STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
LIFEPATH, INC., d/b/a LIFEPATH ) HOSPICE, )
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Petitioner, )
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vs. )
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AGENCY FOR HEALTH CARE ) ADMINISTRATION and HERNANDO- ) PASCO HOSPICE, INC., )
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Respondents. )
Case No. 00-3203CON
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HERNANDO-PASCO HOSPICE, INC.,
Petitioner,
vs.
AGENCY FOR HEALTH CARE ADMINISTRATION and LIFEPATH, INC., d/b/a LIFEPATH HOSPICE,
Respondents.
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)
)
)
) Case No. 00-3205CON
)
)
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)
RECOMMENDED ORDER
Pursuant to notice, a formal hearing was held in this case on July 15 through 19, August 2, 6 through 9, and 21, 2002, in Tallahassee, Florida, before William F. Quattlebaum, a designated Administrative Law Judge (ALJ) of the Division of Administrative Hearings (DOAH).
APPEARANCES
For Lifepath, Inc., d/b/a Lifepath Hospice:
H. Darrell White, Esquire McFarlain & Cassedy, P.A.
305 South Gadsden Street Post Office Box 2174
Tallahassee, Florida 32316-2174 For Hernando-Pasco Hospice, Inc.:
Frank P. Rainer, Esquire Sternstein, Rainer & Clarke, P.A.
101 North Gadsden Street Tallahassee, Florida 32301-7606
For the Agency for Health Care Administration:
Michael O. Mathis, Esquire
Agency for Health Care Administration 2727 Mahan Drive
Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403
STATEMENT OF THE ISSUE
The issue in the case is whether the Agency for Health Care Administration should approve the application of Hernando-Pasco Hospice, Inc., for Certificate of Need No. 9311 to provide hospice services in Hillsborough County, Florida.
PRELIMINARY STATEMENT
On or about March 15, 2000, Hernando-Pasco Hospice, Inc. (HPH) filed an application in the March 2000 batching cycle for Certificate of Need (CON) No. 9311 to operate a hospice in Service Area 6A. Service Area 6A includes Hillsborough County,
Florida, pursuant to Rule 59C-1.0355(2)(k)13, Florida Administrative Code.
After review, the Agency for Health Care Administration (AHCA) gave notice of preliminary approval of the HPH application by publication in the June 30, 2000, edition of Florida Administrative Weekly (Volume 26, Number 26).
On July 20, 2000, Lifepath, Inc., d/b/a Lifepath Hospice (Lifepath) filed a Petition for Formal Administrative Hearing challenging the proposed award of the CON to HPH. Lifepath is the sole licensed hospice provider in Service Area 6A.
On or about August 4, 2000, AHCA forwarded the Lifepath Petition to DOAH where it was numbered as DOAH Case No. 00-3203 and assigned to ALJ David M. Maloney.
On or about July 25, 2000, HPH filed a Petition for Formal Administrative Hearing in support of AHCA's proposed award of the CON. The HPH Petition was forwarded to DOAH, where it was numbered as DOAH Case No. 00-3205 and assigned to ALJ Maloney.
DOAH Case Nos. 00-3203 and 00-3205 were thereafter consolidated with DOAH Case No. 00-1067, which related to a challenge by HPH as to whether there was a numeric need pursuant to Rule 59C-1.0355, Florida Administrative Code, for an additional hospice provider in Service Area 6A.
DOAH Case No. 00-1067 had previously been assigned to
ALJ Maloney who commenced the formal hearing in the consolidated
cases on January 17, 2001. During the hearing, and based on a joint motion by the parties, DOAH Case No. 00-1067 was severed from DOAH Case Nos. 00-3203 and 00-3205, and the latter two cases were placed in abeyance. The hearing in DOAH Case
No. 00-1067 proceeded to conclusion.
On May 18, 2001, ALJ Maloney entered a Recommended Order in DOAH Case No. 00-1067. On August 5, 2001, AHCA entered a Final Order in the case, determining that as to health planning district 6A the fixed need pool for the March 2000 batching cycle was zero.
On August 29, 2001, a formal hearing in the remaining cases was continued due to scheduling conflicts.
On November 16, 2001, HPH filed a challenge to the validity of Rule 59C-1.0355(4)(d), Florida Administrative Code. The case was numbered as DOAH Case No. 01-4460RX and assigned to
ALJ Maloney.
By Order of December 7, 2001, ALJ Maloney granted Lifepath's Petition to Intervene in DOAH Case No. 01-4460RX, HPH's Motion to Consolidate the rule case with the remaining cases, and Lifepath's Motion to Continue the previously scheduled hearing. Additional continuances were granted on December 19, 2001 (based on HPH's motion), and on May 8, 2002 (based on Lifepath's motion).
On May 21, 2002, Florida Hospices and Palliative Care, Inc., filed a Petition to Intervene in DOAH Case No. 01-4460RX, which was granted by Order, dated May 23, 2002.
