STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
BIG BEND HOSPICE, INC.,
Petitioner,
vs.
AGENCY FOR HEALTH CARE ADMINISTRATION AND COVENANT HOSPICE, INC.,
Respondents.
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) Case No. 02-0455CON
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COVENANT HOSPICE, INC.,
Petitioner,
vs.
AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondent.
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) Case No. 02-0880CON
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RECOMMENDED ORDER
A formal hearing was conducted in these cases on June 10-14 and 17-21, 2002, and July 18, 2002, in Tallahassee, Florida, before Suzanne F. Hood, Administrative Law Judge with the Division of Administrative Hearings.
APPEARANCES
For Big Bend W. David Watkins, Esquire Hospice, Inc.: R. L. Caleen, Jr. Esquire
Watkins & Caleen, P.A. 1725 Mahan Drive, Suite 201 Post Office Box 15828
Tallahassee, Florida 32317-5828
For Agency for Michael O. Mathis, Esquire
Health Care Agency for Health Care Administration Administration: 2727 Mahan Drive
Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403
For Covenant J. Robert Griffin, Esquire Hospice, Inc.: J. Robert Griffin, P.A.
2559 Shiloh Way
Tallahassee, Florida 32308 STATEMENT OF THE ISSUE
The issue is whether the Agency for Health Care Administration properly determined that the application of Covenant Hospice, Inc. meets the statutory and rule criteria for a hospice program in Service Area (SA) 2B.
PRELIMINARY STATEMENT
On or about July 27, 2001, Respondent Agency for Health Care Administration (AHCA) published the fixed need pool projections for additional hospice programs for the January 2003 planning horizon. The fixed need pool projections indicated that there was no numeric need for hospice programs in SA 2B.
On or about August 17, 2001, AHCA published revised fixed need pool projections for the same batch cycle in Florida Administrative Weekly, Volume 27, Number 33. The revised fixed need pool projections indicated that there was a numeric need for one additional hospice program in SA 2B.
By letter dated August 24, 2001, Petitioner Big Bend Hospice, Inc. (BBH) advised AHCA of what BBH believed was an
error in the determination of the need for one additional hospice program in SA 2B. AHCA responded in a letter dated August 27, 2001, that the revised fixed need pool would not be reversed.
By letter dated August 29, 2001, Respondent/Petitioner Covenant Hospice, Inc. (Covenant) advised AHCA that Covenant intended to file an application for a Certificate of Need (CON) to establish a hospice program in SA 2B. Covenant filed the letter of intent pursuant to the notice of the revised fixed need pool as published in the Florida Administrative Weekly, Volume 27, Number 33, on August 17, 2001.
Covenant filed its application with AHCA on September 6, 2001. The application was assigned CON action number 9475 (CON 9475).
BBH filed a Petition for Formal Administrative Proceeding with AHCA on September 6, 2001. The petition challenged the validity of the revised fixed need pool for one additional hospice program in SA 2B.
On or about November 14, 2001, AHCA referred BBH's challenge to the revised fixed need pool to the Division of Administrative Hearings (DOAH). The matter was assigned DOAH Case No. 01-4415CON.
On December 3, 2001, BBH filed a Response to Initial Order in DOAH Case No. 01-4415CON. The response included an unopposed
request to place the case in abeyance. An Order Placing Case In Abeyance was entered that same day.
On December 20, 2001, BBH filed an unopposed Motion for Continued Abeyance. The undersigned granted the motion in an Order dated December 24, 2001.
On or about December 28, 2001, Covenant filed a Petition to Intervene in DOAH 01-4415CON. The undersigned granted Covenant's Petition to Intervene on January 10, 2002.
On or about December 28, 2001, AHCA announced its preliminary agency action approving Covenant's application for CON 9475. AHCA published notice of its decision in the Florida Administrative Weekly, Volume 27, Number 52, December 28, 2001.
On January 17, 2002, BBH filed a Petition for Formal Administrative Proceeding with AHCA. The petition contested AHCA's preliminary approval of CON 9475.
On January 24, 2002, the parties filed a Joint Motion for Continued Abeyance in DOAH Case No. 01-4415CON. The motion was granted on January 25, 2002.
On February 5, 2002, AHCA referred BBH's challenge to the preliminary approval of CON 9475 to DOAH. The case was assigned DOAH Case No. 02-0455CON.
On February 6, 2002, Covenant filed a Petition for Administrative Hearing with AHCA. Covenant filed the petition in support of CON 9475.
On February 11, 2002, the undersigned issued an Order of Consolidation. The Order consolidated DOAH Case Nos. 01-4415CON and 02-0455CON.
On February 18, 2002, the parties in DOAH Case
Nos. 01-4415CON and 02-0455CON filed a Joint Response to Initial Order. After a telephone conference on February 19, 2002, the undersigned issued a Notice of Hearing dated February 20, 2002. The notice scheduled DOAH Case Nos. 01-4415CON and 02-0455CON for hearing on June 10-14 and 17-21, 2002.
On March 2, 2002, AHCA referred Covenant's Petition for Administrative Hearing to DOAH. The petition was assigned DOAH Case No. 02-0880CON.
On March 12, 2002, the parties in DOAH Case No. 02-0880CON filed a Joint Response to Initial Order. The response included a request to consolidate DOAH Case Nos. 01-4415CON, 02-0455CON and 02-0880CON.
On March 19, 2002, the undersigned issued a Second Order of Consolidation. The order consolidated DOAH Case
Nos. 01-4415CON, 02-0455CON, and 02-0880CON for hearing purposes. An Amended Notice of Hearing scheduled the cases for hearing on June 10-14 and 17-21, 2002.
On April 2, 2002, BBH filed a Motion to Bifurcate Final Hearing. Covenant and AHCA filed responses in opposition to the
motion on April 18, 2002. The motion was denied by Order dated April 23, 2002.
On May 21, 2002, BBH filed a Motion for Continuance or, in the Alternative, Motion in Limine. Covenant and AHCA filed responses in opposition to the motions. By Order dated June 3, 2002, the undersigned denied both motions with leave for BBH to address the issues raised in its Motion in Limine in its proposed recommended order.
On June 7, 2002, BBH filed a Motion in Limine and Request for Oral Argument. During the hearing, the undersigned reserved ruling on the motion.
During the hearing, Covenant presented testimony from the following witnesses: (a) Dale O. Knee, expert in hospice and health care administration; (b) Paula Montgomery, M.D., expert in medical care and hospice medical direction; (c) Autumn Caughey, expert in health care quality improvement; (d) Pam Edwards, expert in hospice nursing; (e) Delia Leslie, expert in hospice program development; (f) Anthony Martinez, expert in hospice volunteer program development; (g) Chetta McCart, expert in hospice AIDS program development; (h) Wayne Ralph, expert in hospice chaplaincy; (i) Janet Wilkie, expert in hospice social work and special programs; (j) Charles Lee, expert in hospice education, outreach programs, and program development; (k) Mary Cummins, expert in hospice nursing and education; (l) Julie
Patton, expert in hospice staff training, curriculum development, and education; (m) Eric Rost, M.D., expert in radiation oncology; (n) Amy Bajjaly, expert in human resource management; (o) Carolyn Burbank, expert in hospice community education; (p) Jay Daniel Cushman, expert in health planning;
(q) Christopher Comeaux, expert in hospice financial management; and (r) Darryl Weiner, expert in health care finance and financial feasibility analysis. With the exception of Covenant's Exhibit Nos. C13 and C22, which were withdrawn, Covenant offered Exhibit Nos. C1 through C121 that were admitted into evidence.
AHCA presented the testimony of the following witnesses:
(a) Jeffrey N. Gregg, expert in health care planning and health care regulation; and (b) Laura MacLafferty, expert in health planning. AHCA did not offer any exhibits for admission into evidence.
BBH presented the testimony of the following witnesses:
Elaine Bartelt, expert in hospice administration;
Jessie V. Furlow, M.D., expert in general medicine and general surgery; (c) James Everett, M.D., expert in family practice medicine; (d) James Mabry, M.D., expert in internal medicine, medical oncology, hematology, hospice medicine, and administration of hospice medical programs; (e) Carol Vanderford, R.N., expert in nursing and hospice nursing
administration; (f) Diane Tomasi, expert in community relation and development; (g) Lisa Kalaf, expert in hospice administration; (h) James McKnight, expert in health care administration; (i) Lynne Mulder, expert in health care planning; and (j) Robert Beiseigel, expert in health care finance.
BBH offered Exhibit Nos. BB1 through BB102 that were received into evidence. BBH's exhibits included the following deposition transcripts: (a) Dr. Julie Schindler; (b) Dr. John Mackay; (c) Eugene Gesner; (d) Regina Compton; (e) Dr. Nancy Chorba; (f) Joseph Brown; (g) Charles McClellan; (h) Dr. Dale Wickstrum; (i) Dr. Diane Haisten; (j) Marlane Williams;
(k) Claire Benjamin; and (l) John Davis.
At the conclusion of the hearing, the parties were directed to file separate proposed recommended orders for DOAH Case
No. 01-4415CON involving the revised fixed need pool projection and DOAH Case Nos. 02-0455CON and O2-0880CON involving the preliminary approval of Covenant's CON application. Pursuant to the agreement of the parties, the proposed recommended orders were due to be filed on or before September 30, 2002.
The complete transcript of the hearing was filed on the following dates: (a) Volumes I-VI and IX on July 16, 2002;
Volumes VII-VIII and XI-XX on September 4, 2002; and
Volumes XXI-XXII on September 6, 2002. The hearing Transcript does not contain a Volume X.
BBH filed Proposed Recommended Orders in DOAH Case
No. 01-4415CON and DOAH Case Nos. 02-0455CON and 02-0880CON on
September 30, 2002. BBH also filed a Memorandum of Law in Support of Proposed Recommended Order on September 30, 2002.
Covenant filed a Proposed Recommended Order in DOAH Case Nos. 02-0455CON and 02-0880CON on September 30, 2002. Covenant and AHCA timely served a Joint Proposed Recommended Order in DOAH Case No. 01-4415CON on BBH. However, due to an oversight, Covenant and AHCA failed to file the latter proposed order with the Division of Administrative Hearings until October 8, 2002. For the reasons set forth in Covenant's letter dated October 11, 2002, Covenant's and AHCA's Joint Proposed Recommended Order in DOAH Case No. 01-4415CON is hereby deemed timely filed.
