STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
HOPE OF SOUTHWEST FLORIDA, | ) | |||
INC., | ) ) | |||
Petitioner, | ) | |||
) | ||||
vs. | ) | Case | No. | 03-4066CON |
) | ||||
AGENCY FOR HEALTH CARE | ) | |||
ADMINISTRATION, | ) ) | |||
Respondent, | ) ) | |||
and | ) | |||
) | ||||
HOSPICE OF SOUTHWEST FLORIDA, | ) | |||
INC., | ) ) | |||
Intervenor. | ) | |||
| ) |
RECOMMENDED ORDER
Pursuant to notice, a final hearing was held in this case on July 12-15, 18, 20-22, 26-28, 2005, in Tallahassee, Florida, before T. Kent Wetherell, II, the designated Administrative Law Judge of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: J. Robert Griffin, Esquire
J. Robert Griffin, P.A.
1342 Timberlane Road, Suite 102-A Tallahassee, Florida 32312-1762
For Respondent: Timothy B. Elliott, Esquire
Kenneth W. Gieseking, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3
Tallahassee, Florida 32308
For Intervenor: Robert D. Newell, Jr., Esquire
Newell & Terry, P.A.
817 North Gadsden Street Tallahassee, Florida 32303-6313
STATEMENT OF THE ISSUE
The issue is whether the Agency for Health Care Administration should approve Petitioner’s application for a Certificate of Need to establish a new hospice program in Service Area 8A.
PRELIMINARY STATEMENT
After the Agency for Health Care Administration (Agency) published a fixed need pool (FNP) identifying a need for zero new hospice programs in Service Area (SA) 8A for the April 2003 batching cycle, Hope of Southwest Florida, Inc. (Hope), timely advised the Agency of alleged errors in the FNP calculations.
After the Agency informed Hope that it did not intend to make any changes in the FNP calculations, Hope timely petitioned for an administrative hearing on that decision. Hope’s petition was referred to the Division of Administrative Hearings (DOAH) on May 29, 2003, where it was designated DOAH Case No. 03-2013.
The final hearing in DOAH Case No. 03-2013 was originally scheduled for October 14-17, 2003. However, by Order dated
September 8, 2003, the hearing was cancelled and the case was placed in abeyance pursuant to the joint motion of Hope and the Agency.
Hope filed an application for a Certificate of Need (CON) to establish a new hospice program in SA 8A in the April 2003 batching cycle. The Agency comparatively reviewed Hope’s application with the CON application filed by Heartland Hospice Services of Florida, Inc. (Heartland), which also sought to establish a new hospice program in SA 8A. The Agency published notice of its intent to deny both applications in the
September 12, 2003, volume of the Florida Administrative Weekly. Also in the April 2003 batching cycle, Hospice of Southwest
Florida, Inc. (HSWF) filed a CON application to establish a 12- bed freestanding inpatient hospice facility as part of its existing hospice program in SA 8A. HSWF’s application was reviewed simultaneously, but not comparatively, with the applications filed by Hope and Heartland. The Agency published notice of its intent to approve HSWF’s application in the September 12, 2003, volume of the Florida Administrative Weekly.
Heartland and Hope timely filed petitions for administrative hearing challenging the Agency’s denial of their respective CON applications. Hope’s petition also challenged the Agency’s approval of HSWF’s CON application. The petitions were referred to DOAH on November 3, 2003, where they were
designated DOAH Case Nos. 03-4064CON (Heartland) and 03-4066CON (Hope).
DOAH Case Nos. 03-4064CON and 03-4066CON were consolidated by Order dated November 17, 2003, and DOAH Case No. 03-2013 was consolidated with those cases by Order dated December 10, 2003. By Orders dated December 4, 2003, and January 7, 2004, HSWF was granted leave to intervene in each of the consolidated cases “subject to proof of standing at hearing.”
HSWF timely filed a petition with the Agency pursuant to Florida Administrative Code Rule 59C-1.012(2)(a) in response to Hope’s petition challenging the approval of HSWF's application. HSWF’s petition was referred to DOAH on December 2, 2003, where it was designated DOAH Case No. 03-4500CON. By Order dated December 18, 2003, DOAH Case No. 03-4500CON was consolidated with DOAH Case Nos. 03-2013, 03-4064CON, and 03-4066CON.
On July 28, 2004, Heartland voluntarily dismissed its petition. By Order dated July 29, 2004, DOAH Case No. 03- 4064CON was severed from the other cases, and DOAH’s file in that case was closed.
Through an Order dated January 4, 2005, those portions of Hope’s petition challenging the approval of HSWF’s CON application were stricken, and jurisdiction over HSWF’s application was relinquished to the Agency. Through a separate Order issued on that same date, DOAH Case No. 03-4500CON was
severed from the other cases, and DOAH’s file in that case was closed. The Agency issued a final order approving HSWF’s CON application on June 3, 2005.
The final hearing in this matter was originally scheduled to begin on October 25, 2004, but it was continued three times at the parties’ request. The hearing commenced on July 12, 2005, and was conducted over a period of 11 days, concluding on July 28, 2005.
At the outset of the final hearing, Hope voluntarily dismissed its challenge to the FNP for SA 8A. The file in DOAH Case No. 03-2013 was closed through an Order dated July 12, 2005, and the final hearing proceeded on DOAH Case No. 03- 4066CON only.
At the hearing, Hope presented the testimony of 22 witnesses: Dr. Diane Smith, who was accepted as an expert in hospice and palliative care medicine; Kent Anderson, who was accepted as an expert in hospice administration; Julie Shera, who was accepted as an expert in hospice community development; Dr. Claude Degraff, who was accepted as an expert in family medicine; Gwen Feather, who was accepted as an expert in hospice nursing and clinical care; Dr. Omar Perez, who was accepted as an expert in family practice; Tricia Stewart, who was accepted as an expert in art therapy; William Enslen, who was accepted as an expert in hospice chaplaincy; Roger Butts; Dr. Thomas
Teuffel; Samira Beckwith, who was accepted as an expert in hospice administration; Joyce Cuffe, who was accepted as an expert in nursing home administration; Dr. Vance Wright- Browning, who was accepted as an expert in oncology and hematology; Christine Gruschke, who was accepted as an expert in geriatric and long-term care nursing; Heather Veatch, who was accepted as an expert in oncology and hospice nursing; Dr. Mary Stegman, who was accepted as an expert in hospice and palliative medicine and oncology; Jay Cushman, who was accepted as an expert in health planning; Dr. Donald Woytowitz; Jill Lampley, who was accepted as an expert in hospice financial management; Darryl Weiner, who was accepted as an expert in health care finance and financial feasibility analysis; Suzanne Zawacki; and John Mahoney, who was accepted as an expert in hospice compliance and regulation. Hope also called John McElligott as a witness, but he was not permitted to testify.
Hope also presented all or portions of the deposition testimony of 25 witnesses: Lisa Barrowclough (Exhibit A-1), Dr. Todd Chace (Exhibit A-2), William Crawford (Exhibit A-3), Aida Fuentes (Exhibit A-4), Bowen Gillespie (Exhibit A-5), Lisa McLaren (Exhibit A-7), Dr. Donald Moopen (Exhibit A-8), Dr.
Thomas Noone (Exhibit A-9), Michael Rehfeldt (Exhibit A-10), Dawn Southard (Exhibit A-11), Kim Spencer (Exhibit A-12), Ariel Vissepo (Exhibit A-13), Beverly Zeiss (Exhibit A-14), Dawn
Crable (Exhibit B-1), Sara-Jo Faucher (Exhibit B-2), Valerie Gilchrist (Exhibit B-3), Robert Karlson (Exhibit B-4), Dr.
Calvin Martin (Exhibit B-5), Paul Norton (Exhibit B-6), Jon Nyberg (Exhibit B-7), Joseph O’Neill (Exhibit B-8), Margo Post (Exhibit B-9), Cathy Rigney (Exhibit B-10), Dr. Richard Sarkis (Exhibit B-11), and Holly Sroka (Exhibit B-12). Hope also presented the final hearing testimony of Pamela Grontanelli (Exhibit A-6) from DOAH Case No. 03-4067CON.
Hope’s Exhibits HOPE-1 through HOPE-6, HOPE-8 through HOPE- 35, HOPE-37, HOPE-39 through HOPE-41, HOPE-44 through HOPE-49,
HOPE-51 through HOPE-53, PF1 through PF9, A-1 through A-14, and B-1 through B-12 were received into evidence. Exhibits HOPE-42, HOPE-43, and HOPE-50 were offered, but were not received.
The Agency did not present the testimony of any witnesses or offer any exhibits.
HSWF presented the testimony of 12 witnesses: Patrice Moore, who was accepted as an expert in hospice administration and hospice nursing; Margaret Maisto, who was accepted as an expert in hospice administration, nursing administration, and hospital administration; Ann Tonzi, who was accepted as an expert in nursing, nursing administration, and hospice inpatient care; Cathy Rigney, who was accepted as an expert in hospice nursing; Margo Post, who was accepted as an expert in nursing administration, long-term care nursing, and hospice nursing;
Sara-Jo Faucher, who was accepted as an expert in hospice and palliative care nursing and nursing administration; Dr. Anne Pollett, who was accepted as an expert medical doctor and in the area of hospice and palliative medicine; Holly Sroka; Dawn Crable; Jeffrey Gregg, who was accepted as an expert in health planning; Lynne Mulder, who was accepted as an expert in health planning; and Robert Beiseigel, who was accepted as an expert in health care financial analysis and forensic financial analysis.
HSWF also presented all or portions of the deposition testimony of 16 witnesses: Debra Burton (Exhibit HSWF-63), Dr. Adelina Flores (Exhibit HSWF-64), Dr. David Klein (Exhibit HSWF- 67), Donna Kotkiewicz (Exhibit HSWF-68), Reverend James Kuse (Exhibit HSWF-69), Kristine Nickel (Exhibit HSWF-71), Katherine Powell (Exhibit HSWF-75), Karen Riley (Exhibit HSWF-76), Dr.
Juan Rivera (Exhibit HSWF-77), Larry Taylor (Exhibit HSWF-79), Gwen Feather (Exhibit HSWF-80), Samira Beckwith (Exhibit HSWF- 81), Lesa Peterson (Exhibit HSWF-82), Jill Lampley (Exhibit HSWF-83), Kent Anderson (Exhibit HSWF-84), and Dr. Diane Smith (Exhibit HSWF-86).
HSWF’s Exhibits HSWF-1 through HSWF-33, HSWF-35, HSWF-37, HSWF-38, HSWF-41 through HSWF-44, HSWF-48 through HSWF-64, HSWF-
67 through HSWF-69, HSWF-71, HSWF-75 through HSWF-77, HSWF-79 through HSWF-84, HSWF-86 through HSWF-88, HSWF-89B, and HSWF-90
through HSWF-92, were received into evidence. Exhibits HSWF-34, HSWF-36, and HSWF-89A were offered, but were not received.