On July 5, 2002, Lifepath filed a Petition for Formal Administrative Hearing to Challenge Agency Statements Defined as Rules. The Petition was numbered as DOAH Case No. 02-2703RU and assigned to ALJ Maloney. The case was consolidated with the previously consolidated cases.
The cases were transferred to the undersigned ALJ on July 12, 2002. The hearing commenced on July 15, 2002.
During the hearing, DOAH Case No. 01-4460RX was severed for purposes of taking evidence. DOAH Case Nos. 00-3202, 00-3205, and 02-2703RU were heard on July 15 through 19, August 2,
6 through 9, and 21, 2002. (DOAH Case No. 01-4460RX, addressed by separate Final Order, was heard on August 20, 2002.)
As to DOAH Case Nos. 00-3202 and 00-3205, HPH presented the live testimony of seven witnesses and deposition testimony of three witnesses. HPH Exhibits numbered 1 through 22, 24
through 25, 27 through 53, 56 through 59, 61, 63 (except a table at the bottom of the page), and 64 through 67 were admitted into evidence. Lifepath presented the live testimony of seven witnesses and the deposition testimony of four witnesses.
Lifepath Exhibits numbered 4 through 82, 84 through 105, 106 (except a table at the top of the page), 107 through 112, and
114 through 119 were admitted into evidence. AHCA presented no testimony or exhibits. (Testimony and exhibits admitted in the rule challenge cases are identified in the Final Orders applicable thereto.)
A transcript of the proceeding was filed on October 20, 2002. Proposed Orders were filed on January 6, 2003.
In DOAH Case Nos. 00-3203 and 00-3205, Lifepath filed a Proposed Recommended Order, and HPH and AHCA filed a joint Proposed Recommended Order.
FINDINGS OF FACT
Hospice services are intended to provide palliative care for persons who have "terminal" illnesses. The purpose of hospice care is to relieve pain and provide an appropriate quality of life for dying patients.
Hospice services include physical, psychological, and spiritual services. Physician-directed medical care, nursing care, social services, and bereavement counseling are core hospice services.
Hospice services are primarily funded by Medicare.
Hospices can also provide community education outreach services related to terminal illness. Some hospice service providers participate in various research programs.
There are various "models" for the provision of hospice services to terminally ill patients. Such models include
"community" hospices, "comprehensive" hospices, and "corporate" hospices. The evidence fails to establish that any hospice model provides services more appropriately than does any other hospice model.
Hospices have different means of providing similar services. For example, some hospices operate residential facilities to provide for patients without available primary caregivers while other hospices may provide caregiver services within the patient's residence or another location. The evidence fails to establish that the differing methods of service provision correlate to the quality of service provided, or that any method is inherently superior to another.
HPH is the sole provider of hospice services in Hernando County (Service Area 3D) and is one of two hospice service providers in Pasco County (Service Area 5A).
HPH serves approximately 500 patients on a daily basis with an average length of stay of about 50 days.
HPH operates three residential facilities with a total of 23 beds, in addition to 35 beds in units located at nursing homes. HPH provides a range of core hospice services.
HPH also provides services beyond core hospice services, including specialized HIV/AIDS outreach program, projects related to persons with chronic obstructive pulmonary disease and congestive heart failure, and children's programs.
HPH provides home health services to clients. HPH also is involved with the organization of a model program for hospice services in Thailand.
HPH operates a subsidiary providing pharmacy services and durable medical equipment to clients.
Lifepath is the sole hospice service provider in Hillsborough County (Service Area 6A). Lifepath also provides hospice services in Polk, Highlands, and Hardee Counties (Service Area 6B)
Lifepath serves approximately 1,200 Service Area 6A patients on a daily basis with an average length of stay of approximately 70 days.
The longer length of stay by Lifepath patients indicates that on average, Lifepath patients access hospice services at an earlier point in the progression of terminal illness and receive services for more time than do HPH patients.
Lifepath is in the process of establishing residential facilities. As with HPH, Lifepath provides a full range of hospice services and other programs.
The evidence fails to establish that, as to services and programs commonly provided, either HPH or Lifepath is markedly superior to the other.
Hillsborough County has a population in excess of one million residents and is the fourth largest county in Florida.
It is the largest hospice Service Area in Florida served by a single licensed hospice. There are five Service Areas with populations in excess of Hillsborough County, all of which are served by more than one hospice.
In 2000, there were 8,649 resident deaths and 9,582 recorded deaths in Hillsborough County. The difference between resident deaths and recorded deaths is largely the result of the fact that Tampa General Hospital and the Moffitt Cancer Center are located in Hillsborough County and draw patients from outside the county.
A CON for hospice services may be awarded to an appropriate applicant when the fixed need calculation pursuant to Rule 59C-1.0355(4)(a), Florida Administrative Code, indicates that numeric need exists for another provider.