On October 10, 2002, BBH filed a Motion to Supplement the Record and for Official Recognition. A copy of AHCA's Notice of Hospice Program Fixed Need Pool as published in the Florida Administrative Weekly, Volume 28, Number 41, October 11, 2002, was attached to the motion. The notice indicates that the fixed need pool projection for hospice programs planned for
January 2004 in SA 2B is zero. On October 22, 2002, Covenant filed a response in opposition to the motion, which is hereby denied.
The record in its entirety is inextricably shared between DOAH Case No. 01-4415CON and DOAH Case Nos. 02-0455CON
and 02-0880CON. Therefore, except for the respective Proposed Recommended Orders, all orders, pleadings, volumes of Transcript, and exhibits are located in DOAH Case
No. 01-4415CON.
DOAH Case No. 01-4415CON, relating to AHCA's fixed need pool determination, DOAH Case Nos. 02-0455CON, and 02-0880CON, related to Covenant's CON application, are hereby deconsolidated for purposes of issuance of separate recommended orders in the respective cases. Rulings on BBH's pending Motions in Limine and other issues raised in BBH's Memorandum of Law are denied for reasons set forth in the Conclusions of Law section of the Recommended Order in DOAH Case Nos. 02-0455CON and 02-0880CON.
FINDINGS OF FACT
Hospice Care
Hospice care is a medically coordinated group of services that is designed for people who have a terminal diagnosis with a life expectancy less than six months. Hospice care provides palliative care as opposed to curative care. The patients' and their families' needs are multi-dimensional and include physical, psychological, emotional, spiritual, and financial needs. Hospice care includes physician directed medical care, nursing services, social work services,
bereavement counseling, and other ancillary services such as community education.
Hospice care is reimbursed by Medicare, Medicaid, Champus/Tri-Care (for military populations), and some commercial insurance programs. For example, under the Medicare reimbursement system, hospices are reimbursed based on an identifiable flat per diem rate for a bundled package of services. Medicare does not reimburse hospices for bereavement services.
The Medicare benefit is based on level of care.
Routine home care is the basic level of care. Routine home care is provided as long as a hospice can care for a patient in a home-like environment. The second level of care is continuous care, which provides between eight and 24 hours of nursing care per day. The third level of care is inpatient care, which a hospice can provide in a hospital, a skilled nursing unit of a nursing home, or a freestanding hospice inpatient facility operated by a hospice. The fourth and final level of care is respite care.
The primary reimbursement agent for hospice care is Medicare, but it is becoming more common for private insurers and health maintenance organizations to provide the benefit. Hospices also provide care to charity patients who have no source of payment and no or insufficient assets or income.
Hospice SA 2B
Hospice SA 2B comprises eight counties: Franklin, Gadsden, Jefferson, Leon, Liberty, Madison, Taylor, and Wakulla. SA 2B covers 5500 square miles. It has an average of 67 persons per square mile. While Leon County has 345 persons per square mile, Taylor, Franklin, Liberty, Madison and Jefferson Counties all have less than 30 persons per square mile.
Liberty County is the least populated county in the state of Florida. Liberty County has a low-income population but is better off economically than some of the other counties in the SA.
Madison County has a population of approximately 17,000, with mostly low-to-middle income families. The majority of residents in Madison County have a high school education or less. Like most rural communities, Madison County is resistant to change or "outside intervention."
Only two SAs in Florida have fewer projected deaths than SA 2B. Those are SA 2A and SA 7C. The providers in SA 2A and SA 7C serve multiple SAs.
The Parties
AHCA
AHCA is the state agency that is responsible for administering the CON program and laws in Florida. In conjunction with these duties, AHCA reviews applications for new
hospice programs pursuant to Sections 400.601, 400.602, 400.609,
400.6095, 408.034, 408.035, 408.036, and 408.043, Florida
Statutes, and Rules 59A-2 and 59C-1.0355, Florida Administrative Code.
Covenant
Covenant, formerly known as Hospice of Northwest Florida, is a not-for-profit community organization that was founded by a committee in 1982. The committee included community leaders and several hospitals in the Pensacola, Florida, area.
Covenant began treating its first patients in 1984 and is currently licensed to provide hospice services in SA 1 and SA 2A. The following counties are located in SA 1: Escambia, Santa Rosa, Okaloosa, and Walton. The following counties are located in SA 2A: Holmes, Washington, Jackson, Calhoun, Bay and Gulf.
Covenant obtained its first CON for SA 1 and three counties in SA 2A. Covenant later expanded to cover all of
SA 2A. In 1994, Hospice of the Emerald Coast (formerly known as Bay Medical Hospice and hereinafter referred to as Emerald Coast) was the dominant provider in SA 2A, but Covenant became the dominant provider within six years after expanding its coverage.
Emerald Coast also has expanded its coverage and is licensed now to provide hospice services in SA 1 and SA 2A. Emerald Coast is now gaining market share in SA 1.
Covenant is licensed to provide hospice services in
26 southern Alabama counties. However, Covenant currently provides services in only nine or ten Alabama counties. Covenant currently shares its Alabama SAs with five or six other providers and is considering further expansion in Alabama.
On average, Covenant serves 429 Florida hospice patients per day. It admits patients and provides service 24 hours a day, seven days a week, without regard to their ability to pay.
Covenant's main office and its eight-bed inpatient/residential facility, the Joyce Goldberg Hospice Inpatient Residence, are located in Pensacola, Florida. The room and board residential component of the inpatient facility is not reimbursed by any government agency and most often provides services on a charitable basis. Covenant built the inpatient facility to provide services to the homeless. However, Covenant does not consider patients who present with subjective signs of imminent death to be appropriate for admission to the facility.
Covenant performs a financial assessment of patients at the time of their admission to the inpatient facility. If
the patient or his or her representative elect not to provide Covenant with financial data, patients and their families understand that the full rate per day for room and board will be charged on a monthly basis at the beginning of each month, even when there is little or no chance that Covenant will ever collect the amount owed. Patients that have the ability to pay for some or all of their treatment at the facility do so on a sliding scale basis. However, the bottom line is that Covenant admits patients to the inpatient/residential facility without regard to their ability to pay.
Covenant historically has provided inpatient care to children in one of the area's children's hospitals, Sacred Heart Hospital. Providing inpatient hospice care to children in a special hospital is appropriate from a quality of care perspective.
Covenant operates the following Florida branch offices: Okaloosa County at Niceville, Florida; Jackson County at Marianna, Florida, and Bay County at Panama City, Florida. Covenant operates Florida community support centers in Okaloosa County at Crestview, Florida, and in Walton County at Destin, Florida.
Volunteers staff Covenant's community support centers.
Among other activities, the centers conduct blood drives and provide space and volunteer training for organizations such as
the American Cancer Society and various Alzheimers groups. Covenant provides the centers on a charitable basis.
Covenant's growth and expansion has focused on serving persons in underserved areas and populations. Its mission is to provide direct care to dying patients, their families and friends, and to provide education to the community.
Covenant is the 30th largest hospice in the United States. It serves the largest geographic area in Florida. Covenant's audited finances demonstrate the corporation's growth. In the past five years, Covenant has nearly tripled its number of patient days. Covenant has purchased management software and systems, with a useful life of five years, to facilitate support for a corporation twice its size. It has secured contracts for services with every hospital, nursing home, and assisted living facility in SA 1 and SA 2A.
Covenant's vision is to create and foster a corporate culture of excellence. In order to achieve its goals, Covenant has recruited personnel from the for-profit industrial sector. As incentives for achievement of performance goals, Covenant pays bonuses to its top management. It also has a separate staff bonus pool. Covenant made a profit in 2001 despite paying such bonuses out of its operational funds.
Covenant has achieved its growth and expansion, in part, by implementing a continuous quality improvement process
in which it constantly looks for ways to improve its operations and services. Expansion into SA 2B will improve Covenant's operations by allowing it to spread its fixed overhead costs.
Consistent with its objectives, Covenant chose to pursue accreditation from the Joint Commission on Accreditation of Health Care Organizations (JCAHO) four years ago. Covenant became accredited without outside consultation, using its own staff and resources. Since then, JCAHO has re-accredited Covenant, pursuant to a 98 percent survey report with no Type I recommendations.
Covenant provides hospice care in a way that ensures sensitivity to cultural diversity and the hospice patient's cultural values. For example, Covenant has informational brochures and material in various foreign languages, including Vietnamese and Spanish.
Covenant's policies and procedures comply with all applicable requirements of the U.S. Department of Health and Human Services related to discrimination in the workplace. They are sufficient to ensure confidentiality for any employee with HIV and to ensure protection of all other employees.
Covenant provides substantial "unfunded" and "underfunded" programs to the community. Underfunded programs include palliative chemotherapy and palliative radiation therapy. In addition to unfunded community support centers,
Covenant provides unfunded bereavement programs in schools and grief-in-the-workplace seminars. Through its physicians and medical teams, Covenant provides unfunded physician care for non-Medicare patients.
In fact, Covenant provided approximately $1.5 to $1.7 million in unreimbursed care in the calendar year 2001, and anticipates that it will provide more such care in 2002. Covenant, like all not-for-profit organizations, must raise funds to pay for non-reimbursed expenditures that support charitable services.
Covenant has developed a strategic plan to identify ways to measure its success in meeting the needs of underserved populations. As a part of its ongoing strategic planning process, Covenant determined that there was an unmet need for hospice services in SA 2B, the area currently exclusively served by BBH.
After receiving requests from physicians for hospice services in SA 2B, Covenant approached BBH to offer assistance and support. Covenant also consulted with its health planner regarding the need for additional hospice services in SA 2B. After AHCA determined that there was a numeric need for an additional hospice in SA 2B, Covenant's chief executive officer (CEO) toured SA 2B to assess the potential for expansion and to look for potential properties. Eventually, Covenant became
convinced that there were compelling reasons to apply for a CON in SA 2B because of an unmet need for hospice services.
