit
hospital located in Ft. Pierce, St. Lucie County, Florida, also owned by HCA. Lawnwood primarily serves the northern area of District 9.
OHS/PTCA Provider Delray Hospital
Delray Hospital is a 319-bed acute care, for-profit hospital located in District 9, Delray Beach, southern Palm Beach County, Florida, and is owned by Tenet Healthcare Corporation (Tenet). Delray offers a broad array of health services. It maintains a 53-bed inpatient mental health unit, a 15-bed surgical ICU for post open-heart surgery and other surgical patients and a 12-unit operating room, including three for open-heart surgery and three cardiac catheterization labs. Delray is the designated trauma center for southern Palm Beach County and annually handles nearly 1,400 trauma patients.
Delray has a medical staff that includes four cardiac surgeons and more than 60 cardiologists, of which approximately
15 perform cardiac catheterization procedures. Between 2000 and 2003, Delray experienced a drop in open-heart surgery volume from 780 cases to 517 cases.
Palm Beach Gardens Hospital, a non-party, 205-bed, acute care facility, is located in western Palm Beach County, within District 9, and provides OHS and angioplasty. In 2002, PBGH performed 579 OHS procedures.
Tenet also owns North Ridge Hospital, a non-party, 332-bed hospital located in northeast Broward County (AHCA Service District 10) that regularly provides OHS/PTCA services to residents of Southern Palm Beach County. In 2002, North Ridge performed 753 OHS procedures.
Published Numeric Need
Pursuant to its need formula, AHCA determined that a numeric need exists in the applicable batching cycle for one new OHS program in District 9. The need formula established in Florida Administrative Code Rule 59C-1.033(7)(b), computes a resident use rate for a district by dividing the annual volume of adult OHS cases by the district's adult population. That use rate is applied to the district's projected adult population to compute the expected number of OHS cases for the planning horizon. The result is divided by 350 to compute gross program need. The "gross need" is reduced to a "net need" for new programs by subtracting the number of existing and approved adult OHS programs.
Thereafter, when the net need projected under the Rule is greater than 0.5, the Agency publishes a need for one new OHS program. If the net need is greater than one, the Agency will also publish a need for only one OHS program in an effort to allow a single new program to become established and achieve sufficient volume as well as protect existing providers from unreasonable cannibalization.
Application of the Rule need formula in this case resulted in a gross need for 8.5 adult OHS programs to serve District 9, which when offset by four existing programs yielded a net numeric need for 4.5 new programs. Although there is a net need of at least four new OHS programs in District 9, consistent with Agency policy, AHCA reduced the net numeric need and published a need for one new program.
A substantially affected party may challenge AHCA's publication of need; however, no party challenged the published need for one new OHS program in District 9.
Given various factors, and notwithstanding the published need for only one new program, AHCA preliminarily approved the applications of Boca and Martin to establish new adult OHS programs in District 9 and denied Bethesda's application.
Applicable Statutory Review Criteria At Issue
Section 408.035(1), Florida Statutes (2000): Need in Relation to Applicable District Health Plan
District 9 is located along the southeast coast of Florida and includes Indian River, Martin, Palm Beach, Okeechobee, and St. Lucie Counties. In 2002, the population of District 9 was 1,674,779 residents, most living in Palm Beach County. In fact, 70 percent of the residents and 266,579 of the 388,596 persons aged 65 or older lived in Palm Beach County.
As indicated, District 9 houses four OHS providers, all of which are for-profit entities. Delray, Palm Beach Gardens, and JFK are located in Palm Beach County while Lawnwood is located in St. Lucie County. In 2002, Palm Beach County residents received 2,037 OHS procedures; Martin County residents received 289; St. Lucie County residents received 471; Okeechobee County residents received 106; and Indian River County residents received 203 OHS procedures.
The evidence demonstrates that one or more additional OHS programs in District 9 is consistent with its local health plan. The Treasure Coast Health Council utilizes two preference statements relating to OHS CON applications. First, preference is provided to applicants with existing cardiac cath programs, which each applicant satisfies. Second, preference is given to applicants that have a documented commitment to serve patients, regardless of ability to pay or county of residence.
Subsection 408.035(2), Florida Statutes (2000):
Availability, Quality of Care, Accessibility and Extent of Utilization of Existing Facilities
Tertiary Service
Pursuant to Florida Administrative Code
Rule 59C-1.032, a cardiac catheterization program that includes the provision of angioplasty may only be located within a hospital that provides OHS services. AHCA defines OHS services in Florida as a tertiary service to be provided in a small
number of regional service centers. However, the evidence demonstrates that the four existing OHS programs in District 9 do not only serve clearly defined regional service areas, but compete with other OHS providers in adjoining districts.
In addition, the Agency's historic application of this tertiary designation has not prevented OHS from becoming a common procedure in Florida. Seventy of the 212 acute care hospitals in Florida have OHS programs and 52, or approximately
71 percent, of the 73 Florida hospitals with 250 or more acute care beds operate OHS programs. Given the aging population in many areas of Florida, OHS is the fifth most common surgical procedure in the state and is frequently performed at many large hospitals that serve relatively small regional service areas.
Quality of Care
The evidence demonstrates that the four existing District 9 OHS facilities operate well-developed cardiology programs and provide high quality care. The testimonial and empirical evidence further indicates that there is a relationship between the volume of OHS procedures at a facility, both elective and non-elective, and the quality of the care and outcomes.
While many of the experts and studies identify and recommend varying minimum OHS volume thresholds necessary to provide quality, ensure safety and minimize mortality rates, the
evidence indicates that volume begets quality. Due to the condition of the patients, the complexity of the surgery and the advancing technologies, high-volume surgeons, with experienced staff performing OHS procedures in high-volume hospitals, typically provide better outcomes and lower mortality rates than lower volume surgeons or lower volume hospitals.
Availability and Accessibility of Existing Providers
It is undisputed that OHS providers are available and geographically accessible to the residents of District 9 within the two-hour drive time set forth in Florida Administrative Code Rule 59C-1.033(4)(a). However, timely availability and accessibility of OHS services are extremely important for many reasons.