The numeric need formula accounts for whether a licensed hospice is achieving an appropriate penetration rate. Penetration rates, both statewide and on a service area basis, are calculated by dividing the number of hospice admissions by the number of resident deaths. The formula is applied to relevant statistical data every six months to generate a report of "numeric need."
The application of the numeric need calculation formula accounts for the population of a service area and historical and projected rates of death in a service area. The
formula also accounts for gaps between the projected penetration rate and the actual penetration rate. A gap in excess of 350 admissions triggers an automatic determination of numeric need.
In this case, the fixed need pool calculation for the applicable batching cycle is zero. There is no numeric need for an additional licensed hospice provider in Service Area 6A.
The HPH CON application is based on HPH's assertion that "special circumstances" exist that outweigh the lack of numeric need and therefore the CON should be granted.
The special circumstances identified by HPH are that Service Area 6A is the largest single hospice Service Area in the state, and that the location of large medical centers drawing terminally ill patients into the county results in a substantial gap between "resident" deaths (which are reflected in the numeric need calculation) and "recorded" deaths (which are not). HPH asserts that the "failure" of the numeric need formula to consider "recorded" deaths rather than "resident" deaths results in the Service Area 6A penetration rate indicating that a significantly higher level of service is being provided than is actually the case.
HPH also asserts that, according to an application by Lifepath of inpatient hospice beds, Lifepath experienced a level of hospice admissions substantially in excess of the projected penetration rate for the time period, and that the increased
admissions indicates that the numeric need methodology under- predicted the actual need for hospice services in Service Area 6A.
Subsequent data indicates that the gap between projected and actual admissions in Service Area 6A has declined since the HPH application was filed. At the time of the hearing, the most recent data indicated that the penetration rate in Service Area 6A exceeds the state average.
Since the HPH application was filed, Lifepath aggressively increased its penetration rate, either in response to the HPH application at issue in this proceeding (as HPH asserts) or accordingly to previously developed (but undisclosed) reorganization and marketing plans (as Lifepath suggests).
The fact that just over one-third of terminally ill patients in Florida access hospice services suggests that other hospices could achieve similar increases in penetration rates. In any event, the evidence fails to establish that the increased Lifepath admissions indicate that the numeric need calculation failed to adequately predict the need for hospice services in the Service Area.
In the CON application, HPH also asserts that the level of service provided by Lifepath, the sole hospice in Service Area 6A, is lower than it would be were Lifepath faced
with a competitor. HPH asserts that under the circumstances, the lack of competition constitutes a "special circumstance" under which HPH should receive the CON.
Section 408.043(2), Florida Statutes (1999), provides in part that the "formula on which the certificate of need is based shall discourage regional monopolies and promote competition."
The formula referenced in Section 408.043(2), Florida Statutes, is the numeric need calculation set forth in Rule 59C- 1.0355(4)(a), Florida Administrative Code.
HPH asserts that Lifepath is a "regional monopoly," that the rule has not functioned properly, and that its CON application should be approved to promote competition.
The HPH position essentially constitutes an improper challenge to the Rule 59C-1.0355(4)(a), Florida Administrative Code, and is rejected. Evidence related to the "market power" allegedly exercised by Lifepath in order to block entry of a competing hospice was unpersuasive and is rejected.
As previously stated, the general level of service provided by a hospice in a particular Service Area is measured, in part, by calculation of a "penetration rate."
Penetration rates are calculated by dividing hospice admissions in a service area by resident deaths in a service area. Penetration rates are a component of the fixed need pool
calculation performed by AHCA. AHCA calculates penetration rates to determine a statewide average and also calculates penetration rates for each service area.
Lifepath's penetration rate during the period prior to the filing of the HPH application was somewhat less than the state average penetration rate and Lifepath's admissions declined by 66 patients from 1998 levels. The decline in penetration rate was not sufficient to result in numeric need for another hospice provider under the fixed need pool calculation and does not constitute a special circumstance supporting approval of the CON at issue in this case.
By statute, in the absence of numeric need, an application for a hospice CON shall not be approved unless other criteria in Rule 59C-1.0355, Florida Administrative Code, and in Sections 408.035 and 408.043(2), Florida Statutes, outweigh the lack of numeric need.
Rule 59C-1.0355(4)(d), Florida Administrative Code, provides as follows:
Approval Under Special Circumstances. In the absence of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify the approval of a new hospice.
Evidence submitted by the applicant must document one or more of the following:
That a specific terminally ill population is not being served.
That a county or counties within the service area of a licensed hospice program are not being served.
That there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested). The applicant shall indicate the number of such persons.
Documentation that a specific terminally ill population is not being served
The HPH application fails to document that a specific terminally ill population is not being served. The State Agency Action Report prepared by AHCA prior to the agency's proposed award of the CON to HPH acknowledges the lack of documentation contained within the application.
At the hearing, HPH identified allegedly underserved populations.