Covenant has strong reserves of ready cash and equivalents, including $2.9 million in cash and over $1 million in investments, to underwrite the SA 2B expansion. Covenant has approximately six times more working capital than BBH. The
$84,000 stated in Covenant's application as required expenditures to develop the new program in SA 2B is insignificant compared to the corporation's ability to provide "unlimited funds" for the project. The fact that Covenant has sizable cash and investment reserves despite having to subsidize it SA 2A offices demonstrates its financial power.
BBH
Community volunteers began organizing BBH in 1981.
After its incorporation in 1983 as a not-for-profit community organization, BBH commenced operation under a license that authorized it to provide hospice services only in SA 2B. On average, BBH serves 162 patients per day.
BBH's main office is located in Tallahassee, Florida, but it operates the following branch offices and/or community support centers: Franklin County at Carrabelle, Florida; Gadsden County at Quincy, Florida; Jefferson County at Monticello, Florida; Madison County at Madison, Florida; and Taylor County at Perry, Florida. BBH plans to create additional
branch offices/community centers in the following locations: Franklin County at Apalachicola, Florida; Gadsden County at Chattahoochee and Havana, Florida; and Wakulla County at Crawfordville, Florida.
BBH also operates a 12-bed inpatient facility. The facility, known as The Hospice House is located in Tallahassee, Florida. It usually operates at 80 percent of its capacity.
The Hospice House was built using funds raised in a capital funds campaign and $250,000 in community grants. The facility is designed so that family and friends can spend as much time as they can with their loved ones.
The facility provides 24-hour care for various reasons, including pain management, respite care, routine residential care as an alternative to continuous care in a patient's home, transition care after leaving a hospital, and care for patients facing imminent death who for personal reasons do not want to die at home. Occasionally, The Hospice House helps local hospitals manage oncology floor bed shortages.
BBH has a policy that requires paying patients to pay in advance on a weekly basis because many times patients do not stay at the facility for longer than a week. The rate charged depends on the patient's ability to pay. Frequently, patients stay at the facility for free due to their low-income status.
BBH does not bill patients for services that it does not intend to collect.
BBH has a 24-member Board of Directors. The Board is comprised of a broad mix of people with backgrounds in law, business, medicine, education, nursing, and insurance.
BBH has one or more community advisory councils (CACs) for each county in SA 2B. The CACs hold public meetings in their respective counties each month. The purpose of the CACs is to support BBH's effort to reach out to civic and church groups and to advise BBH on how to gain acceptance in the SAs diverse communities. Like BBH's Board of Directors, the CACs are comprised of a broad group of people who are racially and ethnically diverse. The CACs include local clergy who assists BBH's outreach to the faith-based community.
BBH has a minority advisory council (MAC) that supports BBH's outreach efforts in the African-American community. The MAC hosts lunches and dinners at churches and sponsors gospel sings that include education about hospice care. For example, a gospel sing that was conducted at Florida A&M University was preceded by an hour-long seminar on hospice care on National Public Radio.
BBH has had an ethics committee since 1994. The purpose of the committee is to educate BBH's staff and the community about ethical issues. The committee routinely reviews
BBH's policies and when necessary, reviews particular patient dilemmas. The ethics committee includes a rabbi, a protestant chaplain, a religion professor, a Muslim pharmacist, a social worker, a nurse, and other interested individuals.
BBH is a member of the National Hospice and Palliative Care Organization (NHPCO). BBH is accredited by the Community Health Care Accreditation Program, one of the first accreditation programs. AHCA has approved BBH after every licensure survey with no deficiencies.
BBH's mission is to provide care and education to terminally ill patients and their families. BBH's mission includes providing emotional support to anyone dealing with grief from loss of a loved one.
BBH serves all individuals who meet the clinical criteria for admission to hospice, regardless of their ability to pay. It provides care to indigent patients without concern for financial reimbursement. BBH responds to patient referrals within 24 to 36 hours. BBH does not discriminate against any group on any basis.
BBH delivers hospice services with a minimum of administrative costs. Out of the funds raised by BBH through charitable gifts, 86 cents of every dollar goes directly to patient care. BBH does not spend substantial funds on marketing or advertising.
BBH has five interdisciplinary teams (IDTs). Each team has a medical director and staff who live in their IDT area. BBH has nurses who live in every county in the SA except Liberty County. The IDTs have separate back-up on-call nurses to provide coverage 24 hours a day, seven days a week. The
on-call nurses can provide care to patients within 30 minutes of a call.
BBH has a full-time medical director, four part-time IDT associate medical directors, and a part-time associate medical director for its inpatient facility. The associate medical directors meet with the IDTs weekly to review patient care. They also provide advice and education to other providers and physicians in the community. The IDT medical directors provide emergency consultation should an acute situation arise with a patient.
In addition to its core services, BBH provides other services to the community and patients that are not reimbursed from any source. These services include grief counseling to adults and children, crisis intervention in schools after a student's death, and the music therapy program.
BBH's music therapy program, which is non-reimbursed, is one of only two such programs in Florida that the National Association of Music Therapists has certified as a music therapy site and as a music therapist training site. BBH has the
equivalent of five full-time staff members that provide music therapy through out SA 2B as requested by patients or recommended by an IDT. Over 30 percent of BBH's patients receive music therapy. BBH provided over 1,500 hours of music therapy in the six months prior to the hearing.
Part of BBH's outreach efforts includes conducting physician education seminars. About 200 out of 320 local physicians in SA 2B periodically refer patients to BBH.
BBH provides palliative chemotherapy and radiation treatment on a case-by-case basis. There is no persuasive evidence that BBH has ever denied a physician's recommendation for such services. At times, BBH has reimbursed a local hospital for palliative radiation services for BBH patients.
BBH solicits feedback from patients, their families, and their physicians through surveys that are sent out three weeks after patients begin receiving care and again after patients pass away. BBH's committee for quality improvement reviews the results of the surveys on a monthly basis as part of BBH's continuing quality improvement program. Recent results show a high degree of patient and family satisfaction because they are equal to or higher than national palliative care statistics. Physician survey responses show 90 percent or better satisfaction. BBH follows up on any survey response that
is less than "very good" from patients or "average" from physicians.
Covenant's Application
Covenant's Board of Directors duly authorized the filing of Covenant's letter of intent and application. The Executive Committee of Covenant's Board of Directors authorized the filing of the letter of intent on August 27, 2001. Covenant timely filed the letter of intent with AHCA on August 29, 2001.
The Board of Directors authorized the filing of the application on August 30, 2001. Covenant filed the application with AHCA on September 4, 2001. After receiving an omissions letter from AHCA, Covenant timely filed its omissions response and complete application along with the appropriate application fee.
AHCA has preliminarily approved Covenant's application to establish a new hospice program in SA 2B. AHCA's preliminary approval is subject to the following conditions: (a) Within the first two years of operation, Covenant must open a branch office in Perry, Taylor County, Florida; and (b) Covenant must establish a special non-cancer outreach program to educate the medical community on the effectiveness of hospice care for patients with non-cancer diagnoses.
Fixed Need Pool
Rule 59C-1.008, Florida Administrative Code, relates to CON application procedures in general. Rule 59C-1.0355, Florida Administrative Code, relates to specifically to hospice programs. Both rules contain provisions that relate to published fixed need pool projections.
In this case, Covenant filed its application in response to a published fixed need for an additional hospice program in SA 2B. BBH has challenged that published need in DOAH Case No. 01-4415 CON. A Recommended Order in that case is being issued concurrently with the instant case.
Conformance with District Health Plan Preferences
Covenant's application is in conformance with the applicable district health plan as required by Section 408.035(1), Florida Statutes, and Rule 59C-1.030(2)(c), Florida Administrative Code. The applicable local health plan preferences are set forth in the District 2 CON Allocation Report, approved October 2000.
With respect to the first local health plan preference, Covenant currently provides and commits to providing district-wide services. Covenant will provide the services 24 hours per day, seven days a week, regardless of a patient's ability to pay.
As to the second local health plan preference, Covenant currently contracts with and commits to contracting with existing hospitals and nursing homes for the provision of inpatient care. The proposed program does not require the construction of a new facility or the addition of beds. Conformance with Agency Rule Criteria
The application conforms to the requirements of Rule 59C-1.0355(3)(a), Florida Administrative Code, which requires hospice programs to comply with the standards for program licensure described in Chapter 400, Part VI, Florida Statutes, and Chapter 58A-2, Florida Administrative Code.
Covenant has demonstrated that it meets these statutory and rule requirements. Some of the requirements, including but not limited to "quality of care," are discussed in detail below.
The application is in conformance with the five-rule preferences set out in Rule 59C-1.0355(4)(e), Florida Administrative Code. As to rule preference one, Covenant evidences a commitment to serve populations with unmet needs. One such population includes non-cancer patients as discussed below.
With respect to the rule preference two, Covenant proposes to provide the inpatient care component of its proposed program through contractual arrangements with existing health
care facilities. Covenant does not propose the development of an inpatient facility.
The application conforms to rule preference three.
Covenant has demonstrated a commitment to serve the homeless, patients with AIDS and patients who do not have primary caregivers at home.
Covenant is entitled to credit for rule preference four. Covenant proposes a project in SA 2B, which has eight counties. It intends to establish its main office in Tallahassee, Leon County, Florida, with a branch office in Perry, Taylor County, Florida. Covenant anticipates opening community support centers in Madison County and in Gadsden County during the third year of operation. Covenant has presented persuasive evidence that Madison and Taylor Counties are underserved as discussed below.
The application meets the expectations of rule preference five. Covenant is committed to providing services not specifically covered by private insurance, Medicaid, or Medicare. These services include, but are not limited to, chaplain services, support for seriously ill patients not yet appropriate for hospice services, non-health care items such as hot water heaters and telephones that provide quality of life and allow patients to stay at home, bereavement services, and volunteer services.
The application is in conformance with Rule
59C-1.0355(5), Florida Administrative Code. Covenant's proposal is consistent with the needs of the community and other criteria contained in local health council plans and the State Health Plan.