The 15-volume Transcript of the final hearing was filed on August 25, 2005. The parties initially requested and were given
60 days from that date to file their proposed recommended orders (PROs). The deadline was subsequently extended to November 23, 2005, at the parties’ request.
The Agency did not file a PRO. The PROs filed by Hope and HSWF have been given due consideration.
FINDINGS OF FACT
Parties (1) Hope
Hope is a not-for-profit corporation and the applicant for the CON at issue in this proceeding, CON 9692.
Hope has operated a hospice program in SA 8C since 1981. It is the sole provider of hospice services in SA 8C.
SA 8C consists of Lee, Glades, and Hendry Counties.
Hope’s SA 8C program is one of the largest hospices in Florida. It had more than 3,200 admissions in calendar year 2003.
Hope’s penetration rate in SA 8C has consistently been among the highest rates in Florida. In calendar year 2002, its penetration rate was 54.7 percent, which was the second-highest rate in Florida and well above the statewide average of 43.8
percent. Hope’s penetration rate increased to 58.5 percent over the 12-month period ending June 30, 2004, which was again the second-highest rate in the state and was still well above the statewide average of 49.9 percent.
Hope has its main office and several branch offices in Lee County. It also has branch offices in Hendry County (opened in 1996) and in Glades County (opened in 2001).
Hope has three “hospice houses” in Lee County in which it provides inpatient and respite care. It has a total of 56 inpatient beds and 20 residential beds in those “hospice houses.” Hope also has contracts for inpatient care at Lehigh Medical Center (in eastern Lee County near the border of Glades and Hendry Counties) and at Hendry Regional Medical Center (in Clewiston).
Hope’s SA 8C program is certified by Medicare and Medicaid, and it is accredited by the Community Health Accreditation Program (CHAP).
The CHAP accreditation, which runs through 2006, includes citations for excellence in staff education and clinical services.
Hope adheres to the guidelines and the standards of practice issued by the National Hospice and Palliative Care Organization (NHPCO), which is the national trade association of hospices.
The NHPCO guidelines and standards of practice are not incorporated into any federal or state regulation. Hospices are not required to comply with the guidelines or the standards of practice, and not all do.
The NHPCO guidelines advocate the “open access” philosophy by stating that “[h]ospices should structure admission policies that are inclusive and make hospice services available to all who meet eligibility requirements.”
The goal of “open access” is to remove or minimize all barriers to accessing hospice care, including barriers associated with the availability of treatments such as palliative chemotherapy and palliative radiation (hereafter "palliative chemo/radiation").
The “open access” philosophy is not yet the standard of practice in the hospice industry. It is an expectation or benchmark that the industry is moving towards.
Hope has won several national awards, including the Circle of Life Citation of Honor (2003) and Circle of Life Award (2004) from the American Hospital Association and NHPCO for its “open access” policies and its “innovative program that improves the care of individuals at the end of life and its strategy to make services available to anyone who needs hospice care.”
Hope admits all hospice-eligible patients without regard to their ability to pay or their payer status.
Hope actively engages in outreach and education activities in SA 8C, both to referral sources and to the community at large. It distributes brochures and newsletters in the community, and its staff members are involved in and make presentations to various community organizations.
Hope provides services in SA 8C in addition to the hospice services that it provides to its patients. For example, Hope provides grief counseling to members of the community who have suffered sudden loss, such as the death of a family member in an automobile accident; it provides counseling and support to crime victims; and it operates a camp for terminally-ill children and children who have lost a family member, whether or not the family member was in hospice.
A portion of the funding for the community and victim counseling services provided by Hope comes from grants and donations. The remainder of the funding, which is “about $2 million” annually, comes from Hope.
Hope is a financially-sound organization. The audited financial statements included in Hope’s CON application reflect that, as of September 30, 2002, Hope had current assets of $13.2 million, including almost $9.65 million in cash and unrestricted investments. As of September 30, 2004, Hope’s current assets had increased to $17 million, but its cash and unrestricted investments had declined to $6.16 million.
Hope is a profitable organization. The audited financial statements in Hope’s CON application reflect that it had operating income of $4.65 million in fiscal year 2001 and
$3.45 million fiscal year 2002. Its “excess of revenues over expenses” (i.e., net income) was $4.28 million in fiscal year 2001 and $3.13 million in fiscal year 2002.
Hope is a successful fundraising organization. The audited financial statements in Hope’s CON application report “cash received from donors” in the amount of $2.7 million in fiscal year 2001 and $2.87 million in fiscal year 2002.
Hope’s operating margin has declined every year since 2002, which means that Hope is having to rely more heavily on contributions to subsidize its operations. In fiscal years 2003 and 2004, Hope’s contributions exceeded its operating income, which means that it had negative operating margins in those years. Nevertheless, Hope still had net income of approximately
$2.8 million in fiscal year 2004.
Hope is aggressively seeking to expand its service area. If its expansion efforts are successful, Hope will more than double the geographic size of its service area and it will triple the number of counties that it serves.
Starting in the April 2003 batching cycle (in which CON 9692 was filed), Hope filed CON applications in four successive batching cycles seeking to establish a hospice
program in SA 8A. In the same batching cycles, Hope filed successive CON applications seeking to establish a hospice program in SA 8B (Collier County). In the April 2005 batching cycle, Hope filed an application to establish a new hospice program in SA 6B (Polk, Hardee, and Highlands Counties) in response to a published need for one new program in that service area.
Hope’s first SA 8B application, CON 9695, was the subject of DOAH Case No. 03-4067CON (hereafter “Hope 8B-I”). The Agency’s final order denying that application is on appeal in Case No. 1D05-2876.
Hope’s “follow up” applications in SA 8A and SA 8B were all preliminarily denied by the Agency, and Hope’s challenges to the denial of those applications are pending at DOAH. The record does not reflect the Agency’s action on Hope’s SA 6B application, but Hope states in its PRO (at page 61) that the application was preliminarily approved by the Agency.
(2) HSWF
HSWF is a not-for-profit corporation established in
1980.
HSWF provides hospice services in SA 8A (Charlotte and DeSoto Counties), SA 8D (Sarasota County), and SA 6C (Manatee County), under a single license issued by the Agency. It is the
sole provider of hospice services in each of those service areas.
HSWF has over 450 employees and 1,800 volunteers.
HSWF had a total of 4,552 admissions in its three service areas in calendar year 2002, with 967 (or 21.2 percent) of those admissions coming from SA 8A. HSWF’s average daily census (ADC) was approximately 800 patients as of the time of the final hearing.
HSWF has had the authority to provide hospice services in SA 8A since at least October 1993, and it has been the sole provider of hospice services in SA 8A since 1998 when it acquired the competing SA 8A hospice program operated by the Bon Secours organization.1
HSWF has its main office and several branch offices in Sarasota County. It also has branch offices in the other counties that it serves, including Charlotte and DeSoto Counties.
In Manatee County, HSWF has a total of 12 hospice inpatient beds in two “hospice houses.” It has CON approval for an additional eight beds at its Bradenton “hospice house.”
In Sarasota County, HSWF has a total of 18 hospice inpatient beds in two “hospice houses.” The Venice “hospice house,” which has six hospice inpatient beds is approximately 17 miles from Port Charlotte.
In Charlotte County, HSWF has an administrative office and a “hospice house.” At the time of the final hearing, the “hospice house” was a six-bed residential facility, but HSWF had recently received CON approval to expand it to a 12-bed hospice inpatient facility. HSWF is also in the process of constructing a seven-bed residential facility and administrative office in the Charlotte County portion of the city of Englewood.
In DeSoto County, HSWF leases office space in Arcadia.
It recently purchased land in Arcadia on which it intends to construct an administrative office and an 8-bed “hospice house.”
HSWF is certified by Medicare and Medicaid. It is seeking CHAP accreditation.
HSWF complies with the staff-to-patient ratios set forth in the NHPCO guidelines. It has begun to embrace the "open access" philosophy, albeit not to the same extent as Hope.
HSWF accepts all hospice-eligible patients without regard to their ability to pay or their payer status.
HSWF provides services to the community in addition to the hospice services that it provides to its patients. For example, it offers bereavement support groups for members of the community in need of such services; it provides grief counseling to the local schools, when needed; and like Hope, HSWF operates a camp for children who have lost a family member, whether or not the family member was in hospice.
HSWF is a financially-sound organization. Its audited financial statements reflect that, as of June 30, 2004, it had current assets of $40.5 million, including approximately $33 million in cash, cash equivalents, and investments.
HSWF is a profitable organization. Its audited financial statements reflect that it had operating income of approximately $4.25 million in fiscal year 2002, $3.85 million in fiscal year 2003, and $3.1 million in fiscal year 2004. HSWF was expected to have its first operating loss ever in fiscal year 2005 as a result of the hurricanes that hit southwest Florida in the summer of 2004 and disrupted HSWF’s operations for several months.
Hope is a successful fundraising organization. Its audited financial statements reflect that it received “total support” -- i.e., contributions and donations, memorials, and donated facility usage –- of approximately $4.12 million in fiscal year 2002, $4 million in fiscal year 2003, and $3.95 million in fiscal year 2004.
HSWF funds the construction of its “hospice houses” and other capital projects through the significant reserve of cash and investments that it has built-up with donations from the community. Its reserves also enable it to absorb operating losses, such as those caused by the recent hurricanes.
(3) Agency
The Agency is the state agency that administers the CON program. It also licenses and regulates hospices.
The Agency’s duties under the CON program include the calculation and publication of a FNP, which identifies the need (or not) for new hospice programs in each Hospice Service Area in the state. The duties also include reviewing and taking final agency action on CON applications for new hospice programs.
Application Submittal and Review and Preliminary Agency Action
The FNP published by the Agency for the April 2003 batching cycle identified a need for zero new hospice programs in SA 8A.
Hope challenged FNP calculations, but it withdrew the challenge at the outset of the final hearing.
Hope timely filed a letter of intent and a CON application in the April 2003 batching cycle. Hope’s application, CON 9692, seeks to establish a new hospice program in SA 8A.
Hope’s letter of intent and CON application complied with the technical submittal requirements in the applicable statutes and Agency rules. The application was properly accepted for review by the Agency.
The Agency comparatively reviewed Hope’s CON 9692 with the CON application filed by Heartland (CON 9693), which also sought to establish a new hospice program in SA 8A.
The applications filed by Hope and Heartland were simultaneously, but not comparatively, reviewed with the CON application filed by HSWF (CON 9694) to establish a 12-bed freestanding hospice inpatient facility in SA 8A.
The Agency’s review of the CON applications complied with all of the applicable statutes and Agency rules.
The Agency’s review culminated in the issuance of a State Agency Action Report (SAAR), which recommended denial of the applications filed by Hope and Heartland and approval of the application filed by HSWF.
The Agency published formal notice of its decisions on the CON applications in the September 12, 2003, volume of the Florida Administrative Weekly as required by the statutes and the Agency's rules.
Hope and Heartland timely challenged the denial of their respective applications. Hope also challenged the approval of HSWF’s application.
Heartland withdrew its challenge to the denial of its application prior to the final hearing, and it did not participate in the hearing in any way.