First, timely OHS access is vital in District 9 given the large number of elderly residents. Heart disease is the leading cause of death in the district, as well as the country, and usually afflicts the elderly. Palm Beach County experienced 4,147 deaths attributable to heart disease in 2002, and Martin County experienced 478 during that period.
Second, timely OHS access is critical due to the condition of the cardiac patient. In general, a heart attack occurs when the coronary arteries are blocked or restricted, obstructing blood flow to the heart. As a result, heart muscle
is damaged or destroyed. The longer the blood flow is disrupted or diminished, the more heart muscle is lost.
Delays in restoring blood flow, or reperfusion, ranging from minutes to hours can damage heart muscle and eventually cause death. The more heart muscle lost, the more likely the patient will suffer a severe reduction in the quality of life or die.
Reperfusion is frequently accomplished through PTCA, which is the cardiac catheterization procedure in which a balloon-tipped catheter is inflated at
the obstruction and expands narrowed segments of coronary arteries to restore blood flow to the heart muscle. PTCA is a widely used, life-saving emergency therapeutic modality, that is generally superior to thrombolytic therapy or clot busters. Studies show that PTCA restores coronary blood flow in
95 percent of cases whereas thrombolytics restore flow
60 percent of the time. PTCA procedures reduce the rates of death, reinfarction, cerebral bleeding, reocclusion and recurrent ischemia. Moreover, PTCA is superior to blood thinners since many patients have advanced age, increased bleeding risk, and/or are recent stroke or surgery patients.
Third, timely access is becoming increasingly important due to the delays associated with transferring cardiac patients. As indicated, cardiac patients requiring OHS or PTCA
services must receive intervention at OHS licensed hospitals. Unfortunately, the majority of patients in need of OHS/PTCA services present to non-OHS hospitals and must be transferred. The evidence indicates that despite a hospital's protocols and concerted efforts to reduce transfer time, on average, it takes at least two hours from the time a patient arrives at a non-OHS hospital until the patient is transferred and between four to five hours before reperfusion or OHS is actually performed.
Systemic and unavoidable delays in transferring patients and eventual reperfusion occur during many stages of patient care including the patient assessment, the physician contact, reception and delivery by the ambulance, team arrivals, acquisition of approval from the receiving facility, and stabilization of the patient prior to transfer.
Consequently, heart attack patients who present to non-OHS hospitals suffering a heart attack are at a distinct disadvantage since transfer delays increase the time to reperfusion and therefore, the risk of complications. In fact, the reliable evidence indicates that heart attack patients with a "door to balloon" time of less than 60 minutes have a mortality rate of 4.2 percent while those with a door to balloon time of 150 to 180 minutes have an 8.5 percent mortality rate. Delays in transfer result in a 60 percent increase in adjusted mortality.
While existing OHS/PTCA providers argue that hospital bypass policies can minimize treatment delays and save lives, the majority of heart attack patients do not present to a hospital via ambulance. Moreover, the emergency departments within the District 9 OHS/PTCA providers are routinely filled to capacity, especially during the tourist season and cannot accept emergent patients. In addition, EMS personnel cannot always accurately diagnose heart attack patients and route them accordingly. Finally, some heart attack patients are extremely unstable and must be taken to the nearest hospital for immediate stabilization.
The addition of one or more additional OHS/PTCA programs in District 9 will, to some extent, improve access to the residents. Given that more than half of all heart attack patients are candidates for angioplasty, quicker intervention will save heart muscle and lives. While there are 15 to 20 OHS providers within 100 miles of each applicant, given the age and nature of the patient, the inherent delays associated with patient transfer and reperfusion, the obvious limitations of local infrastructure, and the service mix within District 9, emergent patients cannot access the provider, undergo transfer and receive the necessary reperfusion or OHS within two hours. On balance, strict adherence to a two-hour drive time rule is unreasonable.
Extent of Utilization of Existing Providers
In the twelve-month period ending September 2002, approximately 32,000 adult OHS procedures and 58,000 PTCAs were performed in Florida hospitals. Between 1999 through 2002, the OHS adjusted volume and use rate slightly declined in Florida while PTCA volume and use rate increased.
Specifically, between 1999 and 2002, as a result of many variables including the events of 9-11, coding changes, decreased travel to Florida and improved technology, the reported number of adult OHS procedures performed in Florida hospitals decreased from 33,755 to 31,525, while the number of PTCA procedures increased from 46,500 to 57,454.
Consistent with the state-wide numbers, the total number of OHS procedures performed by District 9 providers dropped from 2,656 to 2,489 between 1999 and 2002. However, the volume of PTCAs increased initially and then slightly decreased following 9-11.
Despite the slight reduction in OHS volume, each of the existing District 9 OHS providers remains highly utilized. In fact, although two-thirds of the Florida OHS programs annually perform less than 500 OHS cases, in 2002 and 2003, three of the four existing providers in District 9 performed over 500 OHS cases. Specifically, in 2003 Delray performed over
500 OHS procedures, JFK performed nearly 700 OHS cases, Palm
Beach Gardens performed nearly 600 OHS procedures and recently- licensed Lawnwood performed approximately 450 OHS procedures.
Finally, North Ridge, a District 10 provider which treats many District 9 cardiac patients, performed nearly 650 OHS procedures in 2003.
As indicated, many factors contribute to the recent decline in reported OHS cases. First, the reported decline results from definitional changes to the OHS Medicare diagnostic related group (DRG) system. Historically, OHS has been defined by AHCA as procedures falling within DRGs 104 through 109, and DRG 104 included defibrillator implant procedures which are not actual OHS procedures and do not involve the use of a heart-lung bypass machine. Beginning October 1, 2002, the federal government changed the definition of Medicare DRG 104 and excluded defibrillator implant procedures. Since these procedures were historically counted in AHCA reports of OHS utilization until September 30, 2001, the exclusion resulted in a dramatic reduction in reported DRG 104 procedures.