HPH asserts that elderly persons are underserved in Service Area 6A. The numeric need calculation specifically accounts for elderly patients with terminal cancer diagnoses and non-cancer illnesses. The evidence fails to support the assertion. Service Area 6A penetration rates for terminally ill elderly patients, both cancer and non-cancer, are within reasonable ranges to statewide averages.
HPH asserts that children are underserved in Service Area 6A. The evidence fails to support the assertion.
HPH cited Lifepath's closure of the "Beacon Center" children's bereavement program prior to the filing of the HPH application. There is no evidence that the closing of the center resulted in an underservice to children. The closing was based on a determination that services being provided were unfocused and not directly related to the mission of hospice.
Lifepath decentralized their children's services, and the bereavement program was continued under the auspices of Lifepath's psychosocial services unit. Lifepath continues to provide children's services through a variety of programs.
HPH asserts that nursing home residents are underserved in Service Area 6A. The evidence fails to support the assertion.
Lifepath has contracts with every nursing home in the Service Area. Lifepath actively markets services to nursing homes and provides appropriate services to and admissions of nursing home residents.
At the time of the 1999 HPH application, Lifepath nursing home admissions had declined. The decline was based on Lifepath's concern related to apparent Federal regulatory action related to hospice nursing home admissions in an adjacent service area by an unrelated hospice. Lifepath chose to limit admissions pending resolution of the Federal action.
The evidence fails to establish that Lifepath's concern was unwarranted or that Lifepath's response to the situation was unreasonable.
HPH asserts that AIDS patients are underserved in Service Area 6A. There is no evidence that Lifepath underserves AIDS patients. Lifepath works with AIDS patients and case managers from various service organizations, and provides an appropriate level of hospice services to them.
While HPH provides AIDS services and education in a manner different from Lifepath, the evidence does not establish that HPH's AIDS-related services are superior to Lifepath or that the difference reflects a lack of service to AIDS patients in Service Area 6A.
HPH asserts that terminally ill patients without primary caregivers are underserved in Service Area 6A. The evidence fails to support the assertion.
Lifepath has a caregiver program that provides for funding staff to provide primary caregiver services where such is required. Such services are provided without charge to those patients who have no ability to pay for caregiver services.
HPH asserts that the Lifepath's lack of residential facilities at the time the application was filed results in underservice to persons without primary caregivers. The lack of residential facilities does not inhibit service where, as is the
case here, funding is available to provide residential care of persons without primary caregivers.
Documentation that a county or counties within the service area of a licensed hospice program are not being served
The HPH application fails to document that a county or counties are not being served.
The evidence establishes that at the time of the HPH application for CON, Lifepath's penetration rate was below the statewide average but not sufficiently below the statewide average to trigger a determination of numeric need. Subsequent to the HPH application, Lifepath's penetration rate has increased and at the time of hearing exceeds the statewide average.
Because a statewide average penetration rate is used in the numeric need formula, it is logical to expect that half of the service areas will report penetration rates below the state average. The fact that a service area penetration rate is less than the state average does not establish a special circumstance justifying award of a CON for new hospice service.
There is no credible evidence that geographic barriers exist within Hillsborough County which result in a lack of availability of and access to hospice services in any part of the county.
HPH proposes to initially serve the northern ten ZIP code areas of Hillsborough County. There is no evidence that terminally ill persons in the northern ten ZIP code areas of Hillsborough County suffer from a lack of availability or access to hospice services.
The evidence fails to establish that hospice penetration rates for the northern ten ZIP code areas of Hillsborough County are different from penetration rates throughout the county.
The evidence fails to establish that the northern ten ZIP code areas of Hillsborough County is demographically different than the county as a whole.
HPH offered to open its initial office within the northern ten ZIP code areas of Hillsborough County. Although Lifepath does not have administrative offices located within the northern ten ZIP code areas of Hillsborough County, there is no credible evidence that the lack of administrative offices results in a lack of availability or access to hospice services. Lifepath provides hospice services at the residence of the patient and/or family. Hospice staff members are geographically assigned to provide direct patient care. Lifepath has staff members residing in northern ZIP code areas of Hillsborough County.
Documentation that there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested), including identification of the number of such persons
The HPH application does not suggest that there are persons referred for hospice services who are not being admitted with the required 48-hour period.
Section 408.035, Florida Statutes, sets forth the criteria for review of a CON application. The following findings of fact are directed towards consideration of the review criteria that the parties have stipulated are applicable to this proceeding.
The need for the health care facilities and health services being proposed in relation to the applicable district plan, except in emergency circumstances that pose a threat to the public health. Section 408.035(1)(a), Florida Statutes.
The local health plan requires that an applicant must document an existing need and identify how the need is not being met. As set forth herein, the HPH application fails to establish that a need exists for the services being proposed.
The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care facilities and health services in the service district of the applicant. Section 408.035(1)(b), Florida Statutes.