Jurisdiction over Hope’s challenge to the approval of HSWF’s application was relinquished to the Agency through an Order issued in this case on January 4, 2005.
The Agency issued CON 9694 to HSWF through a final order dated June 3, 2005. The final order was not appealed.
The Agency reaffirmed its opposition to Hope’s application at the final hearing through the testimony of Jeffrey Gregg, the Bureau Chief of the Agency’s CON program.
Hospice Care, Generally
Hospice care is provided to patients who are at or near the end of their lives. To be eligible for hospice care, the patient must have been diagnosed with a terminal illness from which the patient is expected to die within six months if the disease runs its normal course.
Hospice care is considered palliative care rather than curative care. The purpose of palliative care is to provide comfort to the patient rather than to cure the patient.
Curative care is inconsistent with the hospice eligibility requirement that the patient's illness be terminal.
Hospice care includes a comprehensive range of services provided by physicians, nurses, social workers, chaplains, therapists, and volunteers, to address the psychosocial and spiritual needs of the patient in addition to the physical pain associated with the dying process. Hospice
care also includes services provided to the patient’s family, including grief counseling during the dying process and after the patient’s death.
Hospice care is collaboratively provided through care teams, or interdisciplinary teams (IDTs), which are composed of individuals in the various disciplines identified above as well as the patient and his or her family. The IDT is responsible for developing and implementing the plan of care for the patient.
There are four general types or “levels” of hospice care: routine home care, continuous care, inpatient care, and respite care. More than 80 percent of all hospice care is routine home care, which is provided to the patient where he or she resides (e.g., home, long-term care facility, etc.).
Medicare pays a per diem rate to the hospice based upon the level of care being provided. The hospice receives the per diem rate for each patient, whether or not services are provided to the patient on a given day.
Medicare-certified providers, such as Hope and HSWF, are required to comply with the Conditions of Participation in the Medicare regulations, 42 CFR Part 418, in order to receive reimbursement from Medicare for the hospice services that they provide to their patients.
Hope and HSWF are also required to comply with the state licensure requirements in Part IV of Chapter 400, Florida Statutes, and Florida Administrative Code Rule 58A-2.
The Medicare regulations require hospice providers to directly provide certain “core” services, including nursing, social work, and counseling. Other services, such as physician services, therapies, and medications, may be provided through third-parties pursuant to a contract with the hospice.
The Medicare regulations make the hospice responsible for all medically necessary care and services related to the patient’s terminal illness once the patient elects the Medicare hospice benefit.
Hospices are required to admit hospice-eligible patients without regard to the patient’s ability to pay, and, as stated above, Hope and HSWF each do so.
Hospice Service Area 8A
Demographics and Penetration Rates
There are similarities between SA 8A, served by HSWF, and SA 8C, served by Hope. However, there are also material differences between the two service areas that undercut Hope’s contention that the differences in the penetration rates in the service areas are solely attributable to differences in the management and operation of HSWF and Hope.
For example, the population of SA 8A (182,190) is significantly smaller than the population of SA 8C (519,395); SA 8A has a lower projected five-year growth rate (11.3 percent) than does SA 8C (14.4 percent); SA 8A is less densely populated (125 persons per square mile) than is SA 8C (170 persons per square mile), even though SA 8A has considerably less land area (1,457 square miles) than does SA 8C (3,046 square miles); and resident deaths increased at a considerably slower rate in SA 8A (four percent) between 1996 and 2001 than they did in SA 8C (15 percent).
These demographic differences explain, at least in part, the lower penetration rates in SA 8A as compared to SA 8C.
In 2002, which is the period reflected in the applicable FNP calculations, the overall penetration rate in SA 8A was 40.5 percent. That rate was slightly lower than the statewide average of 43.8 percent, and was significantly lower than Hope’s 54.7 percent penetration rate in SA 8C.
The overall penetration rate in SA 8A increased to
47.68 percent in 2003, which was almost the same as the 47.75 percent statewide average, but was still lower Hope’s 55.86 percent penetration rate in SA 8C.
The overall penetration rate in SA 8A has continued to increase. For the 12-month period ending June 30, 2004, the overall penetration rate in SA 8A was 53.6 percent, which was
higher than the statewide average of 49.9 percent and was only slightly below Hope’s 58.5 percent penetration rate in SA 8C.
The number of resident deaths in SA 8A is projected to increase to 2,645 for the 12-month period ending June 30, 2005, which is the planning horizon applicable to this case. That is a 10.7 percent increase over calendar year 2001, when there was a total of 2,389 resident deaths in SA 8A.
HSWF’s Existing SA 8A Program
HSWF's efforts to develop the SA 8A market began in earnest in July 2000 when HSWF hired its current president and chief executive officer, Marge Maisto.
Under Ms. Maisto’s leadership, HSWF implemented a number of initiatives designed to enhance the services provided by HSWF, particularly in SA 8A.
First, HSWF undertook efforts to strengthen its medical staff. It hired a Vice President of Medical Affairs to work with the clinical medical director, and it began hiring full-time associate medical directors instead of contracting with physicians on a part-time basis.
HSWF now employs eight full-time physicians who are board certified in hospice and palliative care and other specialties. The physicians are members of the IDTs and they participate in the care planning for patients. They also make
patient visits, which some of the part-time contract physicians did not do.
Three of the physicians -- Drs. Martin, Ray, and Gutherie –- are assigned to SA 8A. They were hired in June
2003.
Second, HSWF formed dedicated IDTs to serve patients
residing in long-term care (LTC) facilities. The LTC teams began serving patients in August 2003.
The planning for the dedicated LTC teams began as early as November 2000, and the decision to form the teams was made in March 2003. HSWF hired a physician, Dr. Tuck, to serve as the “medical director” for the LTC teams in June 2003.
HSWF has three dedicated LTC teams, including a team that serves the LTC facilities in Charlotte and DeSoto Counties. The team includes Dr. Tuck, nurses, social workers, certified nurse assistants, chaplains, a volunteer coordinator, and others.
The LTC team serving Charlotte and DeSoto Counties had a census of approximately 50 patients at the time of the final hearing. There are approximately 10 LTC facilities in SA 8A, but some of the facilities are still closed as a result of damage caused by the 2004 hurricanes.
Third, HSWF implemented an outreach and education program designed to strengthen its relationships with local
physicians since they are the primary referral source of hospice patients.
The program included the hiring of “physician liaisons,” who are responsible for networking with local physicians. The liaisons’ responsibilities initially included “learning about the physician offices, what their barriers were to referrals and how [HSWF] could better serve them,” but the responsibilities evolved into “provid[ing] education to physicians and their office staff regarding [HSWF’s] scope of services, as well as a better understanding of the hospice concept and mission.”
HSWF hired a physician liaison in March 2002 to cover Venice and Port Charlotte. It hired another liaison in November 2002 to cover Charlotte and DeSoto Counties.
Fourth, HSWF created Community Advisory Councils in each of the counties that it serves (including Charlotte and DeSoto Counties) to “get closer with the community and receive feedback and guidance from [the community] on how better to serve them, how better to educate the community at large about hospice services . . . .” The creation of the Councils was an element of HSWF’s 2001-04 Strategic Plan, which was prepared in May 2001.
Fifth, HSWF developed admission guidelines to memorialize its policies regarding the admission of patients on
palliative chemo/radiation or other therapies that, although developed to be curative, can be use to palliate symptoms and improve the patient’s quality of life.
Sixth, HSWF sought and received a CON to convert and expand the "hospice house" in Port Charlotte from six-bed residential facility to a 12-bed hospice inpatient facility. The CON application was filed in the same batching cycle as Hope's CON 9692, and the CON was issued in June 2005.
Although these initiatives address several of the issues that were identified as “special circumstances” in Hope’s CON application, filed in July 2003, the evidence was not persuasive that the initiatives were undertaken in response to Hope’s application as Hope contends. To the contrary, the evidence establishes that these initiatives were at least in the planning stages prior to the time that Hope filed its CON application for a new SA 8A hospice program, and that the implementation of the initiatives was ongoing at the time Hope filed its application.
The implementation of these initiatives contributed to the significant growth in admissions experienced by HSWF in SA 8A between 2000 (when it had 793 admission) and 2003 (when it had 1,172 admissions). Over that period, HSWF’s admissions grew by 5.93 percent between 2000 and 2001, by 15.1 percent between 2001 and 2002, and by 21.2 percent between 2002 and 2003.
HSWF provides the full continuum of hospice care in SA 8A, including routine home care, continuous care, inpatient care, and respite care.
HSWF has contracts with all of the hospitals in Charlotte and DeSoto Counties, which allow HSWF to provide hospice inpatient services in those hospitals. Its “hospice house” in Venice, which is approximately 17 miles from Port Charlotte, is also available for SA 8A patients in need of hospice inpatient services and, as noted above, HSWF will soon have a 12-bed inpatient facility in Port Charlotte.
HSWF offers a full range of ancillary or expressive “therapies” to its patients through its Creative Caring and Connections program. The services include touch, art, music, horticulture, aroma, and pet “therapies.”
HSWF also has a training program for clowns. It is the only hospice-affiliated clown program in the country. The clowns visit and entertain hospice patients and their families under the premise that, sometimes, laughter can be the best medicine.
HSWF’s clown program is recognized by the world’s largest clowning organization but, unlike massage, art, and music therapies, clown “therapy” is not formally recognized as an expressive therapy by any accrediting body.
The expressive “therapies” offered by HSWF are provided to patients in order to reduce anxiety or palliate symptoms. They are delivered as part of the patient’s care plan, typically upon the recommendation of the social worker on the IDT.
The “therapies” offered by HSWF are provided by trained volunteers from the community, not certified therapists employed by HSWF. Massage therapy, which is one type of touch therapy offered by HSWF, is provided by licensed massage therapists who are volunteers, not employees of HSWF.
HSWF relies heavily on “local clergy” to deliver spiritual care to its patients. It does so because it has found that patients are often more comfortable with their own spiritual advisor with whom they are familiar and have a longstanding relationship.
HSWF hired a full-time director of spiritual care in October 2002. It has since hired two additional full-time chaplains and has another who provides services on a contract basis. The chaplain who serves SA 8A was hired in March 2003.
The staff chaplains coordinate the spiritual care of the patient and are available to patients 24 hours a day, seven days a week. They visit patients, they perform memorial services, and they coordinate the services provided by the “local clergy.”
The hiring of staff chaplains by HSWF predated Hope’s application and, as acknowledged by a former HSWF employee who testified on behalf of Hope at the final hearing, it had nothing to do with the filing of Hope’s application.
In “late 2004” or early 2005, HSWF implemented a formal training program for “local clergy” regarding the manner in which end-of-life issues are dealt with by hospice staff. The program had been in the planning stages since October 2002 when HSWF hired a full-time director of spiritual care, but it
was not considered to be a priority because clergy are generally familiar with the unique needs of dying patients and their families by virtue of their training in divinity school and/or their experience with their own parishioners.
