STATE OF FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION _— re RENDITION NO.AH@A- Olo- OU FOF: CoN “ CON NOS. 9767 & 9768 MANATEE MEMORIAL HOSPITAL, LP. Petitioner, DOAH CASE NO. 04-2723CON AHCA NO. 2004006374 VS. STATE OF FLORIDA, AGENCY FOR z HEALTH CARE ADMINISTRATION wot and NORTH PORT HMA, INC., or e719 Respondents, oe a = and m ENGLEWOOD COMMUNITY HOSPITAL, INC. d/b/a ENGLEWOOD COMMUNITY HOSPITAL and FAWCETT MEMORIAL HOSPITAL, INC. d/b/a FAWCETT MEMORIAL HOSPITAL, Intervenors. / ENGLEWOOD COMMUNITY HOSPITAL, INC. d/b/a ENGLEWOOD COMMUNITY HOSPITAL and FAWCETT MEMORIAL HOSPITAL, INC. d/b/a FAWCETT MEMORIAL HOSPITAL, Petitioners, DOAH CASE NO. 04-3027CON AHCA NO. 2004006643 vs. STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION, Respondent. ann APR G2 'v El Ba O02 | NORTH PORT HMA, INC., Petitioner, DOAH CASE NO, 04-3147CON AHCA NO. 2004006642 vs. STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION and MANATEE MEMORIAL HOSPITAL, L-P., Respondents. / FINAL ORDER This case was referred to the Division of Administrative Hearings (DOAH) where the assigned Administrative Law Judge (ALJ), T. Kent Wetherell, I, conducted a formal administrative hearing. At issue in this proceeding is whether the Agency for Health Care Administration (Agency) should approve the Certificate of Need (CON) applications filed by Manatee Memorial Hospital, L.P. (“Manatee”) and North Port HMA, Inc. (“North Port”), each of which proposed to establish a new acute care hospital to serve the city of North Port in Sarasota County, Acute Care Subdistrict 8-6. The Recommended Order dated December 1, 2005, is incorporated herein by reference. RULINGS ON EXCEPTIONS North Port filed exceptions to which Manatee, Englewood Community Hospital, Inc. (“Englewood”), and Fawcett Memorial Hospital, Inc. (“Fawcett”) filed responses. Englewood and Fawcett also filed exceptions. The Agency filed a Notice of Joinder to North Port’s exceptions. Manatee did not file any exceptions. . ENGLEWOOD AND FAWCETT’S EXCEPTIONS In their first exception, Englewood and Fawcett took exception to the conclusions of law in Paragraphs 378 and 379 of the Recommended Order, arguing that the ALJ’s consideration of future population growth as an offset to lost patient volume resulting from construction of a new hospital was erroneous and inconsistent with prior Agency decisions. In support of this argument, Englewood and Fawcett cited to the case of Wellington Regional Medical Center v. Agency for Health Care Administration, et.al, 27 FALR 1446 (AHCA 2005) (appeal pending), wherein the ALJ in that case rejected “the argument that an existing hospital that gets a ‘smaller piece of a larger pie’ after the approval of a new hospital suffers no adverse impact so long as the overall amount of ‘pie’ that it is getting in the future is greater than the ‘larger piece of the smaller pie’ that it is currently getting.” Id, at 1504. The Agency recognizes that the conclusions of law in Paragraphs 378 and 379 of the Recommended Order are in direct conflict with the Wellington conclusion discussed supra. It is the determination of the Agency that the ALI in the case at hand reached the proper conclusion that future population growth can be considered as an offset to lost patient volume resulting from construction of a new hospital. In Section 120.57(1)(), Florida Statutes (2005), an agency is allowed to “reject or modify the conclusions of law over which it has substantive jurisdiction and interpretation of administrative rules over which it has substantive jurisdiction.” However, in doing so, “the agency must state with particularity its reasons for rejecting or modifying such conclusion of law or interpretation of administrative rule and must make a finding that its substituted conclusion of law or interpretation of administrative rule is as or more reasonable than that which was rejected or modified.” The Agency finds that, while it has substantive jurisdiction over the conclusions of law in Paragraphs 378 and 379 of the Recommended Order, it could not substitute conclusions of law as or more reasonable than those of the ALJ. Therefore, Englewood and Fawcett’s first exception is denied. In their second exception, Englewood and Fawcett took exception to the conclusions of law in Paragraphs 380 through 383 of the Recommended Order, arguing that the ALJ impermissibly applied offsetting future growth to the financial impact on Englewood and Fawcett, and incorrectly used earnings before depreciation, interest, taxes, and amortization (EBDITA) to calculate adverse financial impact. In regards to the ALJ’s use of EBDITA to calculate adverse financial impact, Englewood and Fawcett cited to the case of Holmes Regional Medical Center, Inc. v. State of Florida, Agency for Health Care Administration and Wuesthoff Memorial Hospital Inc., 27 FALR 4303 (AHCA 2005), in support of their argument that the ALJ should not have used this method. However, the Holmes case did not limit the methodology an ALJ could use in determining adverse financial impact to existing providers. Rather, in Holmes, the ALJ stated that “[t]he health planners who testified at hearing agreed that in determining the impact of VMC on the Wuesthoff hospitals it [was] appropriate to focus on the number of admissions that the Wuesthoff hospitals would have received but for the approval of VMC.” Id. at 4337. In this case, the ALJ found that it was appropriate to consider the EBDITA of Englewood and Fawcett in considering the adverse financial impact to those facilities as a result of approval of a new hospital in the city of North Port, and even noted that, in Englewood’s case, EBDITA was “the financial indicator that its chief financial officer ‘really