The evidence establishes that a full range of hospice services is currently available and accessible in Service Area
6A.
Lifepath hospice care addresses the physical,
spiritual and psychosocial needs of terminally ill persons. Services are available 24 hours a day seven days a week.
Available services include various forms of palliative care including palliative chemotherapy and radiation treatment, intensive care, mechanical ventilation, nutritional services, pharmaceutical services, hydration, and dialysis.
Bereavement services are available to families, survivors and caregivers during the terminal process and for up to one year after the death of a patient.
Direct physician care is available wherever a patient resides. Outpatient physician care is available via an outpatient clinic which patients may utilize if they desire.
Lifepath and the University of South Florida medical school participate in various research efforts that result in Lifepath patients having access to medical school students and physicians. Lifepath also participates with the University in a research program at the "Center for Hospice, Palliative Care, and End-of-Life Studies."
Lifepath utilizes various advisory review committees, including medical and spiritual personnel, as well as
representatives of specific ethnic populations, to monitor performance and permit improvements in service provision. Lifepath also utilizes volunteers to assist in providing patient care as well as to raise funds and increase awareness of hospice services.
There are no barriers interfering with access to hospice services in Service Area 6A. Lifepath provides services to anyone who desires hospice care. Patients may choose the types of services they receive from Lifepath. Such treatment includes radiation and chemotherapies that are palliative in nature. Lifepath provides a substantial amount of unreimbursed care.
Hospice services provided by Lifepath are appropriate and adequate. Staffing patterns are acceptable. A newly developed staffing model ("Pathways") will permit increased flexibility in staffing.
The evidence establishes that HPH and Lifepath differ in how staff is deployed. The evidence fails to establish that either method of staffing is superior to the other.
Utilization as measured by penetration rates is acceptable. As discussed herein, the 1999 Service Area 6A penetration rate lagged the state average by an amount insufficient to trigger a numeric need determination.
Significantly, the penetration rate has improved in Service Area 6A for reasons that are, at best, identified as speculative. At the time of the hearing, the penetration rate in Service Area 6A is the ninth highest in the state. The evidence fails to establish that the addition of another hospice provider in Service Area 6A will necessarily result in increased penetration.
Hospice services in Service Area 6A are provided efficiently. Ancillary services, including drugs and medical equipment are provided through Lifepath subsidiaries, similar to HPH's operations. New staffing models deployed by Lifepath reduced management staffing requirements and increased available resources for patient care.
The ability of the applicant to provide quality of care and the applicant's record of providing quality of care. Section 408.035(1)(c), Florida Statutes.
The evidence establishes that HPH has the ability to provide an appropriate quality of care, and has a record of doing so within its licensed Service Areas.
Lifepath asserts that the quality of care is superior to HPH. The evidence fails to support the assertion. Evidence related to accreditation of Lifepath by the Joint Commission for the Accreditation of Healthcare Organizations is not relevant to this issue and has not been considered.
The availability and adequacy of other health care facilities and health services in the service district of the applicant, such as outpatient care and ambulatory or home care services, which may serve as alternatives for the health care facilities and health services to be provided by the applicant. Section 408.035(1)(d), Florida Statutes.
Hospice services are currently available and adequate in Service Area 6A. In addition to Lifepath services, other end-of-life care identified herein is available to terminally ill persons residing in the county.
Probable economies and improvements in service which may be derived from operation of joint, cooperative, or shared health care resources. Section 408.035(1)(e), Florida Statutes.
There are no economies or efficiencies proposed from the operation of joint, cooperative or shared health care resources.
The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; the effects the project will have on clinical needs of health professional training programs in the service district; the extent to which the services will be accessible to schools for health professions in the service district for training purposes if such services are available in a limited number of facilities; the availability of alternative uses of such resources for the provision of other health services; and the extent to which the proposed services will be accessible to all
residents of the service district. Section 408.035(1)(h), Florida Statutes.
The evidence fails to establish that health personnel will be available to staff the proposed HPH program. The labor pool for home health and nursing personnel in the Service Area is limited, as it is elsewhere in the nation. Staffing shortages are expected to increase. HPH proposed salaries are significantly beneath those required to employ qualified staff in the Hillsborough County, and the proposed recruitment budget for initial staffing is inadequate. HPH also lacks sufficient budgeted funds for continued recruitment and training.
The evidence establishes that HPH's proposal will not provide access to patients who require palliative radiation or chemotherapy. Palliative radiation or chemotherapy is used to provide pain relief, such as to shrink a pain-causing tumor. HPH provides little chemotherapy services to patients and rarely, if ever, pays for the treatment.
Lifepath provides such services and funds them.
Approximately five percent of Lifepath patients receive palliative radiation or intravenous chemotherapy services. An additional five percent receive oral chemotherapy services.
The evidence also establishes that HPH's proposal will not provide access to patients who have a prognosis of more than six months but less than one year to live. HPH does not admit
patients with life expectancies of greater than six months. Lifepath admits patients with life expectancies of up to one
year.