In fact, reported DRG 104 cases in District 9 declined from 514 in 2001 to 272 in 2002. Undeniably, when non-OHS defibrillator implant procedures are removed from that data, the number of DRG 104 OHS cases remained stable at 270 between 2001 and 2002. Moreover, when the non-OHS defibrillator implant procedures are removed from the aggregate OHS procedures
performed in District 9, the actual decline in utilization from 1999 to 2002 was approximately only 80 OHS procedures. The reliable evidence demonstrates that the reclassification of DRG
104 accounts for approximately one-third of the District 9 OHS decline and one-half of the statewide OHS decline between 2001 and 2002.
Second, advances in technology and medicine have also contributed to the reduction in OHS utilization. Since coronary angioplasty was first performed in the United States in 1981, the technique has regularly improved. The advent and development of stents has increased the cardiac patient base that will benefit from angioplasty. Additionally, drug eluting stents and new medications such as statins provide less invasive techniques that may further reduce the OHS use rate.
Third, the events of September 11, 2001, also account for some of the recent decline in OHS utilization in District 9. Following the attacks of 9-11, District 9 experienced a significant reduction in tourism and seasonal residency and an economic decline associated with those attacks. Taxable sales related to tourism and recreation from September 2001 through June 2003 show a decline in tourist spending in Palm Beach County beginning in 2002 and continuing into 2003.
Interestingly, review of quarterly District 9 OHS utilization trends from 2001 to 2003 indicates that OHS volume
declines have been greater in the winter months than in the summer months. This pattern is inconsistent with the theory that the volume declines are primarily due to changes in practices associated with interventional cardiology services and support the temporary reduction in tourism and seasonal residency as larger factors in the recent decline.
In addition, the decline in OHS coupled with the reduction of PTCA volume performed in District 9 following 9-11, in 2002, indicates that there has been a temporary disappearance of a piece of the market, rather than a substitution of PTCA for
OHS.
Notwithstanding the technological developments and
temporary decrease in tourism and seasonal residency, the reliable data, including the district's projected population growth and the aging population, indicates that District 9 OHS utilization will increase steadily by 100 to 150 cases over the next few years. In fact, data from the first half of 2003 demonstrates that the rate of decline in District 9 OHS utilization has quelled, with only 20 fewer cases performed during the first six months of 2003 than in the first six months of 2002. In addition, as discussed below, it is reasonable to expect an increase in District 9 OHS volume when providers target and capture the OHS patients who are currently leaving District 9 for cardiac care.
Subsection 408.035(3), Florida Statutes (2000): The Applicants' Ability to Provide Quality of
Care and Record of Providing Quality of Care
The parties agree that the applicants have a history of providing quality care with regard to the historical scope and intensity of services they have provided. Each applicant has an excellent, diverse and highly trained medical staff that provides a high level of service, and each has a reputation in the medical community of providing a high level of care to its respective patients.
The evidence demonstrates that, given sufficient volume, each of the applicants has the ability to provide high quality OHS services. Each applicant has a cadre of qualified doctors and staff and each has strong support from its administration and community to provide a high quality OHS/PTCA program, given sufficient volume.
Each of the applicants' current cardiology programs provides a full range of cardiology services, excluding those requiring OHS licensure. Each provides diagnostic cardiac cath, electro-physiology services, echocardiography, nuclear stress testing, cardiac rehabilitation services, EECP, and a full range of diagnostic and non-invasive services.
Each applicant's medical staff provides quality care within their respective cardiology program, and each has the ability to provide quality OHS medical care, given sufficient
caseloads. In fact, Boca currently has approximately 40 cardiologists on staff, including 20 interventional cardiologists. Bethesda also has 40 cardiologists, including ten interventional cardiologists on staff, and Martin has 16 cardiologists, one of whom is an interventional cardiologist. Moreover, many of the physicians, including the interventional cardiologists, on staff at the applicant hospitals also serve as attending physicians at existing OHS facilities.
The greater weight of the evidence demonstrates that each of the applicants has an impressive record of providing quality care and each has the ability to provide quality OHS care, given sufficient volume.
Subsection 408.035(4), Florida Statutes (2000): Need for Special Services Not Reasonably and Economically Accessible in Adjoining Areas
The evidence demonstrates that OHS services are accessible in adjoining areas. In fact, District 9 is an OHS/PTCA donor district. Many residents of District 9 routinely travel to Dade and Broward Counties for OHS/PTCA services. Specifically, in each of the past several years, approximately
20 to 25 percent of the OHS patients who live in District 9 traveled outside the district for cardiac care. In 2002, residents of southern Palm Beach County accessed 26 different hospitals for open-heart surgery.
Despite the availability of OHS/PTCA providers in the adjoining areas, and given the critical nature of many patients and the traffic congestion between Dade, Broward and Palm Beach counties, the District 10 providers are not always reasonably accessible. Approval of an additional OHS provider(s) in District 9 will provide, to some degree, more reasonable and economical access for patients who currently leave the district for OHS care.
Subsection 408.035(5), Florida Statutes (2000): Needs of Research and Educational Facilities
Florida Atlantic University (FAU) is a public university that serves approximately 26,000 students. FAU is scheduled to open a new medical school in August 2004 located nearly adjacent to Boca. FAU and Boca maintain a strong relationship, and an OHS program at Boca will advance the needs of FAU and its medical school students by providing improved access to the entire scope of cardiovascular medicine for educational purposes.
Subsection 408.035(6), Florida Statutes (2000): Availability of Resources, Including Health Personnel, Management Personnel, and Funds for Capital and Operating Expenditures, for Project Accomplishment
Availability of Health Personnel
It is undisputed that there is a national nursing shortage. Hospitals in South Florida regularly compete for nurses. However, the nursing shortage in South Florida is less
severe than in other areas of the state. For example, OR nurse positions in South Florida have vacancy rates of 5.8 percent, as compared to 15 to 18 percent elsewhere in Florida. Adult critical care nurse positions in South Florida have a vacancy rate of 7.8 percent compared to the state average of 12.5 percent, and medical/surgical nurse positions have a vacancy rate of 7.8 percent compared to 12.1 percent statewide.
In 2003, the nursing shortage in Florida appears to have eased. Statewide nursing school enrollment has increased
16 percent while nursing turnover rates have decreased.