Rule 59C-1.0355(5), Florida Administrative Code, specifically requires an applicant to provide letters of support from health care organizations, social services organizations, and other entities within the proposed SA that endorse the applicant's development of a hospice program. In order to comply with this provision, Covenant sent approximately 206 letters to individual and entities in SA 2B requesting support of its application.
Even though health care providers in SA 2B have limited knowledge about or experience with Covenant, it received the following letters of support: (a) eight letters of support from physicians who practice in SA 2B; (b) three letters of support from hospitals located in SA 2B; (c) 18 letters of support from nursing homes and assisted living facilities located in SA 2B; and (d) six letters of support from other health care professionals and/or residents who live and work in or adjacent to SA 2B. These letters of support are sufficient to show compliance with Rule 59C-1.0355(5), Florida Administrative Code, despite the fact that AHCA received 160
letters of opposition to the proposed project from various individuals and entities in SA 2B.
The application is in conformance with Rule
59C-1.0355(6), Florida Administrative Code, because it provides a detailed description of the proposed program. First, proposed staffing for the project will be 9.54 full-time equivalents (FTEs) in the first year of operation and 18.79 FTEs in the second year of operation. The volunteer staff will number about one per patient and will increase from about 15 in the first year to about 35 in the second year. The record contains competent evidence showing how Covenant will recruit and train its staff and volunteers.
Second, Covenant expects to obtain patient referrals from hospitals and doctor's offices. Based on Covenant's prior experience in starting new hospice programs, the expected sources of patient referrals are reasonable and appropriate.
Third, the application sets forth the projected number of admissions for the first two years, by payer type, by type of terminal illness, and by age groups. Covenant expects Medicare patients to comprise about 80 percent of the admissions. The majority of Covenant's patients will have diagnoses other than cancer, such as heart disease, emphysema, liver disease, and Lou Gehrig's disease. During the first year, Covenant expects to have 27 patients, under 65, and 82 patients, 65 and older. In
the second year, Covenant expects to have 56 patients, under 65, and 184 patients, 65 and older. These projected utilizations are reasonable and achievable.
Fourth, Covenant has identified the services to be provided by staff and volunteers and those to be provided through contractual arrangements. Covenant plans to provide direct care in the following areas: physician services, nursing services, home health aide services, dietary counseling, social work services, chaplain services, counseling services, and bereavement services. Physical, speech, and occupational therapy services will be provided through contractual arrangements.
Fifth, Covenant will provide inpatient services through contractual arrangements with nursing homes and hospitals. Covenant has gained expertise in providing hospice care in nursing homes in its existing SAs.
Sixth, the application sets forth provisions for serving persons without primary caregivers at home. Covenant's plan allows patients to be responsible for their own care as long as they are able to do so. When that is no longer possible, Covenant provides the patients with a list of alternatives.
Seventh, Covenant will provide bereavement services to its patients before death and to patients' families and friends
after death for at least one year. Covenant also provides grief counseling in schools and in the community. Covenant offers grief support to its staff and volunteers. Covenant uses seminars, workshops, and special programs to train and educate its staff, volunteers, and individuals in the community about particular bereavement topics.
Next, Covenant will provide extensive community education activities concerning hospice programs. Some of these are discussed in detail below. As indicated above, Covenant has agreed to provide a special non-cancer outreach program to educate the medical community in SA 2B about the effectiveness of hospice care for non-cancer diagnoses.
Finally, Covenant's application includes policies for the receipt, acknowledgement, management and utilization of fundraising activities. Covenant expects fundraising to account for 2-3 percent of net revenue for the proposed program. The application does not include specific proposed methods for fundraising activities in SA 2B. However, during the hearing Covenant provided sufficient evidence about its past experiences to support the conclusion that it will be successful in this regard.
80. Rules 59C-1.0355(6)(h) and 59C-1.0355(6)(i), Florida
Administrative Code, do not apply here. Covenant does not intend to establish a freestanding inpatient facility in SA 2B.
Covenant's proposals, expectations, and projections are reasonable and appropriate as they relate to the factors set forth in Rule 59C-1.0355(6), Florida Administrative Code. Based upon Covenant's experience, the proposed program as described in the application is conservative and achievable.
Conformance with Applicable Statutory Criteria
As stated above, the proposed project complies with the standards for licensure described in Chapter 400, Part VI, Florida Statutes. Specifically, the application conforms to the requirements of Section 400.606(1), Florida Statutes, because it provides a plan for the delivery of home, residential, and
home-like inpatient hospice services to terminally ill persons and their families. Covenant's plan contains, but is not limited to, the following: (a) the estimated average number of terminally ill persons to be served monthly; (b) the geographic area in which hospices services will be available; (c) a listing of services which will be provided, either directly by the applicant or through contractual arrangements with existing providers; (d) provision for the implementation of hospice home care within three months after licensure; (e) the provision of inpatient care in nursing homes and other health care facilities; (f) the number and disciplines of professional staff to be employed; (g) the name and qualifications of potential contractors; (h) a plan for attracting and training volunteers;
(i) the projected annual operating cost of the hospice; and
a statement of financial resources and personnel available to the applicant to deliver hospice care. Some of these plans are discussed in detail herein.
Rule 59C-1.0355(3)(b), Florida Administrative Code, requires an applicant to be in conformance with Sections 408.035 and 408.043(2), Florida Statutes. Covenant meets the standards sets forth in these statutes as indicated below.
Section 408.035(1), Florida Statutes, requires consideration of the need for the proposed project in relation to the applicable district health plan. As discussed above, Covenant meets this criterion.
Sections 408.035(2) and 408.035(7), Florida Statutes, relate to the need for the proposed project as evidenced by the availability, quality of care, efficiency, accessibility, and extent of utilization of existing health care facilities and health services in the applicant's SA. Covenant meets these statutory criteria for the following reasons: (a) SA 2B is characterized by lack of hospice competition; (b) The proposed project will ensure access to hospice care in the SA's rural communities; (c) Covenant's special non-cancer outreach program will increase utilization for patients with non-cancer diagnoses; (d) With projected admissions of 109 patients in year one, 240 patients in year two, and 305 patients in year three,
the proposed project will achieve a 25 percent market share in the third year; and (e) Covenant is Medicare and Medicaid certified and has a history of providing quality of care.
Sections 408.035(2) and 408.035(12), Florida Statutes, relate to the applicant's history of providing quality of care and its demonstrated ability to provide such care. Covenant meets these criteria because it has a quality assurance program that provides a comprehensive, centrally coordinated system by which Covenant can conduct an ongoing evaluation of patient care and family services. Covenant's Performance Improvement Plan (PIP) is discussed in detail below.
Section 408.035(4), Florida Statutes, relates to whether the applicant will provide services that are not reasonably and economically accessible in adjacent SAs. It is preferable for hospice services to be delivered in patients' homes or in home-like environments. It is undisputed that residents of rural populations often are reluctant to accept hospice services from a local provider. It follows that rural populations would be even more reluctant to seek hospice services in an adjoining SA.
Some SA 2B patients from Liberty and Franklin Counties receive hospice services in SA 2A. Additionally, some residents of Madison and Taylor Counties receive hospice services in
SA 3A. However, there is no persuasive evidence that a
significant number of the underserved patients in the rural populations of SA 2B ever received services in an adjoining county for any one year. To the contrary, the greatest weight of the evidence indicates that for a substantial number of patients in SA 2B, hospice services are not reasonably or economically accessible in adjoining SAs.
Section 408.035(5), Florida Statutes, relates to the needs of research and educational facilities in the SA. This criterion does not apply because Covenant's proposed project is not located in a teaching hospital and does not involve research or formal education and training programs for physicians and other health care professionals.
Section 408.035(6), Florida Statutes, relates to the applicant's resources, including health personnel, management personnel, and funds for capital and operating expenditures, that are available for project accomplishment and operation. Section 408.035(8), Florida Statutes, relates to the applicant's immediate and long-term financial feasibility. Covenant meets these criteria because it has demonstrated the short-term and long-term financial feasibility of the proposed project.
Section 408.035(9), Florida Statutes, relates to whether the proposed project will foster competition to promote quality and cost-effectiveness. Covenant's proposed project will meet this criterion because it will provide the patients of
SA 2B a choice of providers. Benefits accrue from competition among hospice providers because hospice utilization is strongly related to awareness and education. Competition creates an environment in which hospices must do more to educate the community, promoting quality of care. Covenant's proposed project also will increase the hospice penetration rate in
SA 2B, thereby resulting cost effectiveness and overall savings to the health care system. This is true even though a large majority of patient care is provided by fixed price government payer sources that are not influenced by competition.
Section 408.035(10), Florida Statutes, relates to proposed costs and methods of construction associated with the proposed project. This criterion does not apply because the proposed project does not involve any construction.
Section 408.035(11), Florida Statutes, relates to the applicant's history of and commitment to providing health services to Medicaid patients and the medically indigent. In 2000, Covenant provided about 7.8 percent of its patient days to Medicaid patients. That same year, Covenant provided approximately $480,000 in non-billable services. In SA 2B, Covenant proposes to provide 10 percent of its patient days to Medicaid patients and 4 percent to charity. The record is clear that Covenant meets this statutory criterion.
Section 408.043(2), Florida Statutes, relates to the need for and availability of hospice services in the community. The application is in conformance with the requirements of this statute because there is a need for additional hospice services in SA 2B, especially for non-cancer patients and in rural populations. Additionally, a new hospice program will promote competition.
Need for an Additional Hospice
Published Fixed Need Pool and Special Circumstances
The hospice penetration rate is defined as the ratio of hospice admissions in a SA divided by the number of resident deaths for that SA. Hospice penetration has grown in Florida and the United States in recent years, due primarily to increased awareness among the lay and health care communities. In Florida, overall hospice penetration is currently about 40 percent.
Like the rest of the state, Covenant has increased its utilization in the past few years. The licensing of Emerald Coast in SA 1 created a competitive environment with Covenant and resulted in increased admissions and penetration in SA 1. The same result was achieved in SA 2A when Covenant was licensed to serve all of SA 2A in competition with Emerald Coast.
In contrast, BBH has been the sole provider in SA 2B, which has experienced a penetration rate gap that has persisted
over a seven-year period. For the batching cycle at issue here, SA 2B has one of the lowest penetration rates (29 percent) in the state, ranking 26th out of 27 SAs.