The immediate and long-term financial feasibility of the proposal. Section 408.035(1)(i), Florida Statutes.
The HPH proposal is not financially feasible. HPH projects admissions of 230 by the end of year one and 455 by the end of year two. The HPH projections exceed the experience of any other Florida licensed hospice provider, including those expanding into neighboring counties as is proposed here.
Based on a reasonable projection of market share, HPH will likely experience an admission level of 130 patients in year one and 245 patients in year two.
HPH projected salaries are low by approximately
$263,000 in year two. Nursing salaries are insufficient by approximately 20 percent, based on actual Lifepath salaries, which are accepted as reasonable. Correction of the underestimated expenses indicates that HPH will not generate a surplus of revenue over expenses. Further, the HPH pro forma fails to account for costs related to proposed special services including services to AIDS patients, children and persons without caregivers. HPH asserts that such programs are extensions of existing programs and will not generate additional costs. The assertion is not supported by credible evidence.
The needs and circumstances of those entities that provide a substantial portion of their services or resources, or both, to individuals not residing in the service district in which the entities are located or in adjacent service districts. Such entities may include medical and other health professions, schools, multidisciplinary clinics, and specialty services such as open-heart surgery, radiation therapy, and renal transplantation. Section 408.035(1)(k), Florida Statutes.
Approval of the HPH application will permit HPH to provide hospice services to terminally ill Hernando and Pasco residents who travel into Hillsborough County to seek care.
The probable impact of the proposed project on the costs of providing health services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services which foster competition and service to promote quality assurance and cost- effectiveness. Section 408.035(1)(l), Florida Statutes.
HPH asserts that increased competition in Service Area 6A will result in increased penetration rates. The evidence establishes that competition for end-of-life services currently exists in the Service Area. The addition of a second hospice provider will not necessarily result in increased penetration.
Terminally ill patients in Hillsborough County have access to end-of-life care though a variety of health care
resources. Home health agencies and nursing homes (through the "Evercare" program) provide end-of-life care. In addition, several hospitals in the county have palliative care programs for terminally ill patients. There is no evidence that persons seeking end-of-life care in Service Area 6A are unable to obtain it.
Lifepath asserts that the type of services provided by HPH and Lifepath differ so significantly as to foster confusion in the hospice market. While there are differences in levels of service provided, the evidence fails to establish that potential hospice patients would be unable to determine which services met their individual needs.
Lifepath fears that as differences in treatment options become apparent to the medical community, persons seeking more intensive and higher cost care (including radiation and chemotherapy) will be directed towards Lifepath, leaving other, lower-cost patients to HPH.
Lifepath asserts that it could be forced to reduce currently provided services to the allegedly lower level of services provided by HPH. Lifepath suggests that programs funded from surplus revenues could be cut as it dealt with a drain of lower-cost patients to HPH.
Given that most hospice service is Medicare-funded, price competition is not an issue. Competition on the basis of
level of service would potentially reward the hospice offering more comprehensive services, such as those Lifepath claims to offer; accordingly, the assertion is rejected.
Lifepath asserts that approval of the HPH application would result in reduced charitable contributions and reduced volunteers as both hospices sought donors and volunteers from the same "pool." The evidence fails to establish that the availability of charitable contributions and volunteers in Service Area 6A is, or has been, exhausted.
Lifepath asserts that approval of the HPH application will have an adverse impact on its ability to recruit staff. Given that the HPH projected salary levels are significantly below those being offered by Lifepath, it is unlikely that such an adverse impact would result from HPH operations in the
county.
The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. Section 408.035(1)(n), Florida Statutes.
HPH proposes to provide less Medicaid and indigent care in Hillsborough County than it has provided historically. As of 2001, 13.2 percent of HPH patients were Medicaid patients, yet HPH proposes to provide only 5 percent Medicaid care in Hillsborough County. Likewise, the HPH projection of indigent
care provision in Hillsborough County is less than currently provided.
The applicant's past and proposed provision of services that promote a continuum of care in a multilevel health care system, which may include, but are not limited to, acute care, skilled nursing care, home health care, and assisted living facilities.
Section 408.035(1)(o), Florida Statutes.
HPH has a history of integrating its services into the local continuum of care in the counties where it is currently licensed and would likely do the same in Hillsborough County.
Section 408.043(2), Florida Statutes (1999), provides that "[w]hen an application is made for a certificate of need to establish or to expand a hospice, the need for such hospice shall be determined on the basis of the need for and availability of hospice services in the community." The evidence establishes that hospice services are appropriately available in Hillsborough County and that there is currently no need for licensure of an additional hospice. The section further provides that "[t]he formula on which the certificate of need is based shall discourage regional monopolies and promote competition." Issues related to competition are addressed elsewhere herein. The issue of whether Lifepath constitutes a regional monopoly is related to DOAH Case No. 02-2703RU and is addressed by separate order.