The evidence demonstrates that existing OHS providers in South Florida have consistently met the staffing needs of their OHS programs to provide quality care. Sufficient OHS staffing resources will be available in South Florida to accommodate one or more additional OHS programs.
Availability of Funds
The evidence demonstrates that each applicant has the necessary funds for capital and operating expenditures associated with its OHS project.
Subsection 408.035(7), Florida Statutes (2000): Extent to Which the Proposed Service Will Enhance Access to Health Care for Residents of the District
Enhanced Access for Medicaid and Uninsured
Medicaid and uninsured residents in District 9 do not sufficiently access OHS and PTCA services. Over the past few
years, District 9 had the lowest use rate of Medicaid OHS procedures in Florida and an insignificant number of uninsured OHS cases. In 2002, there were no OHS charity cases and only
43 self-pay OHS procedures provided in District 9. Similarly, in 2002, there were no charity PTCA cases and only 113 self-pay PTCA cases.
Based upon the applicable population figures, it is reasonably estimated that at least 100 additional uninsured persons in District 9 would have received OHS in 2002 if they had been insured. Similarly, at least 200 additional uninsured persons in District 9 would have received PTCA.
To combat the access problems for the poor, each applicant has proposed a reasonable, proactive approach that will achieve their respective conditions for Medicaid and charity care and enhance access to the economically disadvantaged. Boca proposes to establish a mobile outreach program to locate and serve uninsured residents of District 9, and dramatically increase its service to the poor and uninsured. Bethesda is located in a less affluent area of Palm Beach County, has historically provided significant Medicaid and charity care, and will continue its efforts. Martin also has numerous Medicaid and charity patients within its service area and will improve their access to OHS services.
Enhanced Access Generally
The evidence demonstrates that approval of one or more additional OHS providers in District 9 will enhance access to all of the residents. As indicated, while each applicant administers thrombolytic drug therapy, patients requiring immediate reperfusion must be transferred to a licensed OHS hospital. As a result, hospital transfer delays are inevitable.
While the American Heart Association recommends that an emergent heart attack patient receive a primary angioplasty within 90 minutes from initial arrival at an ER, in 2002, the average delay between a patient's arrival to the applicants' ER, the subsequent transfer and eventual reperfusion or OHS at an existing OHS provider routinely exceeded four to five hours.
Boca operates a 50-bed emergency department that annually cares for 47,000 patients. Non-traumatic cardiac- related emergencies comprise the top five diagnoses of patients admitted to Boca and include patients with chest pain, heart attacks, unstable angina, arrhythmias and congestive heart failure. More importantly, in the year ending September 30, 2002, Boca admitted 310 emergent heart attack patients through its Emergency Room.
Martin operates a 22-bed emergency department and annually treats over 30,000 patients. In 2002, nearly 700 persons presented to the Martin ER with a confirmed primary
diagnosis of heart attack, and 40 percent of those emergent patients were transferred to an OHS facility for immediate care. Moreover, in 2002, nearly 550 of its 1,500 diagnostic cath patients were transferred by ambulance to an OHS provider for intervention.
Bethesda operates an emergency department that annually treats 53,000 patients. Although 25 percent of its ER traffic is related to pediatric and obstetrical emergencies, Bethesda transferred approximately 70 emergent cardiac patients from its emergency department to an OHS provider in the 12-month period ending March 31, 2003.
The evidence demonstrates that approval of another OHS/PTCA provider will enhance access to care and reduce unnecessary heart damage and mortality among patients. Boca and Martin have a larger volume of cardiac patients who require OHS and PTCA services and will benefit from enhanced access.
While the opponents argue that the Denmark study, associating better outcomes for patients even after transfer, diminishes the need to enhance access in District 9, the study appears limited. The Danish study's exclusion criteria removed many of the types of patients commonly seen at the applicant hospitals who would benefit most from enhanced access to angioplasty services including patients with contraindications to thrombolytic drugs, left bundle branch AMI's, peripheral
vascular disease, previous surgery, diabetes, and high risk patients suffering cardiogenic shock, severe heart failures or arrhythmias. The Denmark study apparently included only ideal heart attack patients and excluded patients that would benefit from more immediate intervention.
Enhanced Access to Better Continuity of Care
The provision of OHS services at one or more applicant hospitals will also improve the continuity of care provided to patients. Elderly OHS patients often suffer from a host of infirmities and receive treatment from various specialists. The practice of transferring cardiac patients interferes with an established continuity of care and can be detrimental to critically ill patients.
Section 408.035(8), Florida Statutes (2000): Immediate and Long-term Financial Feasibility
Immediate Financial Feasibility
The evidence demonstrates that each applicant's proposal is immediately financially feasible. Boca proposes to fund the construction of its project from a philanthropic donation of $20 million provided by one of its Board Members, Ms. Christine Lynn. While Boca experienced operating losses of approximately $22 million in 2002, it reported operating losses of $5.5 million in 2003 and is projected to break even in 2004. In addition, Boca has net assets of approximately $250 million,
with $185 million in cash and marketable securities and has an "A-minus" rating by Standard and Poors.
Bethesda reasonably estimates that it will cost
$5,942,815 to implement its OHS/PTCA program and has adequate funds available for the project. The program is financially feasible in the short-term.
Martin reasonably estimates that it will expend over
$9,000,000 to implement its proposal. Martin has sufficient resources to fund the project and its application is financially feasible in the short term.
Long-Term Financial Feasibility a. Volume Factors
AHCA's determination of long-term financial feasibility within the context of a CON application generally means that the project will show a positive bottom line in or near the second year of operation. The evidence presented at hearing demonstrates that, with respect to an OHS program, a provider can reasonably expect to financially break-even when it annually performs 150 to 200 OHS procedures and will be profitable when it performs more than 200 procedures.
An applicant's ability to generate sufficient OHS/PTCA volume and establish a financially feasible program hinges on many variables. First, viability depends, in part, on the applicant's established base of cardiac patients. While there
appears to be an increasing trend to have patients receive diagnostic cardiac cath procedures at OHS facilities, the current volume of diagnostic cardiac cath procedures performed at each applicant's facility is a reasonable indicator of its potential OHS volume.