Patient admissions at HSWF are handled by a clinician who is part of a centralized admissions team, rather than by a clinician who is part of the IDT serving the geographic region where the patient is located. This streamlines the admissions process and allows the IDT members to focus on the delivery of patient care.
HSWF actively engages in outreach and education efforts to the community at large. It distributes newsletters and other publications throughout Charlotte and DeSoto Counties, it participates in community events in those counties, and its
staff members speak to community groups and are involved in community activities.
Hope’s Proposed SA 8A Program (1) Generally
Hope’s proposed SA 8A hospice program is essentially an expansion of the service area of its existing program into the adjacent SA 8C. The policies and procedures that Hope utilizes in its existing program will be implemented in its proposed SA 8A program.
The policies include Hope’s commitment to serving patients and families without regard to caregiver status, homelessness, or HIV/AIDS status, and without regard to their ability to pay.
The policies also include Hope’s commitment to “open access,” particularly with respect to patients on palliative chemo/radiation.
There have been no changes to Hope’s polices related to palliative chemo/radiation since the time of the final hearing in Hope 8B-I.
Hope's procedures include protocols used by its nurses to help them manage the most common pain symptoms found in hospice patients, including anxiety, fatigue, and depression, as well as Hope's detailed protocols for pediatric hospice patients. The protocols are used by Hope's nurses as a guide in
the assessment of the patient; the identification of treatment options; the administration of medications, when indicated and pre-authorized by the physician; and the facilitation of the nurse’s communications with the physician and pharmacist about the patient’s condition and course of treatment.
At Hope, admissions are handled by a member of the clinical staff who will be caring for the patient, rather than a dedicated admission team. This promotes continuity of care.
Hope intends to establish an office in Arcadia to serve DeSoto County and an office in Port Charlotte to serve Charlotte County. The offices will be located in leased space. No new construction is proposed.
Hope’s existing offices in Cape Coral and Boca Grande will also be used to provide services in Charlotte County.
Those offices are in northern Lee County, close to the southern border of Charlotte County.
Hope is not proposing any inpatient hospice beds as part of its proposed SA 8A program. It intends to provide inpatient and respite care through contractual arrangements with existing nursing homes and hospitals in SA 8A and/or through the use of the inpatient beds at its "hospice houses" in Lee County.
Hope’s proposed SA 8A hospice program will provide a comprehensive range of hospice services, including physician services, nursing services, home health aide services, social
services, chaplain services, and all other services required by the state and federal hospice regulations.
Hope provides chaplain services to its patients through its staff of 14 full-time chaplains. It also offers training to “local clergy” regarding bereavement and end-of-life issues. Hope recognizes the importance of the patient’s own spiritual advisor being involved in the patient's plan of care, but it does not rely on "local clergy" as heavily as does HSWF.
Hope intends to provide services that are not reimbursed by Medicare or other insurance, such as bereavement services and massage, music, art, and pet therapies. Hope provides those services in its existing SA 8C hospice program.
The ancillary or expressive therapies provided by Hope (e.g., art, massage, music, pet) are provided by certified therapists employed by Hope rather than community volunteers. The therapists are members of the IDTs.
Hope expects to receive the vast majority of its referrals to its proposed SA 8A hospice program from physicians, which is consistent with its experience in SA 8C.
Hope projected in its CON application that approximately 83 percent of the patient days at its proposed SA 8A hospice program will be attributable to Medicare patients, approximately six percent of the patient days will be attributable to Medicaid patients, and approximately two percent
of the patient days will be attributable to charity patients. The application states that these figures are based upon Hope’s experience in the adjacent SA 8C, and they are reasonable in light of the demographics of SA 8A.
Hope projected in its CON application that the total project costs for its proposed SA 8A hospice program will be
$148,450. The largest line-item cost -- $56,941 –- is for “preoperational staffing, recruiting and training.” The projected costs are reasonable.
Hope intends to fund the costs of its proposed SA 8A hospice program with cash “on hand and/or from operations."
Hope has sufficient financial resources to fund the costs of its proposed SA 8A hospice program along with its other ongoing capital projects and proposed service area expansions.
Hope projected in its CON application that it will need 12.17 full-time equivalents (FTEs) to staff its proposed SA 8A hospice program in its first year of operation, and that it will need an additional 7.83 FTEs (for a total of 20 FTEs) in its second year of operation.
It was stipulated that the projected staffing levels are reasonable and that Hope will be able to recruit the necessary FTEs at the salaries projected in its CON application.
In addition to the FTEs projected in the application, Hope will utilize volunteers to “provide both administrative
support and patient support functions.” Hope projects that its proposed SA 8A hospice program will have approximately one volunteer per patient, which equates to approximately 30 volunteers in the first year of operation and 45 volunteers in the second year of operation.
Hope has been successful in recruiting and retaining volunteers in SA 8C, and it is reasonable to expect that Hope will be able to recruit and retain sufficient volunteers for its proposed SA 8A hospice program.
The payer mix and revenues projected in Schedule 7A of Hope's CON application are reasonable, as are the expenses projected in Schedule 8A of the application.
Hope projected that its proposed SA 8A hospice program will generate a net loss from operations of $6,303 in its first year, and that it will generate a net profit from operations of $30,688 in its second year. These projections are reasonable.
Hope projected that it will have non-operating revenue of $50,642 and $72,111 in the first and second years of operation, respectively. Those amounts include “donations/memorials and bequests” that Hope expects to receive as well as a net of $10,000 from fundraising. These projections are reasonable.
The bottom-line “net profit” projected on Schedule 8A of Hope’s application, which includes the net profit from operations and the non-operating revenues, is $38,959 in the program’s first year of operation and $97,799 in its second year of operation. Those amounts are reasonable.
(2) Projected Admissions
Hope projected that its proposed SA 8A hospice program will have 167, 238, and 280 admissions in its first three years of operation. By the seventh year of operation, Hope projected that its proposed SA 8A hospice program will have
481 admissions.
Those figures represent 15 percent (year 1), 20 percent (year 2), 22 percent (year 3), and 30 percent (year 7) of the projected hospice admissions in SA 8A. Those market shares are at the high end of the range of the market shares achieved by other recent start-up hospice programs that entered into single-provider markets. However, under the circumstances of this case, the market shares projected by Hope are likely somewhat understated.
In projecting the total number of hospice admissions in SA 8A, Hope assumed that the overall penetration rate in the service area will increase each year based on its presence in the market. The assumption of an increasing penetration rate is reasonable, but attributing that increase to Hope’s presence in
the market is not. Indeed, the evidence reflects that penetration rate in SA 8A has been steadily increasing over the past several years to levels consistent with the rates projected by Hope in its application.
Hope’s projected admissions translate into ADCs of 30 patients (year 1), 47.2 patients (year 2), 56.8 patients (year 3), and 97.5 patients (year 7). The ADC figures are based upon a 65.7-day average length of stay (ALOS) in year one, which increases to 74-day ALOS in year seven.
The ALOSs and ADCs projected by Hope are consistent with Hope’s experience in SA 8C and are reasonable in light of Hope’s “open access” policies.
The methodology used to calculate the projected admissions and the ADCs is reasonable, and Hope will be able to achieve its projected utilization levels. Indeed, as more fully discussed in Part F below, the projected admissions are likely somewhat understated because a component of the market share assumptions made by Hope is too low.
Impact on HSWF
The number of admissions projected for Hope’s proposed SA 8A hospice program –- 167 (year one), 238 (year two), and 280 (year 3) -- also represent the number of “lost admissions” projected for HSWF because HSWF is currently the sole provider of hospice services in SA 8A.
The “lost admissions” projected in Hope’s CON application are likely understated because they were based upon the assumption that Hope will get an equal percentage of the cancer and non-cancer patients that would have otherwise been served by HSWF.
Specifically, Hope projected that it will get 15 percent of SA 8A’s cancer patients and 15 percent of the service area’s non-cancer patients in the first year of its program’s operation; 20 percent of each category’s patients in its second year of operation; and 22 percent of each category’s patients in its third year of operation.
The assumption that Hope will take an equal number of cancer and non-cancer patients from HSWF each year is not consistent with the evidence regarding Hope’s “open access” philosophy towards palliative chemo/radiation or the testimony of oncologists in SA 8A regarding their intent to refer their patients to Hope rather than HSWF if Hope’s application is approved. Indeed, based upon that evidence and testimony, it is reasonable to expect that Hope will, over a relatively short period of time, have a significantly larger percentage of the cancer patients in SA 8A than will HSWF.
On the issue of the percentage of cancer patients that Hope will take from HSWF, the projections of HSWF’s health planner are more reasonable than the projections of Hope’s
health planner.2 Specifically, it is not unreasonable to expect that Hope will get 25 percent, 50 percent, and 75 percent of the cancer patients in SA 8A in its first three years of operation.
The effect of Hope getting a larger percentage of SA 8A's cancer patients is that its total admissions and, hence, HSWF’s “lost admissions” will more likely be 217, 396, and 545 in Hope’s first three years of operation in SA 8A.3
Those admissions translate into projected market shares for Hope of 19.5 percent, 33.2 percent, and 42.8 percent in its first three years of operation, based upon the total number of admissions projected by Hope’s health planner for SA 8A over that period. Those market shares are reasonable and attainable, even after taking into account HSWF’s status as the incumbent hospice provider with considerable community support.
The financial impact of the “lost admissions” on HSWF will be significant, both in terms of the lost patient revenues from the admissions and the lost donations and bequests that HSWF would likely have otherwise received from those patients.
The financial impact on HSWF is a factor weighing against approval of Hope’s CON application, but the impact is not so significant that it is an independent basis for denying the application.
The financial impact of the admissions that HSWF will “lose” to Hope if Hope’s CON application is approved will be
largely offset by the annual savings that HSWF expects to realize from the establishment or expansion of hospice inpatient facilities in SA 8A and its other service areas. Moreover, HSWF has sufficient current assets to absorb the financial impact of Hope’s proposed 8A program while continuing its existing operations in SA 8A at their current levels if it chose to do so.
Even though HSWF has the financial strength to continue its existing operations in SA 8A at their current levels notwithstanding Hope’s entry into the SA 8A market, it is unlikely to do so. Indeed, HSWF's chief executive officer testified that HSWF would likely eliminate or scale back certain aspects of its SA 8A program as a result of the patient volume that it would “lose” to Hope.
Alleged Special Circumstances
Hope identified seven “special circumstances” in its CON application, which, in its view, support the approval of its proposed SA 8A hospice program.
Disproportionately High “Unmet Needs”
The first special circumstance alleged by Hope in its application is that the “unmet need” in SA 8A, as reflected in the FNP calculation, is disproportionately high.
The justification offered by Hope for this special circumstance was statistical data. There was no testimony from
physicians or community witnesses related to this special circumstance.
Under the hospice CON rule, Florida Administrative Code Rule 59C-1.0355, need for a new hospice program is determined through a FNP calculation in which the hospice admissions from the most recent calendar year (here, 2002) are subtracted from the projected number of hospice admissions over the planning horizon (here, July 2004 through June 2005).