In the instant case, AHCA calculated a net numeric need under Rule 59C-1.0355, Florida Administrative Code, of 351, which exceeds the need threshold of 350, and indicates the need for one additional hospice program in SA 2B. The rule's methodology takes into account the demographic differences between SA 2B and the rest of the state.
With a projected need of 1,209 patients for the planning horizon at issue here and only 858 BBH admissions for the relevant historical period, BBH would have needed 41 percent more admissions to close the penetration rate gap regardless of the fact that there is only a difference of one between 350 and
351. It is clear that the net numeric need here correlates to the local reality.
Special Circumstances
Rule 59C-1.0355(4)(d), Florida Administrative Code, identifies the following special circumstances that may merit approval of a new program even if there is no published need. These special circumstances are as follows: (a) that a specific terminally ill population is not being served; (b) that a county or counties within the SA of a licensed hospice program are not being served; and (c) 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.)
AHCA did not review Covenant's application to determine whether a CON should be awarded based on special circumstances. Instead, AHCA gave preliminary approval to the proposed project based on the publication of need.
However, AHCA's State Agency Action Report (SAAR) indicates that the agency considered and did not agree with Covenant that Madison and Taylor Counties were "underserved." AHCA also determined that there was a need for educational outreach to non-cancer patients in SA 2B and conditioned the award of the CON on Covenant's provision of that service.
During the hearing, Covenant presented persuasive evidence that underserved non-cancer patients and underserved rural populations in SA 2B constitute special circumstances within the meaning of Rule 59C-1.0355(4)(d), Florida Administrative Code. The special circumstances would have warranted approval of Covenant's application in the absence of numeric need.
Non-Cancer Patients
Care to non-cancer patients has increased dramatically during the past 20 years. Generally, non-cancer patients comprise more than half of all hospice patients. The SA 2B penetration rate of non-cancer patients, under age 65 and
age 65 and over, lags behind the overall state penetration rate. This is especially significant because the non-cancer deaths rates are higher in the panhandle of Florida than for the State as a whole.
For the batching cycle applicable to this proceeding, the penetration rate gap in SA 2B was most remarkable for elderly non-cancer patients, who make up 69 percent of the net need of 351 patients. The current overall state penetration rate for non-cancer patients, age 65 and older, is 32 percent. In SA 1 and SA 2A, the current overall state penetration rate for non-cancer patients, age 65 and older, is 27.7 percent and
26.6 percent respectively. In SA 2B, the current penetration rate for non-cancer patients, age 65 and older, is 20.1 percent, indicating a gap of 11.9 percent with respect to the state penetration rate. The lack of availability of hospice services in SA 2B nursing homes is another indication of the underserved need of elderly non-cancer patients.
Underserved Rural Populations
SA 2B is underserved as a whole relative to the rest of the state. All counties in SA 2B, except Jefferson County, had a penetration rate lower than the state average. Comparing the overall penetration rate for SA 2B to the penetration rate for each county in the SA shows that Madison and Taylor counties are significantly underserved.
Based upon the most recent data available from the United States, Health Care Finance Administration, there is a
30 percent penetration rate for SA 2B, but for Madison and Taylor counties, it was about 16 percent. For non-cancer diagnoses, the penetration rate was only 8 percent for Madison and Taylor counties, well behind the SA 2B's averages for
non-cancer diagnosis. Covenant Hospice Programs
Quality of Care
Covenant's application is in conformance with the requirements of Rule 59C-1.0355(3)(a), Florida Administrative Code, which provides that the proposed program shall comply with the quality of care standards described in Chapter 400, Part VI, Florida Statutes, and Rule 58A-2, Florida Administrative Code. The best evidence of Covenant's ability to provide quality of care is the finding of no state or federal deficiencies on the three most recent State of Florida compliance surveys.
On a yearly basis, Covenant develops a Performance Improvement Plan (PIP) based on its ongoing continuous quality improvement program. The PIP ensures Covenant's ongoing compliance with all state and federal regulations as well as the standards established by JCAHO and NHPCO.
Covenant also reviews and updates its corporate and clinical policies and procedures to ensure on-going quality
improvement. These policies and procedures are consistent with all state and federal regulations and professional guidelines. The policies and procedures are reasonable and appropriate for all operations, including medical and nursing care.
Medical Direction and Medical Quality of Care
Covenant's medical director is qualified to take an examination for certification in hospice palliative care. He has completed the American Medical Association's curriculum in Education for Physicians in End-of-Life Care. He is
board-certified in geriatrics.
In addition to the medical director, Covenant employs physicians as adjunct medical directors and branch office physicians. These doctors provide direct patient care when they make home and nursing home visits. They serve as consultants to IDTs or patients' attending physicians. Covenant's physicians also serve on its quality improvement committee and review records to ensure quality of care.
Covenant provides access to physician care for all hospice patients. Physician coverage is available for all patients, 24 hours per day, seven days a week, as appropriate. Covenant physicians follow its clinical procedures manual, which is in conformance with all state and federal regulations and professional guidelines.
Covenant provides high quality pharmaceutical services. The policies and procedures related to these services are appropriate to ensure compliance with all state and federal regulations.
Partners in Care Program
Covenant developed its PIC program in part to ensure appropriate education of its own staff and the community in general. However, the main purpose of the program is to educate and train the staff of nursing homes and other health facility settings. The PIC program promotes continuity and quality of care for patients in such facilities, which house about 47 percent of Covenant's patients.
The PIC program is based on a procedures manual known as "The Grey Book." The procedures manual is a toolbox that facility staff can reference at any time. The manual has been instrumental in making the PIC program so successful in addressing the needs of critical patients in extreme pain and discomfort associated with certain terminal illness.
Education and Outreach
Covenant has a comprehensive education program. It develops an education calendar on a yearly basis and presents extensive educational programs to all applicable audiences.
Covenant's education program includes a clinical education program that is designed to ensure high professional
competency for nurses, social workers, home health aides, nursing aides, and other health care providers. For example, Covenant's program for nurses requires them to demonstrate "knowledge based competencies" within the first 30 days of employment and on an on-going basis. The competencies are important in achieving high quality of nursing care.
Covenant has produced its own comprehensive educational modules on an array of topics. They are "in-depth" courses, not "Hospice 101" or survey courses. They deal with such issues as advanced pain management, advanced symptom management, physiology of dying, ethical issues in the end-of- life care, just to name a few.
Many of the advanced training modules are approved by various professional organizations for continuing education credit, including continuing medical education credits. The use of the modules will facilitate hospice utilization and penetration wherever they are used.
Another facet of Covenant's education and outreach program is its Patient and Family Handbook that Covenant gives to patients and their families. The handbook provides extensive resources and guidelines to patients and their caregivers. The handbook is clinically appropriate to ensure high quality of care.
Covenant's education program also includes extensive and intensive community education. This part of the program increases hospice utilization or penetration by ensuring that the community knows about the availability of hospice services and understands the benefits of those services.
Covenant has specific education materials directed to non-cancer diagnoses to ensure access to hospice patients with non-cancer diseases. The materials assist clinicians in determining when a terminally ill non-cancer patient is appropriate for hospice care. They provide the community with knowledge about the availability of hospice care for non-cancer patients. The use of the materials results in greater non- cancer admissions to hospice.
In fact, Covenant provides educational programs for physicians to assist them in caring for all types and ages of hospice patients. Referring physicians routinely receive newsletters, written and edited by Covenant's medical staff. At times, Covenant provides one-on-one education of physicians,
in-service training, and other modes of education as appropriate.
Covenant maintains medical advisory groups in each area office. These groups meet on a regular basis for education and to provide participants input and feedback to Covenant.
Covenant has developed educational materials in Spanish and Vietnamese in order to facilitate access to those minority populations. Covenant uses its community support centers to distribute the materials.
In contrast, BBH provides far fewer educational opportunities to the community than Covenant. In some months, BBH only provided four or five programs. In other months, none of BBH's programs were provided by trained clinicians. Most of BBH's programs were introductory, not advanced or continuing education level presentations directed to health care professionals. BBH's education programs are insufficient to create adequate public and professional awareness of hospice services in an eight-county area. It appears that BBH has increased the number of programs it presents on a monthly basis after Covenant submitted its application.
Rural populations often have religious or conservative belief systems that cause them to be reluctant to accept hospice services. Such barriers to access for hospice services can be overcome by sufficient and appropriate education and outreach to the community and to physicians or other health care providers. Competition of an additional hospice in SA 2B will stimulate additional education and outreach, resulting in higher levels of hospice utilization and penetration rate.
Volunteer Program
State and federal regulations require a hospice to involve community volunteers in the delivery of hospice services. Hospices use volunteers for a variety of functions including, reading to patients, transportation, housekeeping, and office administrative support.
Covenant has developed a comprehensive and high quality volunteer program based upon excellent recruitment and training of volunteers. In an attempt to encourage more patients to remain at home for hospice care, the Escambia County Council on Aging reimburses Covenant for care-giver training and in-home respite care, charged on an hourly basis.
Currently, Covenant has over 850 active, trained volunteers. Between 2/3 and 3/4 of Covenant's volunteers come from patient families and friends. Covenant's volunteer training program and manual comply with all state and federal regulations and professional guidelines.
Faith in Action Programs
Covenant has a special volunteer program referred to as the Faith in Action Program. Covenant developed the program in conjunction with initial Robert Wood Johnson Foundation grant funding. Currently, Covenant provides the service on an unfunded basis. The program sponsors activities to involve faith communities in the care of terminally ill members. Thus,
the program enhances access to hospice care by members of the faith communities.
Covenant also has established a Faith in Action AIDS Program. The program focuses on the needs of AIDS patients and their families. The educational component of the Faith in Action AIDS program teaches faith communities about the needs of HIV and terminally ill AIDS patients, including children.
The Faith in Action AIDS program provides a high level of community service to the AIDS community. It links persons living with HIV to faith communities. It directly addresses many practical needs of individuals with HIV and AIDS. The program was initially grant-funded but is now supported by Covenant as a charitable service.