In fiscal year 2003, Martin performed nearly 1,500 diagnostic caths, in part, because it is located in a more remote setting and farther from existing OHS providers. Martin's large diagnostic cath program will reasonably translate into a substantial number of OHS/PTCA procedures.
In 2003, Boca performed 2,400 inpatient and outpatient procedures in its cath labs, including 500 diagnostic caths. Boca regularly transfers a significant volume of cardiac patients for OHS/PTCA services. As indicated, Boca has a large cardiology program and a significant volume of cardiac patients. It is well positioned to generate sufficient OHS/PTCA volume.
In 2003, Bethesda performed 329 diagnostic caths and transferred approximately 400 inpatients to an OHS facility for cardiac care. While it provides quality care, Bethesda has a smaller cardiac patient base and will experience greater difficulty acquiring sufficient OHS volume from its existing patient mix.
While the diagnostic volumes demonstrate, in part, the potential OHS volume and viability of a proposed OHS program,
other variables including size, existing cardiology program, market trends, referral patterns, location, practice patterns, and scope of services further demonstrate an applicant's ability to achieve and support a sufficient volume, high quality OHS program.
The applicant hospitals in this case vary in size.
Boca is the largest hospital in Florida without an OHS program. Thirty-eight of the 68 existing OHS programs in Florida are located at hospitals with fewer beds than Boca. Bethesda is slightly smaller while Martin is considerably smaller. Each is sufficiently sized to operate a quality OHS program, given sufficient OHS/PTCA cases.
The applicants' existing cardiology programs also demonstrate whether they can establish a sufficient volume of OHS cases. While each applicant manages a mature cardiology program, applicant Boca focuses on cardiac services and operates a highly sophisticated cardiology program. Nearly one-half of its 20,000 annual patient admissions have a cardiology-related diagnosis. In 2002, Boca recorded 4,907 MDC-5 patient discharges, ranking it as the 25th largest Florida hospital for cardiology discharges and larger than two of the existing OHS providers in District 9.
Furthermore, Boca has an active electrophysiology program, enabling it to study, diagnose and treat heart rhythm
disturbances and provide a wider range of cardiology services. On the other hand, Bethesda and Martin reported 3,512 and 2,881 MDC-5 discharges, respectively in 2002, and have a smaller pool of cardiac patients.
The location of each applicant is also relevant to demonstrate whether it can generate sufficient OHS/PTCA volume. Martin is ideally located in a medium-sized, rapidly growing community with a large percentage of elderly residents. Martin is positioned in the northern tip of District 9, approximately
20 miles from Lawnwood, the closest existing OHS provider.
Boca and Bethesda are also located in a growing elderly community, but much closer to existing OHS providers. Boca is located approximately ten miles from Delray and 14 miles from North Ridge, while Bethesda is located within nine miles of both JFK and Delray.
Per Case Projected Revenues and Expenses
Each applicant provided specific projected per case revenues and expenses that are within range of existing OHS/PTCA providers and are reasonable.
Utilization Projections
Each applicant provided specific utilization projections that have been carefully considered. In its application, Boca projected that it would perform 447 OHS and 806 PTCA procedures in year two of its program. Boca's
projection is based on the application of its anticipated market share to the total volume of OHS and PTCA procedures, by payor and DRG, that were referred to other hospitals by the physicians on its active medical staff, as well as the projected uninsured and charity cases.
Considering the slight decline of reported OHS volume in District 9 since its application was filed, Boca's utilization projections are slightly overstated but within reason. Given its existing program, current cardiac-related case mix and volume and strong support from its cardiologists, Boca will establish itself as a strong OHS provider. Absent a fourth provider in southern Palm Beach County, in a three-way market of Boca, Delray and North Ridge, Boca will reasonably achieve its projected 23 to 27 percent market share and likely perform 400 OHS procedures in year two.
Furthermore, even if Boca's OHS utilization projections do not fully materialize, Boca's proposal will remain financially feasible given its sensitivity analysis. If OHS use rates remain constant or decline slightly further, in year two, Boca's OHS utilization will reasonably hover well above 300 cases while its PTCA procedures increase. Boca will experience a combined annual profit of at least $800,000 and remain financially feasible.
Martin's utilization projections are also reasonable.
In its application, Martin projected that it would perform 367 OHS and 495 PTCA procedures in year two of its program. Given Martin's location, existing cardiac-related caseload and mix, as well as its market share and relative isolation from other OHS providers, it is reasonable to expect Martin to attain its projections and establish a financially feasible OHS program.
Moreover, the recent decline in OHS volume has been offset by the increase in PTCA procedures resulting in nearly two PTCA procedures for each OHS procedure. Even assuming that the recent trend of declining OHS procedures unexpectedly continues, the additional angioplasty procedures will keep Martin's proposal financially feasible in the long term and will benefit the northern residents of District 9.
Bethesda's OHS and PTCA utilization projections are less reasonable. Although Bethesda projected less volume, 270 OHS and 370 PTCA, in year two of its program, given the evidence, including its current cardiac program, service mix and diagnostic cath volume, location and existing competition, it is less likely that Bethesda will achieve its projections. As a result, the long term financial feasibility of Bethesda's proposal is more speculative.
Section 408.035(9), Florida Statutes (2000): Extent to Which the Proposal Will Enhance Competition that Promotes Quality and Cost-effectiveness
District 9, particularly Southern Palm Beach County, lacks adequate price competition among its OHS/PTCA providers. Delray and North Ridge, both owned by Tenet, dominate the market and perform 80 percent of the OHS cases in southern Palm Beach and northern Broward Counties. While net revenues per OHS case are generally between $26,000 and $29,000, and Medicare pays approximately $26,000 per case, Delray experienced $44,000 in net revenue per OHS case, and JFK and North Ridge experienced over $37,000 per OHS case in 2002. The existing providers extract significantly higher revenue per OHS case from their managed care providers and Medicaid outlier patients. Additional competition in the District 9 OHS market will promote more competitive pricing.
In addition, existing providers are experiencing higher average net revenue per angioplasty case in District 9. Increased competition will promote competitive pricing in the PTCA market.