The result of that calculation, according to paragraph (4)(a) of the hospice CON rule, is “the projected number of unserved patients who would elect a hospice program.” Hope refers to the result of the calculation as “unmet need.”
If the projected number of unserved patients is greater than 350, then the FNP shows a need for a new hospice program. If the projected number of unserved patients is less than 350, then the FNP shows that a new hospice program is not needed.
The FNP calculation for the April 2003 batching cycle showed 238 projected unserved patients in SA 8A. Because that figure is less than 350, the end-result of the FNP calculation is a need for zero new hospice programs in SA 8A.
The ratio of the projected unserved patients (238) to the actual admissions in SA 8A (967) is 24.6 percent, which is the fourth highest rate of all of the service areas in the
state, and, according to Hope, that ratio reflects a disproportionately high level of “unmet need” in SA 8A.
This is not a special circumstance. The FNP calculations necessarily include a threshold below which need is presumed not to exist, no matter how close the number of projected unserved patients is to the threshold or how “disproportionate” that number may seem.
Hope's contention on this issue is essentially a criticism of the threshold in the FNP calculation because, according to Hope, the “comparatively small size [of SA 8A] has prevented the need formula from calculating an unmet need sufficient to trigger the [350 threshold necessary for a] determination of a numeric need.” The reasonableness of the threshold (in general or for smaller service areas) is not properly at issue in this proceeding and, moreover, the “unmet need” identified by Hope is something that is specifically taken into account in the FNP calculations.
Inadequate Lengths of Stay
The second special circumstance alleged by Hope in its CON application is that lengths of stay at HSWF are inadequate for quality of care.
The critical assumption underlying this contention is that longer lengths of stay are necessarily better than shorter lengths of stay from a quality of care perspective.
Longer lengths of stay can be an indicator of the accessibility of hospice care because they tend to reflect that patients are being referred to, and admitted into, hospice earlier in the dying process.
Longer lengths of stay are not, however, a reliable indicator of hospice quality of care, which depends more upon the services that the patient is receiving from the hospice than the length of time that the patient is enrolled in hospice. Nursing costs per-patient-day (PPD) is a better indicator of the level of direct patient care being provided by the hospice than is the hospice's ALOS, and, on this point, it is noteworthy that the nursing costs PPD at HSWF exceed the national average for hospices with more than 350 annual admissions whereas the nursing costs PPD at Hope are less than the “national average.”.
Another reason that longer lengths of stay are not necessarily a reliable indicator of quality of care is that hospices have a financial incentive to increase length of stay because hospice patients typically require less services in the “middle” portion (i.e., the period between 15 days after admission and 15 days before death) of their stay. The "middle" portion of the patient's stay is more profitable for the hospice because even though it is providing less services to the patient (and, hence, incurring less cost), the per diem rate paid by Medicare remains constant.
The ALOS at Hope is among the highest in the state and the nation. Its ALOS was 74 days in 2002, and it is trending upward.
The statewide average ALOS in 2002 was 63 days.
The ALOS at HSWF in 2002 was 39 days, which is among the lowest in the state. This figure includes all of the counties served by HSWF.
The ALOS for the patients served by HSWF in Charlotte was 34.5 days in 2002, and the ALOS for its DeSoto County patients was 35.2 days in 2002.
The ALOS for patients served by HSWF in Charlotte in DeSoto Counties has increased. In 2004, the ALOS for patients in Charlotte County was 44.1 days and the ALOS for patients in DeSoto County was 42.1 days.
The evidence was not persuasive that the quality of care provided at HSWF in SA 8A was inadequate in 2002 despite its relatively low ALOS, nor was the evidence persuasive that the quality of care provided at HSWF was inadequate in 2004 even though its ALOS at that time was still lower than the ALOS at Hope. To the contrary, the evidence establishes that HSWF provides high quality hospice care.
The second special circumstance alleged by Hope was not proven.
Inadequate Service to Patients in Need of Palliative Chemo/Radiation
The third special circumstance alleged by Hope in its CON application is that patients in SA 8A who are need of palliative chemo/radiation are not being adequately served by HSWF.
Palliative chemo/radiation are medical treatments whose goal is symptom reduction and improved quality of life during the dying process. Palliative chemo/radiation is commonly used to reduce the size of the patient’s malignant tumors, which, in turn, relieves pressure exerted by the tumors on other organs and reduces the associated pain.
Palliative chemo/radiation is distinguishable from curative chemotherapy and radiation, whose goal is to cure the patient’s cancer and to allow the patient to have a normal life expectancy. As noted above, curative treatments are not appropriate for hospice patients because eligibility for hospice is premised upon the patient having a terminal illness.
Palliative chemo/radiation is typically administered by an oncologist, who is a physician who specializes in the treatment of cancer. The treatments are typically administered in the oncologist’s office.
The benefits of the treatment (e.g., symptom relief) have to be weighed against the burdens of the treatment (e.g.,
fatigue, nausea, etc.) for each patient on an ongoing basis over the course of the treatment.
Palliative chemo/radiation is expensive, and hospices have a financial incentive not to provide it to their patients because the hospice is not reimbursed for a large part of the high costs associated with the treatment.
Patients receiving palliative chemo/radiation constitute only a small percentage of hospice patients. At Hope, for example, the percentage of oncology patients receiving palliative chemo/radiation at the time of their admission was approximately seven percent, and by the seventh week after admission, the percentage of oncology patients receiving palliative chemo/radiation was approximately two percent.
HSWF does not, and has never, categorically denied palliative chemo/radiation to its patients.
Until October 2003, HSWF did not have a written set of guidelines relating to palliative chemo/radiation. It began the process of developing such guidelines in early 2002 in order to address concerns raised by oncologists in SA 8A.
The guidelines, which were “rolled out” in October 2003, describe HSWF’s policies relating to the admission and ongoing evaluation of patients on palliative chemo/radiation and other therapies. Among other things, the guidelines require the treating physician to provide data to the IDT regarding the
prognosis, results, and goals of the treatment so that the IDT, in collaboration with the treating physician and the patient, can evaluate the benefits and burdens of the treatment at least every two weeks.
HSWF’s guidelines on palliative chemo/radiation are reasonable and appropriate, particularly with respect to the ongoing collaboration they require between the oncologist and the IDT regarding the benefits and burdens of the treatment.
Prior to the implementation of the guidelines, there was a perception by some of the oncologists in SA 8A that HSWF would not allow patients to continue to receive palliative chemo/radiation once they were admitted into hospice. As a result of that perception, the oncologists delayed the referral of patients on palliative chemo/radiation to HSWF until the patient’s course of treatment was complete.
Since the implementation of the guidelines, that perception has changed. The oncologists who previously delayed referrals of patients on palliative chemo/radiation now find HSWF to be more receptive to admitting those patients, and they testified that they are generally satisfied with the level of collaboration between themselves and HSWF about the patient’s course of treatment. Nevertheless, those oncologists testified that they would likely refer their patients to Hope if its SA 8A program was approved because of the relationship and positive
experiences that the Lee County oncologists in their practice group have had with Hope.
The level of palliative chemo/radiation provided by HSWF is not insignificant. In fiscal year 2002, for example, HSWF had total expenditures of $124,396 on chemotherapy and total expenditures of $77,026 on radiation. By fiscal year 2004, its total expenditures had increased to $267,871 on chemotherapy and $137,921 on radiation.
HSWF spends considerably less on chemotherapy and radiation than does Hope, but that does not mean that HSWF is providing an inadequate level of palliative chemo/radiation in SA 8A.
On this point, it is noteworthy that the level of chemotherapy and radiation provided by HSWF is greater than, but not materially out of line with, the national average for hospices with more than 350 annual admissions on both a cost per patient ($/patient) basis and a cost per-patient-day basis ($/PPD). In fiscal year 2002, for example, HSWF spent
$26.01/patient (or $0.76/PPD) on chemotherapy and $16.11/patient (or $0.47/PPD) on radiation, and the “national average” was
$10.12/patient (or $0.18/PPD) for chemotherapy and $7.27/patient (or $0.14/PPD) for radiation.
By contrast, the level of chemotherapy and radiation provided by Hope is materially out of line with the “national
average.” In fiscal year 2002, for example, Hope spent
$332.33/patient, or $5.32/PPD, on chemotherapy (as compared to the “national average” of $10.12/patient or 0.18/PPD), and
$126.06/patient, or $2.02/PPD, on radiation (as compared to the "national average" of $7.27/patient or $0.14/PPD).
The total expenditures on chemotherapy and radiation at Hope continues to increase even though, as noted above, patients receiving palliative chemo/radiation are only a small percentage of Hope's patients. Its expenditures in fiscal year 2004 ($3.15 million) were almost three times higher than they were in fiscal year 2001 ($1.19 million).
Hope’s “open access” philosophy contributes to its extraordinary level of expenditures on chemotherapy and radiation. Another contributing factor is Hope’s practice of deferring to the oncologist (who has a financial incentive to continue the treatment as long as possible) regarding the benefit/burden evaluation and the decision to continue or not the course of treatment, coupled with the, at best, limited utilization review by Hope of the treatment rendered by the oncologist.
In sum, the evidence fails to establish that the level of service provided by HSWF to patients in need of palliative chemo/radiation was inadequate, either at the time of the hearing or at the time Hope filed its application.
Moreover, the evidence fails to establish that the model that Hope intends to replicate in SA 8A is appropriate with respect to palliative chemo/radiation and, indeed, the evidence suggests that Hope’s model results in overutilization of such services.
The third special circumstance alleged by Hope was not proven, and, even if it had been proven, it would not justify the approval of Hope's application.
Inadequate Service to African-Americans
The fourth special circumstance alleged by Hope in its CON application is that African-American patients in SA 8A are not being adequately served by HSWF.
The justification offered by Hope for this special circumstance was statistical data. There was no testimony from community witnesses related to this special circumstance.
African-Americans typically utilize hospice services at a lower rate than the general population and, as a result, it is not unusual for the African-American penetration rate in a service area to be lower than the overall penetration rate in the service area.
It is important for hospices to have outreach programs directed to the African-American community. Hope has such programs in SA 8C, as does HSWF in SA 8A.
The African American population in SA 8A is relatively small. Only 6.1 percent of the service area’s population was African-American in 2002.
In 2001, the penetration rate for African-Americans in SA 8A was 25 percent, which was less than the 32 percent statewide penetration rate for African-Americans and less than the 41 percent penetration rate for African-Americans in Hope’s SA 8C.
The lower African-American penetration rate in SA 8A in 2001 is explained, at least in part, by the fact that HSWF did not consistently capture ethnicity in its patient database prior to 2004. Its failure to do so had the effect of understating the penetration rates for African-Americans and other ethnicities.
In 2004, the penetration rate for African-Americans in SA 8A was 38.4 percent, which is a more reliable figure and reflects adequate service of African-Americans by HSWF.
There is no credible evidence that the increase in the African-American penetration rate is the result of increased outreach efforts by HSWF in response to Hope’s CON application.