Rule 59C-1.0355, Florida Administrative Code, sets forth "preferences" given to an applicant meeting certain specified criteria. None of the preferences outweigh the lack of numeric need in this case.
The HPH application fails to meet the preference given to an applicant who has a commitment to serve populations with unmet needs. The evidence fails to establish that such populations exist in Service Area 6A.
The HPH application meets the preference to provide inpatient care through contractual arrangements with existing healthcare providers. HPH has previously utilized such contracts where it is licensed to operate and would enter into arrangements with Hillsborough County providers.
The HPH application fails to meet the preference given to an applicant committed to serve patients without primary caregivers, homeless patients, and patients with AIDS. The HPH application does not set forth budgeted funds to provide such services. The evidence fails to establish that such patients are currently underserved in the Service Area.
The HPH application fails to meet the preference given to applicants proposing to provide services which are not specifically covered by private insurance, Medicaid or Medicare because HPH does not provide for palliative radiation or chemotherapy treatments.
Rule 59C-1.0355(5), Florida Administrative Code, requires that letters of support be included with the application. HPH submitted approximately 180 letters of support less that half of which were from Hillsborough County and many of which are form letters.
Rule 59C-1.030, Florida Administrative Code, sets forth additional criteria used in the evaluation of CON applications. Rule 59C-1.030(2)(a), Florida Administrative Code, requires that the review consider the need for the proposed services by underserved populations. The evidence in this case fails to establish that there is an underserved population in Service Area 6A.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and subject matter of this proceeding. Section 120.57, Florida Statutes.
The Petitioner has the burden to demonstrate that it is entitled to the CON. Boca Raton Artificial Kidney Center v.
Department of Health and Rehabilitative Services, 475 So. 2d 260 (Fla. 1st DCA 1985); Florida Department of Transportation v.
J.W.C. Co., 396 So. 2d 778 (Fla. 1st DCA 1981). A balanced consideration of applicable statutory and rule criteria must be made. Humana, Inc. v. Department of Health and Rehabilitative Services, 469 So. 2d 889 (Fla. 1st DCA 1985). Such
consideration requires that varying weight be accorded each criterion depending on the facts of each case. Collier Medical
Center, Inc. v. Department of Health and Rehabilitative Services, 462 So. 2d 83 (Fla. 1st DCA 1985). Based upon consideration of the applicable criteria as related to the facts of the case, the Petitioner has not met the burden of establishing that it is entitled to award of the CON.
Rule 59C-1.0355(3)(b), Florida Administrative Code, provides as follows:
A certificate of need for the establishment of a new hospice program, construction of a freestanding inpatient hospice facility, or change in licensed bed capacity of a freestanding inpatient hospice facility, shall not be approved unless the applicant meets the applicable review criteria in Sections 408.035 and 408.043(2), F.S., and the standards and need determination criteria set forth in this rule.
Applications to establish a new hospice program shall not be approved in the absence of a numeric need indicated by the formula in paragraph (4)(a) of this rule, unless other criteria in this rule and in Sections 408.035 and 408.043(2), F.S., outweigh the lack of a numeric need. (Emphasis supplied.)
In this case, there is no numeric need, therefore the application may not be approved unless other criteria in
Rule 59C-1.0355(3)(b), Florida Administrative Code, and in Sections 408.035 and 408.043(2), Florida Statutes, outweigh the lack of numeric need. A review of the criteria fails to
establish that the lack of numeric need is outweighed, accordingly the CON application should be denied.
The HPH application is premised on an alleged "unmet need" which was determined by contrasting the number of hospice patients served by the existing hospice in Hillsborough County with the number of resident deaths in Hillsborough County. The difference between the two is identified as an "unmet need."
Pursuant to Rule 59C-1.0355(4)(a), Florida Administrative Code, need determinations are addressed by calculation of the fixed need pool. Rule 59C-1.0355(4)(d), Florida Administrative Code, provides as follows:
Approval Under Special Circumstances. In the absence of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify the approval of a new hospice.
Evidence submitted by the applicant must document one or more of the following:
That a specific terminally ill population is not being served.
That a county or counties within the service area of a licensed hospice program are not being served.
That there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested). The applicant shall indicate the number of such persons. (Emphasis supplied.)
In this case, the applicant has failed to provide sufficient evidence to document any of the factors set forth in
Rule 59C-1.0355(4)(d), Florida Administrative Code. The evidence fails to establish that a specific terminally ill population is not being served or that a county or counties within the service area are not being served. There is no evidence that persons being referred to hospice programs are not being admitted within 48 hours.
Rule 59C-1.010, Florida Administrative Code, sets forth procedures for review of CON applications. Once an application is deemed complete by AHCA, no further application information or amendment is permitted. Rule 59C-1.010(3)(b), Florida Administrative Code. At hearing, HPH offered evidence related to specific terminally ill populations not identified in the HPH CON application. Such information constitutes an improper addition to, and amendment of, the application. Because the HPH application fails to comply with Rule 59C- 1.0355(4)(d), Florida Administrative Code, the application should be rejected.