Finally, many providers who serve District 9 apparently charge unusually high prices for cardiac services. Delray's charges in the cardiology product line are 90 percent higher than Boca's and 30 percent higher than the average at all Palm Beach County OHS providers. North Ridge's charges in the
cardiology product line are nearly twice Boca's and approximately 14 percent higher than average OHS charges in Broward County.
Delray's angioplasty charges are 46 percent higher than the Palm Beach County average, and North Ridge's angioplasty charges are about 14 percent higher than the Palm Beach County average and 35 percent higher than the Broward County average.
While the existing OHS providers contend that charge data is immaterial, the evidence does not support their argument. Charges matter to self-paying patients who often pay full charges, to commercial insurers and managed care providers who often pay on the basis of a discount off charges or pay pursuant to stop-loss provisions, and to the Medicare program which makes payments based on charges for outlier patients.
The approval of one or more OHS programs in District 9 will increase competition in the market. Using the
applicants' self-defined service areas, the Herfindahl-Hirschman Index analysis evidence demonstrates that approval of the Boca program will have the largest impact on promoting competition for OHS procedures while approval of Martin will have the largest impact on promoting competition for PTCA services. The establishment of Boca and Martin as OHS/PTCA providers will allow non-Medicare payers to negotiate between competing
providers, reduce charges and reimbursement rates, and possibly reduce Medicare outliers.
The potential adverse impact upon existing OHS providers has also been carefully considered. While the CON process is not intended to protect hospitals from the effects of competition, it is unreasonable to adversely impact the existing high quality care or materially jeopardize the financial stability of an existing OHS program by granting licensure to another facility.
Although the data indicates that surgeon, staff and hospital volume beget quality, recent studies indicate that there is no clear minimum threshold of appropriate volume to ensure a quality program. However, the evidence generally indicates that OHS programs, using experienced surgeons and staff, must annually perform a minimum of 300 OHS procedures to ensure quality.
The evidence in this case demonstrates that approval of two programs in southern Palm Beach County, i.e., Boca and Bethesda, would likely result in one program acquiring significantly less OHS volume than its competitors and potentially providing inferior care. However, approval of only one new provider in southern Palm Beach County will not adversely effect the existing quality of care.
In addition, approval of one additional OHS provider in southern Palm Beach County will not place any existing provider at unreasonable financial risk. While an approval of Boca or Bethesda will undoubtedly affect the market share of Delray and North Ridge, even if OHS use rates continue to decline, given the population trends and current market dominance, neither facility will fall below 350 annual OHS cases. Delray will reasonably perform 400-450 OHS procedures in Boca's second year of operation and continue to provide high quality services and reduce its mortality rates.
Furthermore, the evidence demonstrates that an OHS program at Boca or Bethesda will have even less impact on JFK's and Lawnwood's OHS/PTCA programs. JFK and Lawnwood receive few referrals from the far southern Palm Beach County service area.
Similarly, approval of Martin's OHS program will have negligible impact on Lawnwood. Over the past several years, Martin referred the vast majority of its OHS/PTCA patients to Palm Beach Gardens, JFK and Mount Sinai. In 2002, Lawnwood performed approximately 450 OHS cases, eight of which derived from Martin County. In the small eight zip code area in
St. Lucie County where Martin will compete with Lawnwood, Martin projects that it will receive 20 percent of its cases. Lawnwood can expect to keep its current 40 percent market share.
JFK, on the other hand, will experience a greater impact by the approval of a Martin OHS/PTCA program. JFK can reasonably expect to lose between 50 to 70 OHS cases and
at least 100 PTCA procedures to Martin in year two. Notwithstanding the losses, JFK will remain a strong OHS/PTCA provider in District 9, continue to provide quality care and remain financially secure.
On balance, it is reasonable to expect that the approval of one new OHS provider in southern Palm Beach County and one in Martin County will improve the performance of the existing providers in District 9. Each provider will effectively target, compete for and capture existing OHS patients and those who are currently leaving District 9 for cardiac services. All providers will enhance their quality of care and service to patients.
Section 408.035(10), Florida Statutes (2000): Costs and Methods of Construction
Each applicant's proposed costs and methods of construction are reasonable.
Section 408.035(11), Florida Statutes (2000): Applicant's Past and Proposed Provision of Health Care Services to Medicaid Patients and the Medically Indigent
Although each applicant has a solid record of providing health care services to its community, regardless of ability to pay, OHS recipients are typically over 65 and covered
by Medicare. Notwithstanding the smaller base of Medicaid and indigent OHS patients, Bethesda has historically demonstrated the greatest commitment toward serving the economically disadvantaged within its service area. For decades, Bethesda has served as a disproportionate share provider in both the federal Medicare and Florida Medicaid programs. Bethesda has proposed to continue its commitment by conditioning its CON on providing at least three percent of its annual OHS care to Medicaid patients and at least three percent to indigent patients. Given that over five percent of the adult population within its service area is Medicaid eligible, Bethesda's commitment is significant.
Boca also has a strong record of providing care to the economically disadvantaged. Given that Boca is situated in a more affluent area with only 2.8 percent Medicaid eligible, Boca annually conducts numerous community outreach programs. It provides school nurses in all public schools in Boca Raton and annually manages over 100,000 student visits. It operates a multi-phased dental health program in conjunction with Nova University and provides dental screenings for underprivileged children, Boca Raton public school students and senior citizens.
In its application, Boca proposes to develop a mobile outreach program that will provide health screenings, including cardiac and diabetes screenings in economically depressed areas.
It has committed to provide five percent of its OHS and angioplasty cases to uninsured and charity patients.
Martin has also demonstrated its commitment to serving Medicaid and medically indigent patients. In 2003, over ten percent of its discharges were Medicaid patients. In year two of its program, Martin has agreed to provide one percent of its OHS cases to charity patients and two percent to Medicaid.
Applicable Rule Requirements.
Florida Administrative Code Rule 59C-1.033(3), Service Availability
Each applicant can comply with the "service availability" requirements.
Florida Administrative Code Rule 59C-1.033(4), Service Accessibility
Each applicant can independently comply with the service accessibility requirements. Moreover, concurrent approval of the applications filed by Martin and Boca or Bethesda in this case will not impact their ability to be available for elective surgeries eight hours per day, five days a week, and to possess the capability for rapid mobilization 24 hours a day, seven days a week.