In sum, the evidence was not persuasive that African- Americans in SA 8A were being inadequately served by HSWF, either at the time Hope filed its application or at the time of the final hearing.
The fourth special circumstance alleged by Hope was not proven.
Inadequate Service to Elderly Non-cancer Patients
The fifth special circumstance alleged by Hope in its CON application is that elderly non-cancer patients in SA 8A are not being adequately served by HSWF.
To address this special circumstance, Hope committed in its CON application to "engage in a special Non-Cancer Outreach Program to educate the medical community in [SA] 8A about the effectiveness of hospice care for non-cancer diagnoses."
The limited discussion in the CON application (at page 48) relating to this “special circumstance” referred to the “unmet need” shown in the FNP calculations -– i.e., the difference between the projected number of non-cancer patients in the 65+ age cohort (636) and the actual number of patients in that age/disease cohort admitted at HSWF (483) -- and the comparatively low penetration rate for that age/disease cohort in SA 8A (36 percent) as compared to SA 8C (48 percent).
The level and/or variance in the penetration rate for non-cancer patients in the 65+ age cohort is not, in and of itself, a special circumstance. Indeed, it is not unusual for hospices to have different penetration rates in each of the age/disease cohorts nor is it unusual for to the penetration
rates in an age/disease cohort to differ between service areas. Moreover, it is noteworthy that the statewide penetration rate for non-cancer patients in the 65+ age cohort, as reflected in the “P4” factor in the FNP calculation, was 38.1 percent, which was only slightly above HSWF's 36 percent penetration rate in SA 8A.
At the final hearing and in its PRO (at pages 61-71), Hope’s discussion on this “special circumstance” focused primarily on the allegedly inadequate level of service provided by HSWF to its patients in LTC facilities.
The LTC facility is required to provide, and is reimbursed by the hospice for providing, “room and board” to hospice patients living in the facility. The hospice is required to provide the nursing and other care related to the patient’s terminal illness, but that does not excuse the LTC facility from providing nursing and other care to the patient to the extent that the care is unrelated to the patient’s terminal illness.
HSWF provides "hands-on" nursing care and other required services to its patients in LTC facilities. The "hands-on" care provided by HSWF is less extensive than that
provided by Hope to its patients in LTC facilities but, contrary to Hope's contention, the level of care provided by HSWF to its patients in LTC facilities is not inadequate.
The care provided by HSWF to its patients in LTC facilities complements the routine care provided by the staff of the LTC facility. It does not duplicate that care.
The level of care provided by HSWF to its patients in LTC facilities was enhanced through the establishment of the dedicated LTC teams, which began serving patients in August 2003. Indeed, the LTC facility staff who testified at the hearing regarding perceived deficiencies in the care provided by HSWF acknowledged the improvement in the services provided by HSWF as a result of the dedicated LTC teams.
The fifth special circumstance alleged by Hope was not proven.
Inadequate Service to Patients in Need of Intensive Hospice Care
The sixth special circumstance alleged by Hope in its CON application is that patients in SA 8A who are need of “intensive hospice care” -– i.e., continuous home care and general inpatient care -- are not being adequately served by HSWF.
The justification offered by Hope for this special circumstance was statistical data. There was no testimony from physicians or community witnesses related to this special circumstance.
The statistics relied on by Hope reflect that, in 2001, only 3.7 percent of the patient days at HSWF’s SA 8A program were attributable to “intensive hospice care,” as compared to 7.5 percent at Hope and “about 6 percent” statewide. The statistics also indicate that only 30 percent of HSWF’s patients in SA 8A received “intensive hospice care” at some point during their stay, as compared to 46 percent of Hope’s patients and 47 percent of hospice patients statewide. Based upon these statistics, Hope asserted in its CON application that “[t]he quality of care received by residents of Service Area 8A is not adequate.”
No evidence was presented by Hope regarding patients in need of “intensive hospice care” who were not provided such care by HSWF. Indeed, the more persuasive evidence establishes that “intensive hospice care” is (and has been) available to residents of SA 8A, as needed.
Hope’s proposed approach to providing “intensive hospice care” in SA 8A -– i.e., contracting with area hospital and nursing homes and utilizing its “hospice house” in Cape Coral -- is essentially the same as the approach used by HSWF. As a result, approval of Hope's application will not materially enhance access to "intensive hospice care" in SA 8A.
Moreover, HSWF recently received a CON to convert its “hospice house” in Port Charlotte to a 12-bed inpatient
facility, which will enhance its ability to provide “intensive hospice care” to residents of SA 8A and will further enhance access to “intensive hospice care" in SA 8A.
The sixth special circumstance alleged by Hope was
not proven.
Inadequate Service to DeSoto County
The seventh special circumstance alleged by Hope in its CON application is that patients in DeSoto County are not being adequately served by HSWF.
DeSoto County is a rural, sparsely populated county.
The county’s population was only 35,233 in 2002, and it had only
55 residents per square mile.
DeSoto County is an economically disadvantaged county. The median household income, income per capita, percentage of owner-occupied housing, and percentage of college- educated residents in DeSoto County were all lower than the statewide averages in 2002.
DeSoto County is racially diverse. The population is
12.7 percent African-American, 26.6 percent Hispanic, and 5.6 percent Native American.
DeSoto County is demographically similar to Hendry and Glades Counties, which are rural counties in SA 8C served by Hope.
Hospice penetration rates in rural, economically disadvantaged counties (such as DeSoto, Hendry, and Glades Counties) are typically lower than penetration rates in more urban counties.
In 2001, HSWF’s penetration rate in DeSoto County was
26.73 percent, which, as expected, is considerably lower than the overall penetration rate in SA 8A. That penetration rate was also lower than the 39.28 percent penetration rate achieved by Hope in Hendry County in 2001.
HSWF’s penetration rate in DeSoto County fell to
20.13 percent in 2002, but it increased in 2003 (to 23.59 percent) and 2004 (to 44.74 percent).
HSWF’s 23.59 percent penetration rate in DeSoto County in 2003 was slightly higher than Hope’s 22.12 percent penetration rate that year in Glades County, but it was lower than Hope’s 37.29 percent penetration rate that year in Hendry County.
The difference in penetration rates achieved by HSWF and Hope in the rural counties of their respective service areas is not material and does not, in and of itself, justify the approval of Hope’s application, particularly since the evidence establishes that HSWF is adequately serving DeSoto County.
HSWF had an office in DeSoto County prior to the filing of Hope’s CON application for its proposed SA 8A hospice
program, but the office was not staffed until after the application was filed. Before the time that the office was staffed, it was used to store supplies used by staff serving patients in the county.
The decision to staff the office was intended by HSWF to “increase visibility in [the DeSoto County] community to counteract the lack of visibility cited in [Hope’s] application.”
HSWF established a Community Advisory Council in DeSoto County in June 2002.
In the fall of 2003, Hope established a program known as Shepard’s Watch in DeSoto County. The program trains volunteers from the various churches in the county about hospice (and HSWF) so that they are in a position to provide information to persons in the church who are diagnosed with a terminal illness and may be in need of hospice services.
The Shepard’s Watch program was recommended by the Community Advisory Council in DeSoto County as a means to educate residents of the county about hospice because it is a faith-based community, and the churches are the “focal point of information sharing” in the community. The program was under development since “the spring of 2003,” prior to the filing of Hope’s CON application.
HSWF’s staff and volunteers were active in DeSoto County prior to the filing of Hope’s CON application, but their level of activity increased after the filing of the application.
HSWF had an outreach and education program directed to physicians in DeSoto County since at least November 2002.
There was not a separate IDT team serving DeSoto until some point in 2003. Prior to that time, DeSoto County was served by an IDT team based in Port Charlotte that also served patients in Charlotte County. The decision to create a separate IDT team for DeSoto County was based upon the increasing census in the area, not the filing of Hope’s CON application.
Hope followed a similar approach in serving the rural counties in its service area. Prior to the time that it opened offices in Hendry County (1996) and Glades County (2001), it served those areas with IDT teams based in eastern Lee County.
Hope committed in its CON application to "open a branch hospice office in DeSoto County within two years of licensure in [SA] 8A." The office would be in leased space.
The physical presence that Hope has proposed for DeSoto County is essentially the same as that which HSWF currently has in the county, and it is less than that which HSWF will likely have in the near future because, as noted above, HSWF recently purchased land for a "hospice house" in Arcadia.
In sum, the evidence was not persuasive that patients in DeSoto County were being inadequately served by HSWF at the time that Hope filed its application and, in any event, the evidence establishes that the county is currently being adequately served by HSWF.
The seventh special circumstance alleged by Hope was not proven.
Statutory and Rule Criteria (1) Statutory Criteria
(a) § 408.035(1), (2), and (5), Fla Stat.,
and § 408.043(2), Fla. Stat.
Subsections (1), (2), and (5) of Section 408.035, Florida Statutes, are interrelated and require an evaluation of the “need” for the proposed new hospice program, the availability and accessibility of the existing hospice program, and the extent to which the proposed new program will “enhance access” to hospice care for residents of the service area.
Similarly, Section 408.043(2), Florida Statutes, requires consideration of the “need for and availability of hospice services in the community.”
There is a presumption that there is no need for a new hospice program in SA 8A based upon the FNP published by the Agency for the April 2003 batching cycle, which identified the need for zero new hospice programs in SA 8A.
The hospice services provided by HSWF in SA 8A are available and accessible. HSWF actively engages in education and outreach activities in SA 8A directed to referral sources (e.g., local physicians) and the community at large.
HSWF’s penetration rate in SA 8A is a measure of the availability and accessibility of its services. The penetration rate has consistently increased over the past several years, and it now exceeds the statewide average. The ALOS at HSWF in SA 8A, which is another measure of the program's accessibility, has also increased over the past several years.
The evidence was not persuasive that that Hope’s proposed SA 8A program would materially “enhance access” to hospice services. Indeed, the initiatives that Hope intends to implement in SA 8A to serve the “unmet need” identified in its application (e.g., establishing a physical presence in DeSoto County, extending its “open access” policy towards palliative chemo/radiation to SA 8A) are, for the most part, already in effect at HSWF.
In sum, the evidence fails to establish that there is a “need” for hospice services in SA 8A that is not being met by HSWF so as to warrant the approval of a new hospice program in the service area. As a result, the criteria in Subsections (1), (2), and (5) of Section 408.035, Florida Statutes, and Section
408.043(2), Florida Statutes, weigh against approval of Hope’s CON application.
(b) § 408.035(3), Fla. Stat.
Section 408.035(3), Florida Statutes, requires consideration of the applicant’s ability to, and record of, providing quality of care.
Hope provides high quality hospice care in its CHAP- accredited program in SA 8C, and it is reasonable to expect that its proposed SA 8A hospice program will also provide high quality of care since it is effectively an expansion of Hope's existing program.
HSWF provides high quality hospice care at its existing SA 8A program, and the evidence was not persuasive that the quality of care at Hope’s proposed SA 8A hospice program will be materially higher than that currently provided by HSWF.