concentrate[s] on.’” Comparing this case to those of Wellington and Holmes, it appears that the financial indicators used to determine adverse financial impact to existing facilities by the addition of a new facility to the district will always be case specific because different facilities measure adverse financial impact in different ways. Furthermore, the ALJ’s conclusions of law in Paragraphs 380 through 382 were based on competent substantial evidence. See, e.g., Transcript, Volume XVIII, Pages 2443-2448; and Transcript, Volume XIX, Pages 2573, 2666-2667 and 2673. Thus, the Agency finds that, while it has substantive jurisdiction over the conclusions of law in Paragraphs 380 through 382 of the Recommended Order, it could not substitute conclusions of law as or more reasonable than those of the ALJ. In regards to Englewood and Fawcett’s argument concerning the ALJ’s impermissible application of offsetting future growth to the financial impact on Englewood and Fawcett, the Agency concludes, based on the ruling on Englewood and Faweett’s first exception supra, that the ALJ’s application of offsetting future growth to the financial impact on Englewood and Fawcett was correct. Thus, the Agency finds that, while it has substantive jurisdiction over the conclusion of law in Paragraph 383 of the Recommended Order, it could not substitute a conclusion of law as or more reasonable than that of the ALJ. Therefore, Englewood and Fawcett’s second exception is denied. In their third exception, Englewood and Fawcett took exception to the conclusion of law in Paragraph 385 of the Recommended Order, arguing that, contrary to the ALJ’s conclusion, if the adverse financial impact to Englewood and Fawcett had been calculated using “accepted methodologies” it would have shown that the addition of a new hospital in the city of North Port would result in a significant adverse financial impact to both facilities. However, based on the discussion concerning the conclusions of law in Paragraphs 380 through 382 in the ruling on Englewood and Fawcett’s second exception supra, the Agency finds that, while it has substantive jurisdiction over the conclusion of law in Paragraph 385 of the Recommended Order, it could not substitute a conclusion of law as or more reasonable than that of the ALJ. Therefore, Englewood and Fawcett’s third exception is denied. NORTH PORT’S EXCEPTIONS In its sole exception to the Recommended Order, North Port took exception to Paragraphs 259 and 397 of the Recommended Order. According to North Port, both of these paragraphs are conclusions of law over which the Agency has substantive jurisdiction. Additionally, North Port suggested that the findings in the Recommended Order support a conclusion of law that, contrary to those in Paragraphs 259 and 397 of the Recommended Order, there is a need for a new hospital in the city of North Port. First, Paragraph 259 of the Recommended Order was a summary finding of fact based on the ALJ’s findings in Paragraphs 185 through 258 of the Recommended Order, which were not challenged by North Port. North Port is, in essence, asking the Agency to re-weigh the evidence in this case in order to arrive at a different finding than that of the ALJ. However, even if the Agency were to accept this invitation, it would not reach a different finding. See Lawnwood Medical Center, Inc. v. Agency for Health Care Administration, 678 So.2d 421, 425 (Fla. 1* DCA 1996) (noting that “[p]erhaps in a proper case AHCA might attribute greater weight to certain of the review criteria than that attributed by the hearing officer.”). Second, assuming arguendo that both Paragraphs 259 and 397 were conclusions of law; the ALJ’s conclusions were based on a proper weighing of the statutory and tule criteria applicable to this matter. Thus, the Agency finds that, while it has jurisdiction over the “conclusion of law” in Paragraph 259, and the conclusion of law in Paragraph 397 of the Recommended Order, it could not substitute conclusions of law as or more reasonable than those of the ALJ. Therefore, North Port’s exception to Paragraphs 259 and 397 of the Recommended Order is denied. FINDINGS OF FACT The Agency hereby adopts the findings of fact set forth in the Recommended Order. CONCLUSIONS OF LAW The Agency adopts the conclusions of law set forth in the Recommended Order. ORDER Based upon the foregoing, Manatee’s CON application no. 9767 and North Port’s CON application no. 9768 are both denied. DONE and ORDERED this [ | day of A pt ‘f , 2006, in Tallahassee, Florida. “ ALAN LEVINE, SECRETARY AGENCY FOR HEALTH CARE ADMINISTRATION NOTICE OF RIGHT TO JUDICIAL REVIEW A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH THE FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing Final Order has been furnished by U.S. Mail, or by the method indicated, to the persons named below on this haan day of Zgpce'l , 2006. RICHARD J. SHOOP, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, MS #3 Tallahassee, Florida 32308-5403 (850) 922-5873 COPIES FURNISHED TO: T. Kent Wetherell, IT Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 Timothy B. Elliott, Esquire Assistant General Counsel Agency for Health Care Administration 2727 Mahan Drive, MS #3 Tallahassee, Florida 32308 Robert D. Newell, Jr., Esquire Newell & Terry, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Richard M. Ellis, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite"420 Post Office Box 551 Tallahassee, Florida 32302-0551 Geoffrey D. Smith, Esquire Susan C. Hauser, Esquire Blank, Meenan & Smith, Esquire 204 South Monroe Street Tallahassee, Florida 32301 Elizabeth Dudek Health Quality Assurance Jan Mills Facilities Intake

Docket for Case No: 04-002723CON

Orders for Case No: 04-002723CON