Florida Administrative Code Rule 59C-1.033(5), Service Quality
Given their current cardiology programs, volume and likelihood of generating sufficient OHS volume, Boca and Martin
are better able than Bethesda to ensure high quality service. They are better able to recruit and retain high quality cardiovascular surgeons for their OHS programs. Boca and Martin will meet the team mobilization requirements in Florida Administrative Code Rule 59C-1.033(4)(c), and the follow-up care requirements of Florida Administrative Code Rule 59C- 1.033(5)(c). They will be staffed with at least two board- certified anesthesiologists trained in OHS.
Florida Administrative Code Rule 59C-1.033(6), Patient Charges
Each applicant's proposed OHS charges are highly competitive when compared to the charges established by area existing providers.
Florida Administrative Code Rule 59C-1.033(7), Need Determination
Application of the Rule need methodology on a county specific basis in this case reveals that the need generated by that formula is largely a function of Palm Beach County's population. Specifically, given the gross need for 8.5 OHS programs to serve District 9 as calculated by the Rule formula, six of those programs are needed to serve Palm Beach County. Similarly, given the calculated net need for 4.5 new programs in District 9, three relate to Palm Beach County's population, 0.7 to Martin County, 0.6 to Indian River County, and 0.2 relate to Okeechobee County.
Approximately 70 to 75 percent of the total population, elderly population and OHS volume in District 9 derive from Palm Beach County. In 2002, Boca's proposed OHS primary service area contained 32 percent of the district's total elderly, age 65 and over population and is projected to increase. In addition, the primary service areas of Boca and Martin have higher OHS use rates than Bethesda, Lawnwood, Districts 9 and 10, and the state of Florida. Boca and Martin are better situated to improve the general access to OHS care in District 9.
Florida Administrative Code Rule 59C-1.030, Access
Each applicant will enhance access for all residents of District 9, including the underserved, assuming sufficient volume.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding. See
§§ 120.569, 120.57, and 408.039(5), Fla. Stat. (2000). In this
proceeding, each applicant has the burden of demonstrating by a preponderance of the evidence that its respective proposal should be approved. See Boca Raton Artificial Kidney Center v. Department of Health & Rehabilitative Services, 475 So. 2d 260 (Fla. 1st DCA 1985).
The award of a CON involves balancing all of the relevant and disputed CON review criteria set forth in statute and rule. See Department of Health & Rehabilitative Services v. Johnson & Johnson Home Health Care, Inc., 447 So. 2d 361 (Fla. 1st DCA 1984); Balsam v. Department of Health & Rehabilitative Services, 486 So. 2d 1341 (Fla. 1st DCA 1986); § 408.035, Fla. Stat. (2000); Fla. Admin. Code R. 59C-1.033. The weight to be given each criterion is not fixed, but instead depends on the facts and circumstances of each case. See Collier Medical Center, Inc. v. Department of Health & Rehabilitative Services,
462 So. 2d 83 (Fla. 1st DCA 1985). Upon careful consideration of the evidence, on balance, the applications of both Boca and Martin best satisfy the applicable review criteria.
This proceeding involves an unchallenged fixed need pool of one additional program in District 9. While AHCA's published need identified a need for one new program and establishes a presumption of correctness, the projected population and OHS use rate demonstrates a formula net need for
3 new programs in Palm Beach County and 1 new program in Martin County. See Fla. Admin. Code
R. 59C-1.033(7).
The existing providers argue that approval of more than one new program in this case requires a demonstration of "not normal" circumstances in order to justify a second OHS
award. However, examination of the Rule and relevant precedent is inconsistent with the opponents' arguments.
First, AHCA admits that it limits the published net need to one new OHS provider at a time for two reasons. First, the introduction of only one new OHS program prevents two competing and fledgling programs from being simultaneously introduced without an independent opportunity to grow and become established. Second, single approval prevents the introduction of two new programs that might simultaneously impact the same existing provider.
In this case, with the approval of Martin and either Boca or Bethesda, neither circumstance is present. First, the applicants are located approximately 75 miles apart and serve entirely distinct areas. Simultaneous licensing will have no effect upon each program's ability to independently develop and become established. Second, simultaneous approval of Martin and either Boca or Bethesda will not have a material combined effect on any single existing provider. The approval of Boca or Bethesda will have some effect on two Tenet facilities, Delray and North Ridge. The approval of Martin will have some effect on HCA's JFK Medical Center and negligible effect on Lawnwood.
Upon review of AHCA precedent, the Agency has found similar circumstances justified the simultaneous approval of two new OHS programs. See Lifemark Hospitals of Florida, Inc. v.
Agency for Health Care Administration, Case No. 01-0357CON (DOAH, April 14, 2003), adopted in toto (AHCA, October 8, 2003); HCA Health Services of Florida, Inc. v. Agency for Health Care Administration, Case No. 00-3216CON, 2001 WL 1175358 (DOAH, October 4, 2001), adopted in toto (AHCA, January 24, 2002).
Notwithstanding the Agency's rationale and precedent, not normal circumstances exist. Given the calculated numeric need, the lack of an OHS provider in the rapidly growing Martin County, Martin's location, its high diagnostic cath rate, its distinctly separate market from southern Palm Beach County, and the frequency of transfer delays, not normal circumstances favor the approval of Martin's application.
Generally, the evidence demonstrates that each of the proposals sufficiently satisfies much of the statutory review criteria. Their proposals comply with the applicable district health plan preferences. See § 408.035(1), Fla. Stat. (2000). They have a history of providing quality care and will be able to provide high quality OHS services, given sufficient volume. See § 408.035(3), Fla. Stat. (2000). There are sufficient personnel and resources available to accomplish their respective projects. See § 408.035(6), Fla. Stat. (2000). The applicants' proposed project costs and methods of construction are reasonable. See § 408.035(10), Fla. Stat. (2000). Each applicant has a strong commitment to serving the economically
disadvantaged, and while most OHS patients are over 65 and insured by Medicare, each applicant will improve indigent access to OHS services. See § 408.035(2), (7), and (11) Fla. Stat. (2000).