Hope satisfies the criteria in Section 408.035(3), Florida Statutes, but that criteria is given minimal weight because HSWF is (and has been) providing high quality hospice care in SA 8A.
(c) § 408.035(4), Fla. Stat.
Section 408.035(4), Florida Statutes, requires consideration of the availability of staff, funds, and other resources necessary to establish and operate the proposed hospice program.
It was stipulated that the staffing proposed in Hope’s CON application was adequate and that Hope will be able to recruit and retain the staff and volunteers necessary to operate its proposed SA 8A hospice program.
Hope has the financial and other resources necessary to expand its current hospice program into SA 8A, and to operate the program as proposed in the CON application.
Hope satisfies the criteria in Section 408.035(4), Florida Statutes.
(d) § 408.035(6), Fla. Stat.
Section 408.035(6), Florida Statutes, requires consideration of the short-term and long-term financial feasibility of the proposed project.
Hope’s SA 8A hospice program is financially feasible in the short term. Hope has sufficient financial resources to fund the cost of its proposed SA 8A program along with its other ongoing and proposed projects even though its operating margin has declined over the past several years.
Hope’s proposed SA 8A hospice program is financially feasible in the long term. The projections in Hope’s CON application, which are reasonable and attainable, reflect that Hope’s SA 8A program will generate a net profit from operations of $30,688 and a bottom-line net profit of $97,799 in its second year of operation.
Hope satisfies the criteria in Section 408.035(6), Florida Statutes.
(e) § 408.035(7), Fla. Stat.
Section 408.035(7), Florida Statutes, requires consideration of “[t]he extent to which the proposal will foster competition that promotes quality and cost effectiveness.”
Hope cites the recent initiatives implemented by HSWF to address the alleged deficiencies in its existing program as evidence that the approval of Hope’s proposed program would foster competition in SA 8A. Those initiatives, according to Hope, are the direct result of the “competitive pressure” exerted on HSWF by the filing of Hope’s CON application.
The evidence fails to support that claim. Indeed, as discussed in Part D(2) above, the more persuasive evidence establishes that the initiatives were in the planning stages and/or being implemented prior to the filing of Hope’s application and, therefore, were not a competitive response to Hope’s application.
Nevertheless, the establishment of a new hospice in SA 8A will necessarily increase competition for hospice care in the service area because there is currently only one hospice, HSWF, serving the area.
The evidence is not persuasive that the competition that would result from the approval of Hope’s application will
promote quality or cost effectiveness. Indeed, to the contrary, Hope’s entry into SA 8A will likely result in a dramatic increase in the utilization of costly palliative chemo/radiation services in SA 8A.
In any event, fostering competition is not a consideration that is given significant weight in the hospice context. First, hospice care does not lend itself to competition in the traditional sense because its “consumers” are terminally-ill patients and their families. Second, the relative lack of competition among hospices in Florida has allowed the hospices to grow, which, in turn, allows them to provide more unreimbursed services to their patients.
The criteria in Section 408.035(7), Florida Statutes, do not materially weigh in favor of the approval of Hope’s application.
(f) § 408.035(8), Fla. Stat.
Section 408.035(8), Florida Statutes, which requires consideration of the costs and methods of the construction proposed in the CON application, is not applicable because Hope is not proposing any construction as part of its proposed SA 8A hospice program.
(g) § 408.035(9), Fla. Stat., and Fla. Admin. Code R. 59C-1.030(2)
Section 408.035(9), Florida Statutes, requires consideration of the applicant’s past and proposed commitment to Medicaid patients and the medically indigent.
The statutory reference to “the medically indigent” encompasses what are typically referred to as charity patients.
Similarly, Florida Administrative Code Rule 59C- 1.030(2) requires consideration of the effect of the proposed project on the ability of low-income persons and other medically underserved groups to access care.
Hope did not condition the approval of its CON application on the provision of a minimum level of patient days to Medicaid and/or charity patients.
The financial projections in Hope’s CON application assume that six percent of the patient days at its proposed SA 8A hospice program will be attributable to Medicaid patients and that two percent of the patient days will be attributable to charity patients.
Those percentages were, according to the CON application, based upon “the experience of the applicant and the proposed service area.” HSWF did not contest that contention, nor did it challenge the sufficiency of Hope’s past or proposed commitments to Medicaid and charity patients.
Hope has a history of providing free services for the benefit of the community at-large above and beyond the hospice services provided to its Medicaid and charity patients.
Hope satisfies the criteria in Section 408.035(9), Florida Statutes.
HSWF provides a significant level of charity care in SA 8A. Over the three-year period of 2002 through 2004, HSWF provided an average of approximately $775,000 (or 2.2 percent of its total revenues) annually in charity care. That figure does not include the value of room and board provided at its residential facilities, which is not reimbursed by Medicare and which amounted to approximately $1.4 million in 2004.
HSWF also provides free services to the SA 8A community at-large above and beyond the hospice services that it provides to its Medicaid and charity patients.
The evidence was not persuasive that Hope’s proposed SA 8A hospice program is necessary to, or specifically designed to, address deficiencies in the provision of hospice services to the medically indigent in SA 8A by HSWF.
As a result, and because hospices are required by law to serve all hospice-eligible patients who request hospice services regardless of their ability to pay, the criteria in Section 408.035(9), Florida Statutes, is given minimal weight.
(h) § 408.035(10), Fla. Stat.
Section 408.035(10), Florida Statutes, which requires consideration of the applicant’s designation as a Gold Seal Program nursing facility, is not applicable because Hope is not proposing to add nursing home beds.
(2) Rule Criteria
Fla. Admin. Code R. 59C-1.0355(4)(e)
The preferences in Florida Administrative Code Rule 59C-1.0355(4)(e) are primarily used by the Agency in the comparative review of multiple CON applications filed in the same batching cycle for new hospice programs in the same service area. The preferences are less significant where, as here, there is only one application at issue.
Florida Administrative Code Rule 59C-1.0355(4)(e)1. gives preference to an applicant who commits to serve “populations with unmet needs.”
Hope formally committed on Schedule C of its CON application to open a branch office in DeSoto County and to engage in outreach program to the medical community regarding the effectiveness of hospice care for non-cancer diagnoses. Those commitments were directed to two of the population groups in SA 8A that, according to Hope, have “unmet needs.”
Hope contends that the approval of its application will also address the “unmet needs” of African-American
patients, patients in need of palliative chemo/radiation, and patients in need of intensive hospice care, through the programs and policies that Hope will bring to SA 8A from SA 8C. Those programs and policies will, according to Hope, increase the utilization of hospice services by those patient groups by as much as 300 percent.
As discussed in Part G above, the evidence fails to establish that the needs of those population groups are not being met by HSWF. Accordingly, Hope’s commitment to serve the “unmet needs” of those population groups is given no weight.
Florida Administrative Code Rule 59C-1.0355(4)(e)2. gives preference to an applicant who proposes to provide the inpatient component of care through contractual relationships with existing health care facilities unless the applicant demonstrates a more cost-effective alternative.
Hope satisfies this preference. It plans to provide inpatient care through contracts with local hospitals, and it will also make its “hospice house” in Cape Coral, which is in northern Lee County less than 10 miles south of Charlotte County, available to patients from SA 8A in need of inpatient or respite care.
This preference is given minimal weight because HSWF currently provides inpatient care in a similar manner –- i.e., through contracts with hospitals in Charlotte and DeSoto
Counties or in its “hospice house” in Venice -- and it will soon be able to provide inpatient care in its “hospice house” in Port Charlotte, which is in northern Charlotte County in SA 8A.
Florida Administrative Code Rule 59C-1.0355(4)(e)3. gives preference to an applicant who commits to serve patients without primary caregivers, the homeless, and patients with AIDS.
Hope satisfies this preference. It plans to serve these patients groups in its proposed SA 8A program, as it does in its current SA 8C program.
The evidence does not reflect what, if any, special programs HSWF has for these patient groups, but it is noteworthy that Hope did not contend that those groups are not being adequately served by HSWF.
Florida Administrative Code Rule 59C-1.0355(4)(e)4. gives preference to an applicant who commits to establish a physical presence in an underserved county within a three-county service area. This preference is not applicable because SA 8A consists of only two counties.
Florida Administrative Code Rule 59C-1.0355(4)(e)5. gives preference to an applicant who proposes to provide services not covered by private insurance, Medicaid, or Medicare.
Hope satisfies this preference. It plans to provide unreimbursed services (e.g., massage, pet, music, and art therapies; bereavement services to the community at large) as part of its proposed SA 8A program, as it does in its current SA 8C program.
HSWF provides similar unreimbursed services as part of its existing SA 8A program, and the evidence was not persuasive that the ancillary or expressive therapies provided by Hope are materially superior to those provided by HSWF even though Hope provides the therapies through certified therapists whereas HSWF provides the therapies through trained volunteers.
In sum, Hope’s proposed SA 8A hospice program satisfies the preferences in Florida Administrative Code 59C- 1.0355(4)(e)2., 3., and 5., but the preferences in those subparagraphs are given minimal weight in evaluating whether Hope’s application should be approved because the evidence establishes that HSWF’s existing program is adequately serving SA 8A and already provides essentially the same services as proposed by Hope in its CON application.
Fla. Admin. Code R. 59C-1.0355(5)
Florida Administrative Code Rule 59C-1.0355(5) requires the applicant to demonstrate that its proposed program is “consistent with the needs of the community” and the criteria in the local health plan. The rule also requires the CON
application to include letters of support from “health organizations, social services organizations, and other entities within the proposed service area” that support the applicant’s proposed hospice program. Hope satisfied the criteria in this
rule.
The parties stipulated that the local health plan
preferences are no longer in effect and need not be considered as a result of the 2004 amendments to the CON law, which deleted reference to the local health plan in Section 408.035(1), Florida Statutes.
Hope’s proposed program is consistent with the “needs of the community” in that it will offer a comprehensive range of hospice services, but as discussed above, the “needs of the community” are currently being met by HSWF.
Hope’s CON application includes letters of support from a number of physicians, nursing homes, social service agencies, religious organizations, and individuals in SA 8A.
The application also includes letters of support from individuals and organizations in Hope’s current service area, SA 8C, attesting to quality of care provided by Hope.
Fla. Admin. Code R. 59C-1.0355(6)
Florida Administrative Code Rule 59C-1.0355(6) requires an applicant for a new hospice program to “provide a
detailed program description” in its CON application, which includes the following elements:
Proposed staffing, including use of volunteers.
Expected sources of patient referrals.
Projected number of admissions, by payer type, including Medicare, Medicaid, private insurance, self-pay, and indigent care patients for the first 2 years of operation.
Projected number of admissions, by type of terminal illness, for the first 2 years of operation.
Projected number of admissions by two age groups, under 65 and 65 or older, for the first 2 years of operation.
Identification of the services that will be provided directly by hospice staff and volunteers and those that will be provided through contractual arrangements.
Proposed arrangements for providing inpatient care (e.g., construction of a freestanding inpatient hospice facility; contractual arrangements for dedicated or renovated space in hospitals or nursing homes).