The Faith in Action AIDS program utilizes approximately 75 trained volunteers. Currently the program is based in Pensacola and Escambia Counties and primarily serves those areas. However, Covenant is expanding the program through its SAs.
Covenant also has developed a clinical AIDS program as a dedicated hospice program. Covenant provides excellent care and comprehensive services to hospice patients with AIDS and their loved ones through this special program.
Chaplain Services
Covenant's chaplains function as core members of the IDTs. They provide spiritual care to patients and their families, 24 hours per day, seven days per week. The chaplains are employees of Covenant who receive comprehensive hospice training. This ensures high quality services and proper professional development.
For the most part, Covenant's chaplains are ordained ministers with five years of experience and a masters of divinity degree. Covenant's 14 full-time or part-time chaplains are distributed across Covenant's SAs. The program meets state and federal regulations and professional guidelines.
Social Work and Bereavement Services
Covenant's social work begins at admission with comprehensive assessments of the patients' and their families' needs. Bereavement services focus on the family and loved ones during the terminal illness and after the death of the patient. Both of these services provide extensive education to patients, their families, and the community.
Covenant's social work and bereavement programs provide educational seminars and workshops in the community on an unfunded basis. Social workers and bereavement specialists are required to complete competency-based instruction in hospice social work. Covenant's corporate and clinical policies and
procedures related to social work and bereavement ensure high quality of care. They meet or exceed all state and federal regulations and professional guidelines.
Covenant's social workers are core members of the IDTs. The social worker networks with other members of the team to plan and implement services. They help the patient set and achieve goals.
Children's Services
Covenant provides children's services through a program that is dedicated to terminally ill children and their families or to children of terminally ill parents or grandparents. The children's program includes unfunded bereavement services even if the bereavement in not associated with a hospice patient.
Covenant has been selected to participate in one of eight demonstration projects for children's hospice services known as Program for All Inclusive Care for Children (PAC). The PAC project is a Medicaid waiver program. It will allow hospices to interact with dying children and their families earlier than would be otherwise allowed for enrollment in hospice based upon Medicaid program requirements. Participation in the project is unfunded.
Covenant's children's program is comprehensive and provides high quality of care. It meets or exceeds all state and federal regulations and professional guidelines.
Competition and Impact of the Proposed Project on the Existing Provider
Covenant's application is in conformance with the requirements of Section 408.035(9), Florida Statutes. The proposed project will foster competition and promote quality and cost-effectiveness. The effect of the competition will have a positive impact in the SA and increase hospice penetration, particularly for elderly patients with non-cancer diagnoses and rural populations, due in part to Covenant's comprehensive community education programs.
There is no merit to the argument that SA 2B's penetration rates and population size are not sufficient to support two hospices. BBH's own strategic plan shows that its admissions and census will increase even if Covenant is approved. In fact, since AHCA preliminarily approved Covenant's application, BBH has taken numerous steps to increase its referrals and its community outreach and education. These actions show how the mere threat of competition has improved BBH's services.
BBH has set a goal of increasing its referrals by 50 percent. Approval of the application will have an adverse
impact on BBH only if it does not appropriately respond to the presence of a new provider in the area.
Based upon data presented by BBH, its net assets have increased each year. At historical admissions and census levels below that projected by BBH, it actually made money and had an increase in net assets at the end of each year.
There is no persuasive evidence that BBH will lose patients days or that its admissions will decrease if Covenant's application is approved. The most credible data indicates that BBH will have at least 970 admissions in year zero, 1,085 admissions in year one, 1,202 admissions in year two, and 1,219 admissions in year three. Covenant will have 0 admissions in year zero, 109 admissions in year one, 240 admission in year two, and 305 admissions in year three. By year three, BBH will still be the dominant provider in SA 2B with 75 percent of the market share.
When AHCA approved Emerald Coast for an additional hospice program in SA 1, Covenant undertook certain actions to strengthen its position in the community and to become an even better and more effective provider of hospice services. As a result of these and other actions, the addition of a competitor in SA 1 did not have an adverse impact on Covenant. To the contrary, Covenant grew, increasing its admissions, referrals, fundraising, and volunteer participation.
Competition from Emerald Coast brought heightened community awareness about the benefits of hospice services to
SA 1. Because Covenant increased community education concurrent with the development of the new hospice program, there was no resulting confusion over the identities of the two programs.
Nor did the approval of Hospice of the Emerald Coast erode the economic base of Covenant because Covenant took steps to strengthen its referral base.
Emerald Coast did not have an office in Pensacola, or within sixty miles of Pensacola, until approximately May 2002. The admissions and census of Emerald Coast have grown since establishing that office.
The change in the competitive environment in SA 1 resulted in increased admissions and penetration in that SA. Covenant increased its admissions and penetration in SA 2A after Covenant AHCA authorized Covenant to serve all of that SA. The same can be expected in SA 2B if AHCA approves Covenant's application to provide hospice services in SA 2B.
With Covenant’s approval for an additional hospice service in SA 2B, BBH can and will be expected to do the same kinds of things that Covenant did in SA 1 to preserve market share. All of the things that Covenant can do to increase penetration or obtain market share, BBH can do to preserve market share. These activities include providing education and
outreach, developing a referral base, and developing contacts with physicians, hospitals, nursing homes, and other health care facilities. In performing these activities, BBH has a competitive advantage in SA 2B based upon its experience, history, and reputation in the SA. For example, BBH already has contracts with all hospitals and nursing homes in SA 2B.
BBH was financially viable at a service volume of 34,404 patient days in 1997, and at a volume of 35,721 patient days in 1999. Big Bend has been financially viable at substantially lower volumes than it will have in the future, even if Covenant is approved and operational in SA 2B.
Approval of Covenant will not have an adverse impact on the ability of BBH to recruit and retain sufficient numbers of volunteers in SA 2B. BBH currently does not have difficulty recruiting and retaining sufficient numbers of volunteers, which evidences a substantial pool of volunteers in the SA. In addition, Covenant will draw its volunteers primarily from persons served by it, families and friends of Covenant patients. Covenant is willing to work with BBH cooperatively to ensure training and recruitment of sufficient numbers of volunteers.
Approval of Covenant in SA 2B will not have an adverse impact on the ability of BBH to effectively raise funds. In SA 1 and SA 2A, Covenant has tailored its fundraising activities so that they do not conflict with Emerald Coast's
efforts to raise funds. Covenant and Emerald Coast continue to grow their fundraising in both SAs.
The fundraising pool in any SA is elastic and can be expanded. Hospice in particular opens up a new pool of potential donors. The additional education and community outreach provided by Covenant will increase hospice penetration, thereby increasing the pool of hospice donors. Both hospices can increase the fundraising base by utilizing grant revenue.
Covenant is stronger today than it would have been without competition. As friendly competitors, Covenant and BBH will be able to engage in collaborative activities that benefit both hospices, including education and fundraising.
Dale Knee, Covenant's CEO, did not always believe that competition would foster such benefits. In 1996, Emerald Coast, located in Panama City, Florida, applied for and was preliminarily approved for a CON in SA 1, which includes the Pensacola home office of Covenant. Mr. Knee testified extensively that the approval and development of another hospice in SA 1 would adversely impact Covenant and would not increase hospice penetration in SA 1. He now holds the opposite view based upon Covenant’s actual experience in a competitive environment.
Approval of Covenant in SA 2B will increase access to hospice services. It will have a positive impact on the quality
of care in the SA as utilization increases. This is consistent with the prior experience of Covenant.
Further, the approval of Covenant will result in substantial cost savings to the health care system generally. Hospice care is more cost effective and less costly than conventional medical care, such as the pursuit of curative or maintenance treatments provided by hospitals, nursing homes, home health agencies, and other settings. The approval of Covenant will result in an overall savings of approximately $1.6 million by Covenant's third year of operation. This is true even through the large majority of patient care is provided from fixed price government payer sources.
The approval of Covenant in SA 2B will make "continuous care" available to hospice patients. Continuous care is a required level of care under the Medicare conditions of participation. Continuous care is nursing care in excess of eight hours per day, sufficient to maintain the patient with critical needs at home.
BBH currently does not provide continuous care to its patients. Instead, BBH uses home health aides with nurses in attendance for shorter periods of time that is billed to Medicare as routine home care. When a patient needs continuous care to remain at home, BBH places the patient in a hospital or its in-patient facility. Upon approval and initiation of
operations, Covenant will make continuous care available to the hospice patients, improving quality of care and continuity of care in SA 2B.
Financial Feasibility and Financial Schedules and Projections Schedule 1, Estimated Project Costs.
Schedule 1 depicts the estimated project costs for the proposed project. The total estimated project cost is
$82,648. The costs are based substantially on the start up experience of Covenant in its Dothan, Alabama, office.
The $20,000 in cost proposed for recruitment and training of staff is reasonable and appropriate. The amount includes advertising for staff positions, start-up salaries, rent, utilities, and such expenses for a month of start-up operations. The projections for recruitment and training are consistent with prior start-up experience of Covenant.
Covenant provided sufficient costs to hire an office manager for the Tallahassee office 30 days prior to opening. This is a reasonable planning assumption and would be sufficient to provide training and orientation. But this may not be necessary, because Covenant may transfer a manager from an existing office.
Prior to initiation of operation, Covenant would need to hire an office manager, a registered nurse, a home health aide, a social worker, an administrative assistant, and a
community educator. A medical director would not be necessary initially for the Tallahassee office prior to start-up.
Start-up on the Dothan, Alabama, office entailed a different process than starting up a new office in Florida. In Alabama, the office had to become separately licensed by the State of Alabama. The next step in the process was for the office to apply for Medicare certification, which required Covenant to be admitting and treating Medicare eligible patients. This accounts for the fact that Dothan had a longer pre-opening period that is projected for the Tallahassee office.
The initial Dothan staff spent a full week at Covenant in orientation. During the next five weeks the Dothan office manager worked in Covenant's Panama City, Florida, awaiting certification for Dothan.
The Dothan start-up provides insight to Covenant’s success in initiating hospice start-up such as that proposed for SA 2B. Covenant began in Dothan by educating the medical community and others, particularly in the rural communities, where Covenant encountered a lack of understanding of hospice and some reluctance to acceptance of hospice services.