With respect to general access to OHS care in District 9, the credible evidence demonstrates that there will be an increasing volume of elderly patients who present to non- OHS/PTCA facilities with serious cardiac conditions that cannot receive OHS nor primary angioplasty in a timely manner. On balance, the approval of Boca's and Martin's OHS program will better enhance access to acutely ill cardiac patients in Martin and southern Palm Beach Counties. See § 408.035(7), Fla. Stat. (2000).
While each applicant's proposal is financially feasible in the short term, given the evidence, on balance, the Boca and Martin OHS programs will likely generate higher volume and be more financially feasible. See § 408.035(8), Fla. Stat. (2000). The projects will be profitable for Boca and Martin and improve access in District 9. Bethesda will have a more difficult time achieving sufficient OHS volume and be less likely to establish a financially feasible program in the long term.
The need for competition in this market is also an important consideration. See § 408.035(9), Fla. Stat. (2000).
The evidence demonstrates that, on balance, approval of the Boca and Martin applications will have the largest impact upon improving competition within District 9. As indicated, OHS services in District 9 are marginally competitive. Tenet facilities control 80 percent of the OHS market in southern Palm Beach County and have had a virtual monopoly for two decades.
As a result, Tenet's South Florida hospitals have established the pricing within the market and experienced unusually high contribution margins. In fact, all financial experts admitted that the revenues and profitability for OHS and angioplasty experienced by Delray and North Ridge were the highest ever seen.
The purpose of the CON Program is not protectionism.
See Department of Health and Rehabilitative Service v. Johnson &
Johnson Home Health Care, Inc., 447 So. 2d 361 (Fla. 1st DCA 1984). The approval of new providers may be appropriate whenever a need for competition is demonstrated. In fact, in Holmes Regional Medical Center, Inc. v. Agency for Health Care
Administration, Case No. 97-4289CON, 2000 WL 1178843, (DOAH, July 12, 2000), reversed (AHCA November 21, 2000), the Agency reversed the decision of the ALJ and found that a CON application should be approved based upon its beneficial effect on competition, despite clear evidence that the project would not be financially feasible. AHCA has clarified its intention
that competition considerations should be accorded a particularly important role in the consideration of CON applications. AHCA has reiterated that competition concerns, due to their inter-relationship with quality, efficiency and access issues, are extremely important. See, e.g., HCA Health Services of Florida v. AHCA, 24 F.A.L.R. 1519, 1558, 1559 (AHCA
January 24, 2002).
OHS services is not always reasonably and economically accessible in adjoining areas. See § 408.035(4), Fla. Stat. (2000).
Boca's proposal will address the needs of educational programs in the district, including FAU's new medical school located nearly adjacent to the facility. See § 408.035(5), Fla. Stat. (2000).
Finally, neither the Boca nor Martin proposal will have a material adverse impact upon the District 9 existing OHS providers nor diminish the existing high quality of care. Delray is financially strong among for-profit hospitals and has consistently experienced revenues in excess of $50 million per year. It is likely that Delray will become more competitive or absorb the impact.
HCA's JFK and Lawnwood will also absorb the financial impact, maintain sufficient volume, remain competitive and continue to provide quality care. Similarly, North Ridge,
located outside District 9, enjoys sufficiently high volume and revenues and will reasonably absorb the impact of Boca's approval.
On balance, after weighing each criterion to the respective applications, the greater weight of the evidence favors the approval of Boca and Martin's CON applications.
RECOMMENDATION
Based on a balanced consideration of all applicable criteria, it is
RECOMMENDED that AHCA issue a final order approving Boca's CON Application No. 9452 and Martin's CON Application No. 9455 to each establish a new adult open heart surgery program and denying Bethesda's CON Application No. 9451.
DONE AND ENTERED this 23rd day of September, 2004, in Tallahassee, Leon County, Florida.
S
WILLIAM R. PFEIFFER
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675 SUNCOM 278-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 23rd day of September, 2004.
COPIES FURNISHED:
H. Darrell White, Esquire McFarlain & Cassedy, P.A.
305 South Gadsden Street Post Office Box 2174
Tallahassee, Florida 32316-2174
W. David Watkins, Esquire Karl D. Acuff, Esquire Watkins & Caleen, P.A. 1725 Mahan Drive, Suite 201 Post Office Box 15828
Tallahassee, Florida 32317-5828
Stephen A. Ecenia, Esquire
R. David Prescott, Esquire
J. Stephen Menton, Esquire
Rutledge, Ecenia, Purnell & Hoffman, P.A.
215 South Monroe Street, Suite 420 Post Office Box 551
Tallahassee, Florida 32302-0551
C. Gary Williams, Esquire Michael J. Glazer, Esquire Ausley & McMullen
227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302
Paul H. Amundsen, Esquire Amundsen & Gilroy, P.A.
502 East Park Avenue Post Office Drawer 1759
Tallahassee, Florida 32302
Robert D. Newell, Jr., Esquire Newell & Terry, P.A.
817 North Gadsden Street Tallahassee, Florida 32303-6313
Seann M. Frazier, Esquire Greenberg Traurig, P.A.
101 East College Avenue Post Office Box 1838 Tallahassee, Florida 32302
R. Terry Rigsby, Esquire Carlton Fields, P.A. Post Office Drawer 190
Tallahassee, Florida 32302
Kenneth W. Gieseking, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Mail Station No. 3 Tallahassee, Florida 32308
Charlene Thompson, Acting Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3
Tallahassee, Florida 32308
Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431
2727 Mahan Drive
Tallahassee, Florida 32308
Alan Levine, Secretary
Agency for Health Care Administration Fort Knox Building, Suite 3116
2727 Mahan Drive
Tallahassee, Florida 32308
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
| Issue Date | Document | Summary |
|---|---|---|
| Sep. 23, 2004 | Recommended Order | Petitioners Boca and Martin proved that their applications for a certificate of need approval to establish a new open heart surgery program in District 9, on balance, satisfies the applicable statutory and Rule criteria. Recommend application approval. |