Proposed number of inpatient beds that will be located in a freestanding inpatient hospice facility, in hospitals, and in nursing homes.
Circumstances under which a patient would be admitted to an inpatient bed.
Provisions for serving persons without primary caregivers at home.
Arrangements for the provision of bereavement services.
Proposed community education activities concerning hospice programs.
Fundraising activities.
Hope’s CON application included a detailed description of its proposed SA 8A program, which addressed each of the elements in Florida Administrative Code Rule 59C- 1.0355(6). Thus, Hope satisfied the criteria in that rule.
CONCLUSIONS OF LAW
DOAH has jurisdiction over the parties to and subject matter of this proceeding pursuant to Sections 120.569, 120.57(1), and 408.039(5), Florida Statutes (2005).4
HSWF has standing to participate in this proceeding because, as discussed in Part F of the Findings of Fact, its existing hospice program in SA 8A will be substantially affected by the approval of Hope’s proposed program, even though it will not be financially imperiled. See § 408.039(5)(c), Fla. Stat.
Hope has the burden to prove by a preponderance of the evidence that its CON application should be approved. See, e.g., Boca Raton Artificial Kidney Center, Inc. v. Dept. of
Health & Rehab. Servs., 475 So. 2d 260, 263 (Fla. 1st DCA 1985); Lifepath, Inc. v. Agency for Health Care Admin., Case Nos. 00- 3203CON, etc., 2003 Fla. Div. Adm. Hear. LEXIS 203, at *34 (DOAH
Mar. 17, 2003; AHCA July 7, 2003), per curiam aff’d sub nom,
Hernando-Pasco Hospice, Inc. v. Agency for Health Care Admin., 880 So. 2d 1223 (Fla. 2nd DCA 2004) (table); Big Bend Hospice, Inc. v. Agency for Health Care Admin., Case Nos. 02-0455CON, etc., 2002 Fla. Div. Adm. Hear. LEXIS 1314, at *74 (DOAH Nov. 7, 2002; AHCA Mar. 19, 2003), aff’d, 904 So. 2d 610 (Fla. 1st DCA
2005); Hope 8B-I, at 77-78.
In evaluating Hope’s CON application, a balanced consideration of the applicable statutory and rule criteria must be made. The appropriate weight to be given to each criterion is not fixed, but rather varies based upon the facts of the case. See, e.g., Morton F. Plant Hospital Ass’n, Inc. v. Dept. of Health & Rehab. Servs., 491 So. 2d 586, 589 (Fla. 1st DCA 1986) (quoting North Ridge General Hospital, Inc. v. NME Hospitals, Inc., 478 So. 2d 1138, 1139 (Fla. 1st DCA 1985)); Lifepath, 2003 Fla. Div. Adm. Hear. LEXIS 203, at *34; Big Bend Hospice, 2002 Fla. Div. Adm. Hear. LEXIS 1314, at *74; Hope 8B- I, at 78.
Florida Administrative Code Rule 59C-1.0355(3)(b) provides:
A certificate of need for the establishment of a new hospice program . . . shall not be approved unless the applicant meets the applicable review criteria in sections
408.035 and 408.043(2), F.S., and the standards and need determination criteria set forth in this rule. Applications to establish a new hospice program shall not be approved in the absence of a numeric need
indicated by the [FNP calculations] unless other criteria in this rule and in sections 408.035 and 408.043(2), F.S., outweigh the lack of a numeric need. (Emphasis supplied).
In light of the FNP of zero published by the Agency for SA 8A for the April 2003 batching cycle, it is presumed that there is no need for Hope's proposed SA 8A program, and it is necessary for Hope to demonstrate “special circumstances” under Florida Administrative Code Rule 59C-1.0355(4)(d) or other “not normal circumstances” for its CON application to be approved.5
On this issue, Florida Administrative Code Rule 59C- 1.0355(4)(d) provides:
In the absence of numeric need identified in [the FNP calculations], 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.
The rule has been construed as follows:
[T]he 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 [service area].
[T]he 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.
See Big Bend Hospice, 2002 Fla. Div. Adm. Hear. LEXIS 1314, at
**76-77. Accord Hernando-Pasco Hospice, Inc. v. Agency for Health Care Admin., Case No. 01-4460RX, 2003 Fla. Div. Adm. Hear. LEXIS 213, at **6-7 (DOAH Mar. 17, 2003), per curiam aff’d, 880 So. 2d 1223 (Fla. 2nd DCA 2004) (table).
Hope argues that the determination of “need” for its proposed SA 8A hospice program must be based upon the circumstances in the service area as they existed at the time its CON application was filed, and that any changes in those circumstances between the filing of the application (in July 2003) and the final hearing (in July 2005) may not be considered in determining whether its application should be approved based upon "special circumstances." In support of its argument, Hope relies upon Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So. 2d 700 (Fla. 1st DCA 1985), and its progeny.
In Gulf Court, the court held that the bed need for a particular batching cycle is fixed at the time the CON applications are submitted and it cannot be altered by population figures or other data that becomes available after the applications are submitted but before the final hearing is held. Id. at 710. The court noted, however, that the “hearing officer [now, administrative law judge] . . . may consider any and all evidence presented by the parties, including evidence of changed conditions since the preliminary review, so long as it is relevant to the fixed need pool under consideration.” Id. (emphasis supplied).
In subsequent cases, the court has reaffirmed the proposition that new population figures and data cannot be used to show a different amount of need than that shown in the FNP for the batching cycle in which the application was filed. See, e.g., Maple Leaf of Lee County Health Care, Inc. v. Dept. of Health & Rehab. Servs., 601 So. 2d 1238 (Fla. 1st DCA 1992); Meridian, Inc. v. Dept. of Health & Rehab. Servs., 548 So. 2d 1169 (Fla. 1st DCA 1989).
The rationale underlying those cases is not applicable where, as here, the FNP was zero and the new information is being used to rebut the assertions in the CON application that there are “special circumstances” that justify the approval of the CON application despite the absence of need
shown in the FNP. Accordingly, in assessing whether there are any “special circumstances” that would justify the approval of Hope’s application, it is appropriate to evaluate the circumstances as they existed at the time of the final hearing.
That said, it is ultimately unnecessary to consider any "changed conditions" in SA 8A in determining whether Hope’s application should be approved. Indeed, although subsequent data and events demonstrate that the “special circumstances” alleged by Hope in its application no longer exist, the evidence also fails to establish that the circumstances, as they existed at the time Hope’s application was filed, justified the approval of a new hospice program in SA 8A.
The lack of numeric need for a new hospice program in SA 8A is not outweighed by any of the “special circumstances” alleged by Hope in its CON application because those "special circumstances" were not proven. See Findings of Fact, Part G.
The lack of numeric need is not outweighed by any “not normal circumstances.” Indeed, Hope did not allege the existence of any “not normal circumstances” beyond the “special circumstances” identified in its application.
The lack of numeric need is not outweighed by the applicable statutory and rule criteria. Indeed, on balance, those criteria weigh against the approval of Hope’s application. See Findings of Fact, Part H.
Accordingly, Hope’s CON application should be denied.
See Fla. Admin. Code R. 59C-1.0355(3)(b).
Based upon the foregoing findings of fact and conclusions of law, it is
RECOMMENDED that the Agency issue a final order denying Hope’s application to establish a new hospice program in SA 8A, CON 9692.
DONE AND ENTERED this 28th day of December, 2005, in Tallahassee, Leon County, Florida.
S
T. KENT WETHERELL, II 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 28th day of December, 2005.
ENDNOTES
1/ On this issue, the testimony of Hope’s health planner regarding the chronology of the hospice programs in SA 8A is found persuasive. See Transcript, at 1731-32, 1836-37; Exhibit HOPE-44. And cf. Hospice of Southwest Florida, Inc. v. Agency for Health Care Admin., 17 FALR 4641 (AHCA 1995), per curiam aff’d, 675 So. 2d 937 (Fla. 2d DCA 1996) (table).
2/ In all other respects, the utilization projections of Hope’s health planner are accepted.
3/ These figures were calculated from the data in Exhibit HOPE- 22, at page 80. The only change was that the market shares for cancer patients from Exhibit HSWF-59 were applied to the cancer admissions. The calculations are as follows:
Year 1 Year 2 Year 3 Cancer Admissions in SA 8A 496 523 551
Hope’s Market Share 25% 50% 75%
Subtotal 124 262 386
Non-cancer Admissions in SA 8A 618 669 720
Hope’s Market Share 15% 20% 22%
Subtotal 93 134 159
Total Hope Admissions 217 396 545
4/ All statutory references in this Recommended Order are to the 2005 version of the Florida Statutes. See Agency for Health Care Admin. v. Mt. Sinai Medical Center, 690 So. 2d 689, 692-93 (Fla. 1st DCA 1997); Lavernia v. Dept. of Business & Prof. Reg., 616 So. 2d 53, 54 (Fla. 1st DCA 1993); Hope 8B-I, at 78-79.
5/ “Not normal circumstances” is a phrase of art in the CON law. In order to establish “not normal circumstances,” the applicant
must demonstrate and there must be some finding of fact that, without the requested [service], the existing facilities are (or will be) unavailable or inaccessible, or the quality of care is (or will be) suffering from overutilization, or other evidence of that nature.
Humana, Inc. v. Dept. of Health & Rehab. Servs., 492 So. 2d 388,
392 (Fla. 4th DCA 1986). See also Humana, Inc. v. Dept. of Health & Rehab. Servs., 469 So. 2d 889, 891 (Fla. 1st DCA 1985); Wellington Regional Medical Center, Inc. v. Agency for Health Care Admin., Case Nos. 03-2701CON, etc., 2004 Fla. Div. Adm. Hear. LEXIS 1663, at *113 (DOAH Sep. 29, 2004; AHCA Mar. 7, 2005)(recognizing that, although there is not a list of “not normal circumstances,” they typically involve issues related to financial, geographic, or programmatic access to the proposed
service by potential patients, and not facility specific concerns), appeal pending, Case No. 4D05-1430.
COPIES FURNISHED:
Richard Shoop, Agency Clerk
Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3
Tallahassee, Florida 32308
Christa Calamas, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431
2727 Mahan Drive
Tallahassee, Florida 32308
Alan Levine, Secretary
Agency for Health Care Administration Fort Knox Building, Suite 3116
2727 Mahan Drive
Tallahassee, Florida 32308
J. Robert Griffin, Esquire
J. Robert Griffin, P.A.
1342 Timberlane Road, Suite 102-A Tallahassee, Florida 32312-1762
Robert D. Newell, Jr., Esquire Newell & Terry, P.A.
817 North Gadsden Street Tallahassee, Florida 32303-6313
Timothy Elliott, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Building 3
Mail Station 3
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 |
|---|---|---|
| Apr. 13, 2006 | Agency Final Order | |
| Dec. 28, 2005 | Recommended Order | Agency should deny CON application for new hospice in service area 8A, Charlotte and Desoto counties. The existing hospice adequately serves the area, and applicant failed to prove any unmet need or other special circumstances as required by Agency rule. |