The fixed need methodology accounts for terminally ill patients in four classifications; persons age 65 and over with terminal cancer diagnoses, patients under age 65 with terminal cancer diagnoses, patients age 65 and over with a terminal diagnoses other than cancer, and patients under age 65 with a terminal diagnoses other than cancer. This appropriately accounts for all terminally ill persons who may benefit from
hospice services. Other causes of death, including traffic accidents, homicide, suicide, and the like are not appropriate for hospice services.
HPH asserts that the number of deaths in Hillsborough County as contrasted with the Lifepath penetration rate establishes that the Hillsborough population lacks available or accessible hospice services and warrants award of the CON to HPH. HPH's calculation of the "unserved" population constitutes an alternative need methodology and is rejected. Health Care and Retirement Corp. of America v. Dept of Health and
Rehabilitative Services, 489 So. 2d 789 (Fla. 1st DCA 1986); Health Quest Realty v. DHRS, 477 So. 2d 576 (Fla. 1st DCA 1985).
AHCA is bound to follow its own rules in administering the certificate of need program. Page v. Capital
Medical Center, Inc., 371 So. 2d 1087 (Fla. 1st DCA 1979). Accordingly, AHCA is required to utilize its need determination rule to the exclusion of all others. Leesburg Regional Medical Center, v. DHRS (DHRS Final Order, Case No. 83-156, filed January 27, 1984).
HPH offered testimony directed as the issue of whether the goal of competition is being met by application of the formula. HPH essentially asserts that Section 408.043(2), Florida Statutes (1999), stating that, "the formula on which the certificate of need is based shall discourage regional
monopolies and promote competition," indicates that its CON application should be approved. HPH asserts that Lifepath constitutes a "regional monopoly" and therefore an additional hospice should be licensed to compete in Hillsborough County. While Lifepath is the sole licensed hospice in Hillsborough County, it is not the sole provider of end-of-life care. It should also be noted that the statute does not prohibit regional monopolies, even if it is assumed that Lifepath's position in Hillsborough County is that of a "regional monopoly."
At hearing, HPH offered evidence asserting that Lifepath was acting in a monopolistic manner with the goal of preventing entry of a competitor into the market. HPH asserts that Lifepath provides hospice services to no more terminally ill persons than are required to result in a calculation of a fixed need pool of zero. The evidence fails to establish that Lifepath intentionally acted in such a fashion. The safest means for an existing hospice in Lifepath's position to prevent entry of a competitor into the market is to provide services to as many people as possible, so that the fixed need pool for a specific service area is always zero.
There is no credible evidence that Lifepath has refused requested services to any terminally ill person for the purpose of manipulating admission levels so as to prevent entry of a competitor into the market.
Whether or not the "formula" discourages regional monopolies is not properly at issue in this proceeding.
By operation of the requirement that a provider obtain a CON, the regulation of entry into the hospice service market prohibits free competition between any service provider who might choose to be in the market. In the CON process, competition is encouraged in cases where there is a determination of need, by publication of the numeric need, and subsequent review of competing applications.
If it is believed that the rule does not discourage regional monopolies and promote competition, the appropriate way to address the situation is to challenge, and seek to alter, the existing rule; thereafter, providers interested in entering the market would be able to proceed to file competing applications
for award of a CON.
Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby
RECOMMENDED that the Agency for Health Care Administration enter a Final Order denying the application of Hernando-Pasco Hospice, Inc., for Certificate of Need No. 9311 to provide hospice services in Service Area 6A.
DONE AND ENTERED this 17th day of March, 2003, in Tallahassee, Leon County, Florida.
WILLIAM F. QUATTLEBAUM
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 17th day of March, 2003.
COPIES FURNISHED:
Michael O. Mathis, Esquire
Agency for Health Care Administration 2727 Mahan Drive
Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403
Robert D. Newell, Jr., Esquire Newell & Terry, P.A.
817 North Gadsden Street Tallahassee, Florida 32303-6313
Frank P. Rainer, Esquire Sternstein, Rainer & Clarke, P.A.
101 North Gadsden Street Tallahassee, Florida 32301-7606
H. Darrell White, Esquire McFarlain & Cassedy, P.A.
305 South Gadsden Street Post Office Box 2174
Tallahassee, Florida 32316-2174
Lealand McCharen, Agency Clerk
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308
Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive
Fort Knox Building, Suite 3431 Tallahassee, Florida 32308
Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive
Fort Knox Building, Suite 3116 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 |
|---|---|---|
| Jul. 01, 2003 | Agency Final Order | |
| Mar. 17, 2003 | Recommended Order | Lack of competition is not a special circumstance warranting approval of Certificate of Need application. Other criteria do no outweigh lack of numeric need. |