Covenant's program in Dothan has shown a steady increase in census. This is true even though three other hospices serve the same service area. The census of the other
three hospices has continued to increase as well, due to increased public awareness of hospice care generally.
The $5,000 in Covenant's proposed costs for moveable equipment is reasonable, appropriate, and adequate. Covenant generally relies on donated equipment to meet such needs. Covenant already has on-hand equipment for use in SA 2B. This is consistent with prior start-up experience of Covenant, including the start-up of the Dothan office.
Covenant intended the proposed costs for movable equipment in the application to cover incidental items only. The phone system for the Tallahassee office is already in inventory, and no expenditure would be necessary for a phone system.
At the time of the application, Covenant had an extensive inventory of donated furniture and other items that could be used in the Tallahassee office. Covenant made a planning assumption that at the time of implementation, sufficient donated items would be on hand to furnish and equip the Tallahassee office. The expectation and assumption that furniture and other furnishing sufficient for the Tallahassee office would be available was reasonable based on the specific prior experience of Covenant.
The line item of $5,000 for moveable equipment was placed in the budget as a contingency for incidental items, as
needed. Donated equipment is not included in Schedule 1, Line 23, because it is not required to be included.
Overall, the amounts projected on Schedule 1 of the application are reasonable and appropriate. They are conservative estimates and sufficient to cover all anticipated and expected costs.
Schedule 2, Listing of Capital Projects.
Schedule 2 sets out a complete listing of all projected and proposed capital projects planned by Covenant. The schedule completely and accurately depicts all such projects and expenditures that were planned, approved, or under way when Covenant submitted its application. Covenant's audited financial statements and balance sheets indicate that it has sufficient resources to fund the proposed project without adversely affecting Covenant's ability to fund other projects and expenditures.
Schedule 3, Source of Funds.
Covenant has available cash and other funding sources sufficient to fund the proposed project. There are no other demands on the applicant’s available cash. The information depicted in Schedule 3 is reasonable and appropriate.
Schedule 4, Utilization of Existing Beds.
Schedule 4 is not applicable to the application of Covenant.
Schedule 5, Projected Utilization.
The utilization projections set out in Covenant's Schedule 5 are reasonable and appropriate. The projections of patient days projections are obtainable and achievable.
Schedule 6, Staffing.
The staffing and FTE’s proposed by Covenant on Schedule 6A of the application for the first year and the second year of operations are reasonable and appropriate. The staffing projections are sufficient to ensure quality of care.
The projections are consistent with the prior start- up experience of Covenant. They are based on a reliable computer model used by Covenant to staff its operations and administration. The staffing model generally supports staffing ratios for all disciplines, which meet or exceed guidelines established by the NHPCO.
The salaries projected also were developed based on the actual experience and mid-range salaries of Covenant. The salaries are sufficient to recruit and retain sufficient numbers of qualified staff at the salary levels indicated in
Schedule 6A.
Covenant has been able to recruit and retain sufficient numbers of qualified staff, including registered nurses and licensed nurses, in its existing SAs at the salary levels indicated. The proposed nurse salaries are approximately
equivalent to salaries paid in SA 1, SA 2A, and SA 2B, including the salaries paid in hospitals.
Covenant's ability to recruit and retain nurses at the proposed salary levels is corroborated by the fact that some of the registered nurse salaries are higher in the Pensacola, Florida, metropolitan service area (MSA) than in the Tallahassee, Florida, MSA. Even with higher average salaries in Pensacola than in Tallahassee, Covenant has been able to recruit and retain sufficient numbers of registered nurses at the proposed salary levels.
The ability of an organization to recruit and retain sufficient numbers of qualified staff is a function of several factors, including work environment, reputation of the employing organization, satisfaction and morale level of the staff, opportunity for staff development and growth, flexibility and respect of the organization for its staff and, of course, salary and benefits. Many such factors attract nurses and other staff specifically to Covenant.
If approved in SA 2B, Covenant will not have a significant adverse impact on the ability of BBH to recruit and retain sufficient numbers of qualified staff. This is true because Covenant does not require that nurses have hospice experience. However, Covenant will recruit from the same pool of nurses and thus compete in its recruiting with hospitals,
home health agencies, doctors' offices, and any other organization that employs nurses, including BBH. Any adverse impact on BBH's ability to recruit and retain nurses will be minimal.
Further Covenant will recruit its staff across the entire eight-county area that comprises hospice SA 2B. Covenant will fill approximately 3.5 FTEs by the end of the first year. Those numbers are not sufficient to have an adverse impact on BBH's ability to recruit and retain sufficient numbers of staff, including nurses. Nor will Covenant have an adverse impact on the staffing costs in SA 2B by driving up staffing costs.
It is undisputed that there is a shortage of nurses nationwide. Covenant will be able to recruit and retain sufficient numbers of skilled staff, including nurses, in SA 2B, notwithstanding that shortage, in part due to the positive work environment that it will provide.
Schedules 7A and 8A, Projected Revenues and Expenses.
Schedule 7A of the application depicts projected revenue for the proposed project. The starting point for the revenue projections is the utilization and patient day projections for the first two years of operation, set out in Schedule 5 of the application. The revenue projections are based upon an established rate for levels of care and payer
source. They are based on obtainable volumes and payer source projections.
Covenant used a reliable computer model in making the revenue projections. Covenant also projected revenues in a manner consistent with its experience. The overall revenue projections in Schedule 7A, the assumptions underlying their calculations, and the methodology used in making the projections are reasonable, appropriate, and conservative.
Schedule 8A sets forth the projected income and expenses for the proposed project. Covenant used the same computer model discussed above and its experience to project income and expenses. The bottom line is that the project is expected to have a net operating surplus of $23,695 in the second year of operation.
The income and expense projections, their underlying assumptions such as inflation factors, and the methodology used in making the calculations are reasonable, appropriate, and consistent with Covenant's experience. They are conservative in that they underestimate income and overestimate expenses.
Of particular note is that the proposed non-operating revenues for year one and year two include grant revenues, donations, and fundraising. Additionally, property expenses include the cost of rent. Regarding health insurance costs, Covenant has experienced substantial increases in health care
insurance premiums. However, health insurance premiums are a component of benefits, and Covenant’s overall benefit rates are conservative, sufficient, and reasonable. Finally, the projected general and administrative costs and ancillary costs, including contractual costs, are reasonable, appropriate, and conservative.
Immediate or short-term financial feasibility is the ability of the applicant to secure the funds necessary to capitalize and operate the proposed project. Schedules 1, 2, and 3 and the audited financial statements of Covenant demonstrate that it has sufficient funds and cash-on-hand to fund the project. The capital projects listed on Schedule 2 do not adversely affect the ability of Covenant to fund the project, nor does the project adversely affect the ability of Covenant to carry out all projects listed on Schedule 2 of the application. Therefore, the project is financially feasible in the short term.
Long-term financial feasibility is the ability of the project to reach a break-even point within a reasonable period of time and at a reasonable achievable point in the future. Based upon a review of the reasonableness of the volume and patient day projections, the staffing and income and expense projections, it was established by competent substantial
evidence that the proposed project is financially feasible in the long term.
It is important to note that the reasonableness of the income and expense projections depicted on Schedule 8A of the application, which result in a second year net operating surplus, are driven by the admissions and patient day projections. Persuasive evidence indicates that Covenant's admissions and patient day projections are reasonable and achievable.
Financial feasibility analysis is different for hospices than for other organizations because hospices are not- for-profit entities. They rely to a great extent on grants, donations, and other non-operating revenue to sustain operations. Covenant has an excellent record in regard to fund- raising. It has strong reserves of ready cash and over
$1 million in investments. This project would be financially feasible even if it did not show a net profit in the first two years of operation. Covenant has the ability to support the project, and the commitment to do so, such that the program would continue to operate as a viable operating entity.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this
proceeding. Sections 120.569, 120.57(1), and 408.039(5), Florida Statutes.
BBH has standing to challenge AHCA's preliminary approval of Covenant's application. Section 408.039(5)(c), Florida Statutes.
Covenant has the burden of proving by a preponderance of the evidence that its application for an additional hospice program in SA 2B is, on balance, in conformance with applicable rule and statutory criteria. Boca Raton Artificial Kidney Center, Inc. v. Department of Health and Rehabilitative
Services, 475 So. 2d 260 (Fla. 1st DCA 1985); Humana, Inc. v. Department of Health and Rehabilitative Services, 469 So. 2d 889 (Fla. 1st DCA 1985). The weight accorded each criterion depends is not fixed but depends on the circumstances of the case.
Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So. 2d 83 (Fla. 1st DCA 1985); Department of Health and Rehabilitative Services v. Johnson and Johnson Home Health Care, Inc., 447 So. 2d 261 (Fla. 1st DCA 1984).
Motions in Limine
On May 21, 2002, BBH filed a Motion for Continuance or, in the Alternative, Motion in Limine. This motion sought a continuance of the instant proceeding pending resolution of a challenge to Rule 59C-1.0355(4)(d), Florida Administrative Code.
In the alternative, BBH sought to exclude evidence at hearing of any "special circumstances" not specifically set forth in
Rule 59C-1.0355(4)(d), Florida Statutes, which provides as follows:
Approval Under Special Circumstances. In the absence of numeric need identified in paragraphs (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.
On June 7, 2002, BBH filed a second Motion in Limine, which sought to exclude evidence relative to "not normal circumstances" that constitute alleged impermissible application amendments under Rule 59C-1.010(3)(b), Florida Administrative Code, which states as follows in pertinent part:
(b) . . . Subsequent to an application being deemed complete by the agency, no further application information or amendment will be accepted by the agency.
Specifically, BBH seeks to exclude evidence related to the following as impermissible special circumstances and/or impermissible amendments: (a) the existence of racial or ethic
underserved populations; (b) that nursing home resident hospice patient's needs are not adequately served; (c) that hospice patients who require continuous care are not having their needs adequately served; (d) that adequate care is not provided to all hospice patients regardless of their ability to pay; and
that palliative chemotherapy and palliative radiation is not being made available to BBH's patients.
BBH's motions in limine are denied for several reasons. First, Rule 59C-1.0355(4)(d), Florida Administrative Code, does not prohibit applicants from demonstrating any special circumstances when the agency has identified a numeric need.
Second, the special circumstances rule requires applicants to demonstrate at least one of the three listed reasons for such circumstances. However, it does not prohibit applicants from showing that other "not normal circumstances" exists in the SA.
Third, the special circumstances rule does not require an applicant to show that the needs of a specific population or a county are "unserved" or totally unmet. To the contrary, an applicant is entitled to show that an underserved population or that an underserved county warrant consideration as under the rule.
These interpretations of Rule 59C-1.0355(4)(d), Florida Administrative Code, are consistent with AHCA's interpretations and are, therefore, entitled to great weight. Orange Park Kennel Club vs. State of Florida, Department of Business Regulation, 644 So. 2d 574 (Fla. 1st DCA 1994); State Board of Optometry vs. Florida Society of Opthamology, 538 So. 2d 878 (Fla. 1st DCA 1988). Accordingly, the special circumstances rule does not render the evidence at issue here inadmissible.
Fourth, Rule 59C-1.010(3)(b), Florida Administrative Code, does not prevent an applicant from presenting evidence not specifically set forth in an application when the evidence:
(a) is relevant to rule and statutory requirements; (b) is revealed for the first time during discovery; (c) is not a significant or material change to an application or is not a change to the proposed program; and (d) is the type of evidence routinely presented to compare an applicant to an existing provider.
Maple Leaf of Lee County Health Care v. Department of Health Care and Rehabilitative Services, 601 So. 2d 1238 (Fla. 1st DCA 1992); Manor Care, Inc. v. Department of Health and Rehabilitative Services, 558 So. 2d 26 (Fla. 1st DCA 1989); and Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So. 2d 700 (Fla. 1st DCA 1985), do
not require a different result. The alleged impermissible amendments at issue here do not involve changes to the proposed project. Instead, they would, if found to have merit, show the differences in the programs offered by Covenant and BBH and would reinforce Covenant's assertion that there is a need for another hospice in SA 2B, as subsets of the special circumstances set forth in the application or in support of certain statutory and rule criteria.
In fact, BBH and Covenant took advantage of every opportunity during the hearing to present evidence describing and comparing their respective programs--Covenant to show need and BBH to show a lack thereof. For example, Covenant and BBH presented evidence about their Faith in Action programs and their clinical procedures manuals. BBH does not complain that this evidence constitutes impermissible amendments.
In this case, evidence relating to the existence of racial or ethnic underserved populations and evidence relating to the needs of nursing home resident patients are subsets of the special circumstances set forth in the application as follows: (a) Madison and Taylor Counties are generally underserved in SA 2B; and (b) The needs of elderly non-cancer patients are not being met. The evidence to which BBH objects is, therefore, admissible even though, in light of other
evidence presented, it is unnecessary to rely on the evidence to support a finding that special circumstances exist.
Evidence relating to BBH's failure to provide continuous care is also admissible. This evidence does not constitute a special circumstance but it does serve to compare the programs of the parties. It does not represent a change to the proposed program because Covenant's application clearly states that Covenant will provide continuous care as defined by Medicare. The evidence shows that Covenant will meet a need for a Medicare reimbursable service that is not otherwise available, thereby enhancing access to services for patients in SA 2B pursuant to Sections 408.035(2) and 408.035(7), Florida Statutes. In any event, the application warrants approval without consideration of this evidence.
The same is true about evidence relating to BBH's alleged failure to provide care regardless of ability to pay and evidence relating to BBH's alleged failure to provide palliative chemotherapy and radiation. Evidence on these factors does not constitute special circumstances but compares the programs pursuant to Sections 408.035(2) and 408.035(7), Florida Statutes. Here again, the application should be approved without regard to either of these factors. However, as it turns out, there is no persuasive evidence to support them.
Lastly, evidence related to BBH's failure to provide sufficient community education is admissible. The application and the SAAR clearly contemplate that SA 2B can benefit from increased community education about services to non-cancer hospice patients. AHCA accepts Covenant's offer to condition its CON on the provision of this service. Persuasive evidence supports a finding that there is a need for increased community education and outreach, especially in regards to hospice services for elderly non-cancer patients.
BBH's Memorandum of Law
In its Memorandum of Law, BBH asserts that evidence related to Covenant's PAC program, to the "service gap" in
SA 2B, to underserved patients in Franklin County, and to BBH's Caring Tree program are impermissible application amendments.
BBH's argument is without merit for reasons similar to those discussed above.
BBH's Memorandum of Law also objects to certain exhibits and testimony presented during the hearing. The basis of the objections is that Covenant's witnesses lacked the predicate knowledge or experience to introduce the exhibits or to testify about a particular subject.
Anthony Martinez is Covenant's Director of Volunteer Services and qualified as an expert in that area. He has sufficient personal knowledge and expertise to testify about
Covenant's Faith in Action programs and the brochure that Covenant uses to promote that program.
Charles Lee is Covenant's Vice-President of Support Services and qualified as an expert in hospice education and outreach. He has sufficient personal knowledge and expertise to testify about Covenant's education programs, including the ones he developed and others that Covenant utilizes. He is qualified to testify about Covenant's educational materials, training modules, and community analysis and development plan (created by his department) even though he did not personally participate in their creation. He is qualified to testify about BBH's education program and Faith in Action AIDS program based on his analysis of documents produced by BBH during discovery.
Mr. Lee's testimony about the documents, or the scope and quality of the educational programs, do not constitute hearsay.
Dale Knee, Covenant's CEO, is qualified as an expert in hospice and health care administration. His personal experience and expertise in these areas qualified him to answer questions about the cost of recruitment and training of staff associated with the proposed project and Covenant's prior start- up hospice projects. Information prepared and furnished to him by his employees does not constitute hearsay.
Finally, Janet Wilkie is Covenant's Director of Special Programs and qualified as an expert in social work,
bereavement, chaplain services, hospice AIDS programs, and hospice children's services. Her personal experience and expertise in these areas qualified her to answer questions about materials produced by BBH during discovery that relate to its Caring Tree program.
Covenant's Application
AHCA published a fixed need pool determination indicating that there is a need for an additional hospice program in SA 2B. A separate Recommended Order in DOAH
Case No. 01-4415, issued contemporaneously with the Recommended Order in this case, validates that determination.
However, even if there had been no fixed need pool projection of 351, the greater weight of the evidence presented in this case indicates that AHCA should approve Covenant's application. Covenant met its burden of proving that the application is in conformance with statutory and rule criteria and that there is a need based on special circumstances pursuant to Rule 59C-1.0355(4)(d), Florida Administrative Code, set forth above.
Persuasive evidence shows that elderly non-cancer patients and the rural populations of Madison and Taylor Counties are underserved. Covenant is committed to serve those populations and counties, beginning with the establishment of a branch office in Perry, Taylor County, Florida, within the first
two years of operation. Covenant is also committed to establish a special non-cancer outreach program to educate the medical community on the effectiveness of hospice care for patients with non-cancer diagnoses. Covenant already has a comprehensive community education and outreach program that will increase utilization and penetration in general.
It is not necessary to consider any other alleged special circumstances to reach the conclusion that there is a need for a new hospice in SA 2B regardless of numeric need. The fixed need pool projection comports with the local reality.
Chapter 400, Part VI, Florida Statutes, and Sections
408.035 and 408.037, Florida Statutes, generally set forth the applicable statutory criteria. Chapters 58A-2 and 59C-1, Florida Administrative Code, contain the applicable rule criteria.
The proposed project conforms to the statutory and rule criteria for reasons which include, but are not limited to, the following: (a) The application is consistent with the applicable local health plan; (b) Covenant has a record of providing quality of care and is capable of doing so in SA 2B;
(c) Covenant will increase availability and utilization of services and enhance access to services, such as Medicare reimbursable continuous care, in SA 2B; (d) Covenant has a history of providing care to Medicaid and medically indigent
patients without regard to their ability to pay; (e) Covenant provides substantial unfunded and unreimbursed care to the community and will do so in SA 2B; (f) There is a need for services that are not reasonably and economically available in adjoining SAs; (g) Covenant demonstrates that it has sufficient funds for capital and operating expenses and sufficient other resources, including the ability to recruit and train qualified staff, to accomplish its goals in relation to the proposed project; (h) Covenant demonstrated the immediate and long-term financial feasibility of the proposed project; (i) Covenant has sufficient support for the proposed project within the SA; and
(j) Covenant's program will not adversely impact the cost of services in the SA and any impact on BBH's ability to recruit and retain nurses will be minimal.
Finally, Covenant will provide competition and patient choice where none presently exists. The proposed program may not exert a downward pressure on the cost of services reimbursed by government payers but competition will result in savings to the health care system.
Covenant clearly established that it is, on balance, in conformance with the statutory and rule requirements. The application should be approved.
Based on the foregoing Findings of Fact and Conclusions of Law, it is
RECOMMENDED:
That AHCA should grant Covenant a CON to establish an additional hospice program in SA 2B.
DONE AND ENTERED this 7th day of November, 2002, in Tallahassee, Leon County, Florida.
SUZANNE F. HOOD
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 7th day of November, 2002.
COPIES FURNISHED:
Michael D. Mathis, Esquire
Agency for Health Care Administration 2727 Mahan Drive
Fort Knox Building, Suite 3431 Tallahassee, Florida 32308-5403
J. Robert Griffin, Esquire
J. Robert Griffin, P.A. 2559 Shiloh Way Tallahassee, Florida 32308
W. David Watkins, Esquire
R. L. Caleen, Jr., Esquire Watkins & Caleen, P.A. 1725 Mahan Drive, Suite 201 Post Office Box 15828
Tallahassee, Florida 32317-5828
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
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 |
|---|---|---|
| Jun. 20, 2005 | Opinion | |
| Mar. 19, 2003 | Agency Final Order | |
| Nov. 07, 2002 | Recommended Order | Competent, substantial evidence indicates that application for additional hospice program in service area 2B is in conformance with statutory and rule criteria and should be approved based on special circumstances, even with no fixed need pool projection. |
